Randy Shain – a Private Prep parent – founded, built and sold a successful financial investigative firm, and has therefore seen the in’s and out’s of business development. Today, Randy works with college students who are interested in entrepreneurship, providing mentorship and guidance in making smart choices to support this path. Below, Randy shares key lessons learned.
People often ask me how I became an “entrepreneur.” It’s funny because I never saw myself in the mold of what I envisioned the typical entrepreneur to be, i.e. an idea machine, someone who came up with ideas for new businesses almost daily, and always had a bunch of things going at once. In fact, my path to becoming an entrepreneur started far more humbly than that, and shaped my opinion as to how best to embark on this path.
In 1985, I was a sophomore in college with a friend who is much more of what one would describe as a serial entrepreneur. At that time, he was pestering everyone he knew about what our school, Rutgers, needed. As someone who’d worked in his father’s restaurants since he’d been a teenager, my friend realized that food was a natural choice. After a fair amount of badgering, he concluded that the universe of foods at school shouldn’t be limited to pizza and Chinese. With that, he opened a chicken wing restaurant, probably the first of its kind in New Jersey. I became an early employee, and actually was crazy enough to take on the role of handing out flyers while wearing a chicken costume, in the blazing September heat. What I learned over the next three years, though, was critical to my own development as a future entrepreneur, and I am convinced I would not have been successful without this early work experience.
So, what are the things I ask students today who are interested in being entrepreneurs?
- Are you sure you want to be the boss?
My former brother-in-law once remarked that he wanted to be me, someone who could set his own hours and come and go to work as he pleased. This is what he saw. What he didn’t see was how hard I had worked the previous 15 years to get to the point where taking an afternoon off was even possible. A big part of entrepreneurship is the desire to lead, the desire to manage and motivate other people to work for you as if this business were their own. If your desire to be an entrepreneur is fueled entirely by money or the starry-eyed thoughts of setting your own schedule, remember that most entrepreneurs never take vacation, and it can take years to make any real cash. But if the idea of starting and growing something and leading other people is appealing, by all means, do it.
- Do you play nicely with others?
I am a big believer in having a partner. Most people will need someone with complementary skills to their own; as with the extrovert who sells while the introvert handles operations. Having another person with whom you can bounce ideas off of can make a lonely operation one that is stimulating beyond belief. As with any “marriage,” though, selecting this partner is crucial. Be on the lookout for anyone you’ve worked with in group projects whose skills and demeanor fit with yours. Speak with enough people until you can identify someone with a similar background to you, and who is motivated to succeed and to work as hard as you are. Then keep things informal in the testing phase (sort of like dating) until you know it will work, at which time a more formal contract could make sense.
- It is always cheaper to let someone else pay for your mistakes.
When you start a business, you will make mistakes. This is why working for someone else before starting your own business can be incredibly beneficial. In the firm I started in 1993, my partner and I didn’t trademark our name, something that came back to haunt us years later. These early errors, combined with the fact that most new businesses will struggle to maintain adequate capitalization (simply: you’ll run out of money) means that spending precious money fixing mistakes can be devastating. Instead, I advocate working for someone else, learning what works and what doesn’t, and then launch your own gig.
- Will the world buy what I’m selling?
This may sound incredibly obvious but many new businesses fail because they don’t do the research necessary to determine if people actually want what the business is offering. Don’t let that happen to you: ask everyone you know, and everyone you meet, whether they’d buy what you’re proposing to sell. Use online survey technology like SurveyMonkey to develop more insight. Even better, work for an established company in a specific industry, then branch out when you have a substantial landscape of the field, and how to develop an effective product, possibility better and/or cheaper.
While it is certainly true that some businesses create a “want” for a product (leading customers to buy something they don’t necessarily need), it’s far easier to identify a need and then seek to fill it. For example, providing fast and reliable laundry service to college students is probably an easier sell than convincing people to buy a cool new iPhone app.
- Will this idea make money?
Master of the obvious again, right? Yet here again many businesses struggle because while they correctly forecasted a market for their product would exist, they failed to understand that they’d have to spend more to secure customers and produce their item than they could make selling it. Yes, some Internet-era businesses do succeed without ever turning a profit, but the reality is that while those entities may generate insane amounts of press, the survivors are exceedingly rare. It’s well worth your time to determine the true costs of your labor, machinery, goods, etc. before you dump money you can ill afford to lose into a new venture.
- Do I have a thick skin?
In college, one of my “silly” jobs was selling free dance lessons. In an entire semester I didn’t succeed in convincing a single person to take us up on this offer. Frustrating? Sure. But somehow, that experience steeled me for what was to come. Several years later, when I started my first business, I routinely made 75 sales calls a day. As you’d imagine, this led to tons of rejections. How did I deal with this? I always believed I was right – that our service was the best – and that prospects who didn’t understand that could not hurt my feelings, as they were the ones missing out.