1. Be Passionate and Have a 99% Commitment.
The most important thing in starting a successful business is not having a good idea or product. It's not even having a good team or being well capitalized. It's having passion; it's having the vision and determination to know that even though other people could do what you do, your way of doing things is going to change the world. This passion should manifest itself into a 99% commitment to your business. Anyone who tells you that you should be 100% committed hasn't really thought it through and is just bullshitting you. Your dear mother, who raised you and is the reason for everything you are today, has fallen ill and is in the hospital. You cut out of work early to go visit her--THAT'S the 1%. To start a business, the rest of the 99% of you has to be committed to the business, and you must be willing to make sacrifices.
My experience: I started my business 2 weeks after my 21st birthday, and a year before receiving a good degree in a relatively good job market. While my friends were moving up the corporate ladder during the day and exploring the 'youth + money = fun life' equation, I was working. I slept at the office as much as at my house, and picked up odd jobs to pay the bills. The pinnacle came in one month of 2005, as I remember, when I worked 120 hours in each week of the month. I slept every other night and ignored every other aspect of my life. Is this how it should be forever...of course not. But it's what was needed at the time.
2. Have a Hatred of Failure--Not a Fear of It.
There's no denying that being a successful entrepreneur requires a certain disposition towards risk. On occasion, this is going to mean you fail. No single bet should be so great that could potentially bankrupt the company. If things you try fail, you can't let it dissuade you. You have to learn from your screw up, double down, and vow that the same mistake will never happen again. If you're failure results in the company going under, use it as a chip on your shoulder to start the next one.
My experience: In addition to my main company, I've had 2 unsuccessful spin-offs during the 8 years in business. I had a deli in 2005 that basically broke even for a year, but prospects were declining, and I was tired of working for free at a job with miserable hours. More painfully, I was a co-owner of a college bar where I operated the kitchen for about 14 months. Initial projections were wrong, and despite 4 menu changes and continuous improvements over that time, I lost like $65,000. Boo. As I write this, a year and a half after it's over, it still makes me sick. But that's the correct feeling. My experiences gained are invaluable, and I try and use them as motivation to keep on pushing forward.
3. Don't Lose Track of the Money.
This seems obvious, but it can be difficult. This advice is particularly important for young entrepreneurs, but anyone owning a business for the first time or recognizing a life-long dream can fall victim. Owning a business can be thrilling. You have total creative power to bring your vision to fruition, and sometimes the passion (remember from #1 that passion is involved) causes business owners to turn a blind eye to the money. Sometimes you are so exited to serve that new recipe; to get home at night completely exhausted from a day's work; to romanticize the experience, that you ignore the common sense analyses that are needed to make sure you'll be able to pay the bills. Every decision made must be the best effort to maximize the long term profitability of the business. Now does this mean that the cheapest option is always preferred? No! Certain investments yield long term results. However, profits need to be realized somewhat quickly. If cash flow is achieved through slim margins or debt, the long term health of the business could be in jeopardy.
My experience: I lost track big time. As mentioned, I was a young know-nothing when the company started. After I graduated from college (year 1 of the business), the company grew by 500%. I didn't know what to do, so I did what I thought I should do--what 'real companies' do. I hired too many managers and took out a lease on a office that did nothing to increase revenues or profits. By the time I realized this, I was $75k into debt with a business model that shouldn't have needed more than $10k in capital. Total jackass maneuver on my part. Moreover, I was paranoid that customers wouldn't trust a 21 year old kid to deliver on promises, so I gained business by underpricing our services. Even though I now increase prices each year, our old customers are far less profitable than the new customers, and they will probably never catch up. Eight years ago, I essentially sold out to 'buy' cash flow, and today the effects are still being felt.
4. Dream Big.
Especially for companies in early stages, it's quite easy for owners to get caught up in the day-to-day and ignore the long-term. This is not good. 'Appropriate egomania' is the oxymoron that I would use to describe the requirement that you believe that you can do things better than anyone else, and that the possibilities for your business don't stop at what you can see in the near future, but rather are infinite. Take the time to think about a 5 year plan, and make sure that every thing you do in the short term fits in to where you want to take the company in the long term.
My experience: It took me a long time to learn this lesson. Like many entrepreneurs, I was heavily involved in operations in the beginning because I couldn't afford to pay someone else to handle the day-to-day operations while I focused on strategy. My 'holy shit' moment came from a business competition, sponsored by the founder of Under Armour, that gave $15,000 to the winner and $7,500 to 2nd place. I delivered a great presentation, highlighting all the logistics and details that I thought made us the best. After the judges deliberated, they started with their presentation...."Before we announce the first and second place winners"--they turned to me--I knew right away I hadn't won. "Brian, we think you can grow faster than you think you can. Scalability, reproducing what you do now over and over again: that's the future, that's the business model". I was devastated, but the judges rightfully recognized that I wasn't dreaming big. While the other businesses offered figures for what their total potential market was--numbers in the hundreds of millions of dollars that would probably never be realized--I mentioned only what I charged the current customers. If you don't think you can be big, then you can't. So think it.
Shit happens. And at least some of the shit needs to happen in your favor for you to be successful.
My experience: I started my company because I knew how to cook and I was in a fraternity. I was in a fraternity because a friend bugged me to go to a rush event and some guy bought me a piece of pizza. I was at the University of Maryland because I had met a professor at the yacht club I used to work at, and because I was denied admission to the University of Pennsylvania (assholes). I knew how to cook because my paper route wasn't keeping up with the rising cost of Air Jordans in 1997, and I figured a restaurant was better than folding sweaters at the Gap. If any of those things hadn't happened, I probably wouldn't own a business today. The goal is to be well prepared to when fortune falls in your favor, you can capitalize on it.
Want to know more:
Characteristics of Successful Entrepreneurs, from Maryland's 'Godfather of Entrepreneurship'
Book: Good to Great
Book: Built to Last