Capital, Confidence and Concept
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Conventional wisdom says that starting your new business is risky, although these days “risk” is a relative term.
It turns out that working for someone else is risky, too – as so many people have discovered in the past 18 months. Evidently, joining a union for the perceived promise of stability doesn’t remove that risk, and neither does working for the government.
In the presence of the risks of entrepreneurism, there are, however, two things you need to bring to the table in some combination when you make the leap to start your own business: Capital and Confidence. The need for these two elements exists in a constantly evolving, symbiotic dance because the amount of either that is available at any given moment varies. In a general sense, the less capital you have, the more cajones you need to survive.
Nevertheless, many small business epitaphs have been written by entrepreneurs who had an abundance of both, but who lacked a solid, well-thought-out concept of what they were actually doing. In other words, a bad business idea – or a good business idea executed poorly – has the power to trump everything else when it comes to achieving ultimate success.
The concept of concept is multi-faceted. You can have a general idea of something that might make a successful business model and still have absolutely no idea how to actually make it work. Which is why it makes sense to test your assumptions, build a good support system, increase your business skills and knowledge, and continually adjust your plan as you move forward. That is a powerful reason why business coaching makes so much sense for first-time entrepreneurs and new business owners.
Of these three elements – Capital, Confidence and Concept – the risks of entrepreneurism are only alleviated by improving your concept. Contrary to the assumptions of many first-time entrepreneurs, having what is perceived as “sufficient” capital doesn’t remove the risks at all – it only defines the amount of risk. And, confidence – although absolutely essential to any entrepreneur – can actually increase your risk if it isn’t appropriately balanced by the other two pieces.
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6 Comments
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April 22nd, 2011 at 5:02 am
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August 15th, 2011 at 9:28 am
Concept is where most people make a mistake. They come up with a new and original idea and have no idea if there is even a market for it. Sure some may hit it big, but the vast majority fail, and not for lack of capital or confidence.
Find an existing market where money is being spent and made first. Then figure out a concept that will allow you to enter the same market but doing it better.
Generally where there is competition there is money.
- M
October 26th, 2011 at 9:41 pm
I think you hit it right on when you say “Contrary to the assumptions of many first-time entrepreneurs, having what is perceived as “sufficient” capital doesn’t remove the risks at all – it only defines the amount of risk. “. I think that is what people have a hard time understanding. The more you put in, the more you may lose. Once you invest in your company, you are unable to just take the money back. Thanks so much for this great post!!
November 17th, 2011 at 4:57 am
You talk in terms of “Capital, Confidence and Concept” and I cannot disagree. However, I think that for the inexperienced entrepreneur confidence and capital can be a dangerous mixture unless the concept is just right. It is perfectly possible to build a business with little or no capital as many consultants, trainers and internet marketers have proved. Of course you need some money to survive (though a friend of mine started a successful training business while he was working elsewhere full-time) but this way you can experiment and learn at relatively low risk and then plough in some capital as things take off. Naturally, whatever the route, coaching can be a life-saver.
January 13th, 2012 at 6:16 am
Thank you for this wonderful blog. Your site is very informative. Keep it up!