June 17, 2020 7 min read Opinions expressed by Entrepreneur contributors are their own. Pandora founder Tim Westergren maxed out 11 credit cards to ke
7 min read
Opinions expressed by Entrepreneur contributors are their own.
Pandora founder Tim Westergren maxed out 11 credit cards to keep his music-streaming service alive.Jeff Bezos quit a lucrative hedge fund gig to start Amazon out of his garage. He and the company neared financial ruin before the online bookstore finally took off.The greater the risk, the greater the reward, right?That’s what a lot of those startup glory stories would have you believe — that making it as an entrepreneur requires wagering everything. But what about those of us who prefer a slower, steadier path? Is it still possible to reap huge rewards without risking it all?I’d argue that it is. If you have a business idea but you’re not quite ready to jump into the deep end, there’s an alternative path to startup success. Here, a few tips for launching your business without the usual risks.1. Keep your day jobKeeping your day job while you work on your passion project is a great way to launch a business and reduce early-stage risk — plus, you can pick up skills and experience along the way. Before launching my own company, I was a junior developer for a software firm. Early mornings, nights and weekends, I worked on my budding online form company. But during office hours, I learned valuable lessons about operating a business.There’s no shame in financing your side hustle with your full-time job, either. As Katy Waldman writes for the New York Times, it’s not uncommon for great artists to utilize their skills and talent in a job unrelated to their art.“The novelist goes into screenwriting, like Dave Eggers or Ray Bradbury. The poet becomes an ad man, like James Dickey, who crafted slogans for Coca-Cola.”In fact, your day job may give you a sense of structure and security while you prepare to launch your own venture. As Waldman writes, it “might perform the same replenishing ministries as sleep or a long run: relieving creative angst, restoring the artist to her body and to the texture of immediate experience.”Related: How to Take the Right Risks2. Start small and be patientVC-funding might seem like the fast track to success, but bootstrapping can also be highly beneficial. Not only does it reduce your risk, but it can also boost your creativity and drive.Ryan Smith, co-founder of Qualtrics, writes for Harvard Business Review:“When you bootstrap, you are forced to get good fast. As humans, we prefer to put in only as much effort as we need to, but whether we recognize it or not, we all have extra gears. Sometimes it’s not until things get really tough that we find the gears that allow us to shift into overdrive — that is what bootstrapping does for you.”When companies accept VC funding, Smith argues that they’re oftentimes forced to focus on the short-term — pleasing funders and realizing an early exit — rather than long-term goals like continued innovation and longevity.Use the resources you have. No matter how modest, you can start small and grow slow.3. Focus on solving one problemIn “Zoom: Surprising Ways to Supercharge Your Career,” author Daniel Roberts explains why entrepreneurial success depends on doing one thing exceptionally well.Take Twitter: at the outset, their goal was simple: to enable users to share real-time status updates in 140 characters or less. As reported by Business Insider, Roberts argues that “Twitter has succeeded in large part because it never lost sight of that simple starting principle, even as it began to monetize its services and add new features.”To be successful, you don’t have to reinvent the wheel or utilize cutting edge AI. All you have to do is solve one real-world problem. Like Kara Goldin, a former Diet Coke addict and the founder of hint Inc. flavored water, says:“Starting ‘hint’ was really about solving a problem that no one else was working on.” For Goldin, the solution was a healthful alternative to her beloved beverage.So ask yourself: what’s one issue you face that’s just waiting for a solution?Related: 5 Ways Entrepreneurs Learn to Manage Risk4. Don’t complicate the ($) mathSpecialized accounting systems can provide valuable insight into your company’s financial health, but at the end of the day, here’s the one question that matters:Is your company profitable?To be profitable, you have to earn more than you spend.As Neil C. Churchill and John Mullins write for Harvard Business Review: “A key challenge for managers of any growing concern, then, is to strike the proper balance between consuming cash and generating it. Fail to strike that balance, and even a thriving company can soon find itself out of business—a victim of its own success.”Sustainable growth depends on your revenue. Don’t hire a new employee unless you have a year’s worth of their salary in the bank. Don’t increase your expenses unless your sales match the increase. Keep an eye on your cash flow and stay within your balance.5. Don’t lose sight of your core missionIn 2006, in an effort to boost business, McDonald’s doubled its menu offerings. Sales barely changed. Then, in 2016, the fast-food goliathpivoted. Writing for Harvard Business Review, Tiffani Bova explains:“It went back to basics, dropped most of those additional items, and instead extended its popular breakfast offerings. Sales finally jumped, with same-store revenue up 6 percent in 2017, and the stock rose by 40 percent.”With a more extensive menu, customers were slower to order and service lagged. McDonald’s fast-food wasn’t so fast anymore. When they, instead, offered customers the same products they loved throughout the day, business boomed.McDonald’s is a far cry from a startup, but the lesson is valuable: Remember your core mission, whether it’s fast-food or fast, reliable service. That’s why your customers chose you in the first place.6. Let people knowAccording to developer and entrepreneur Jason Roberts, the amount of serendipity you experience “is directly proportional to the degree to which you do something you’re passionate about combined with the total number of people to whom this is effectively communicated.”It’s an idea he calls your “Luck Surface Area,” and highlights an important aspect of being an entrepreneur: getting the word out about your product or service.Today there are so many ways beyond traditional marketing to let people know about your projects: publishing blog posts and articles, sharing on social media and in-person networking. What’s more, sharing your work can also help you to refine and improve it — another way to reduce your overall risk.Communicate your hard work with the world and be proactive about increasing your Luck Surface Area.Launching or running a business is inherently stressful, but hopefully, with these tips, it can be a little less so. You can start solving one of the world’s problems without gambling your wellbeing.Related: 7 Keys to Overcoming Risk on the Path to Success