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Small business entrepreneur reality check

Discussion in 'Mindset and Motivation' started by Edvin, Mar 22, 2018.

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  1. Edvin

    Edvin MVP Member Top Contributor

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    Repeat after me:
    • I'm driven ✓
    • I've got this ✓
    • I can do this ✓
    • I'm organized ✓
    • I'm passionate ✓
    • They can't keep up ✓
    • I've done my research ✓
    • I know more than they do ✓
    • I'm going to quit my day job ✓

    • I'm going to make lots of money - :confused:

    Yes, I've said every one of the above points to myself and have walk away patting myself on the back.
    It wasn't too long ago that I had a reality check; but, I'm due for another jolt; so, I decided to share this with you.

    When I first considered a franchise opportunity, I learned that the average franchise owner made about $50,000/yr in food industry. But my spreadsheets in education industry painted a different picture. I have decided to go on my own (no franchise), and wanted to look at the industry standard tonight.
    Apparently, small business owner average income is about $73,000 with the range of $30,000-$182,000. This may sound good for young entrepreneurs; but, this doesn't sound like much for a seasoned working professional.

    So, what makes me so "special" to think that I'm going to exceed the range that most people have not been able to? The reality is that I need to prepare myself for more work and less pay; any other financial ambition has low probability; hence may be unrealistic.
     
    djbaxter likes this.
  2. Small to Feds

    Small to Feds MVP Member Top Contributor

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    Good check list and advice. Here are a couple additions:

    Do you have a product or service niche in mind?

    Do you believe you have a market and the means to reach it?

    Are you willing to develop a business plan to validate the above before you launch?

    How are you going to do it if you can't plan it?
     
    djbaxter likes this.
  3. Edvin

    Edvin MVP Member Top Contributor

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    Hi Ken,

    I believe my answer is mostly yes to all the questiones. However, the odds are stacked against us when 66% of businesses close doors within 10 years. The reality is that less than 4% of businesses earn over a million dollars in gross revenue, and that is not the same as what business owner takes home.

    Only 236,883 people in US earn over million dollars, 90% of which earned it themselves.
    US population is 325.7 million, which means that only 0.07% of US population achieves that.

    To provide perspective, chance of getting hit by lighting in a lifetime is 1 out of 3000; that is 0.03%.

    I personally can't think of any accomplishment in my life to be ranked within top 0.07% of population.

    So, I can count myself lucky stars if my business annual gross revenue is more than million dollars after 10 years. That puts me at top (100% - 66%) * 4% = 1.4%.
     
    Last edited: Mar 22, 2018
  4. Small to Feds

    Small to Feds MVP Member Top Contributor

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    The additional questions I have offered were developed over a decade of working with nearly 8000 small businesses:

    "Do you have a product or service niche in mind?
    Do you believe you have a market and the means to reach it?
    Are you willing to develop a business plan to validate the above before you launch?
    How are you going to do it if you can't plan it?"

    I found during that time period that the above led to many prospective new enterprises talking themselves out of a launch and without draining their personal treasuries

    or

    They confirmed their idea and launched an enterprise that improved substantially on the statistics you offer.
    Many of these achieved sales in excess of $1 M, but it took in excess of 5 Years of hard work to do so.
     
    Last edited: Mar 23, 2018
    Edvin and djbaxter like this.

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