Can big fixed costs — like rent, payroll, utility bills, and the like — motivate entrepreneurs to stick with businesses they would otherwise abandon?
In an Inc. Magazine column earlier this year, seasoned business owner Norm Brodsky laments what he views as a pervasive tendency among today’s entrepreneurs to start Web-based ventures. “They’re launching websites because they think it’s easier, less expensive, and less risky than starting a traditional business,” he wrote, going on to mention that most of the would-be entrepreneurs to which he refers keep their day jobs as they pursue new projects.
Brodsky contends that big financial obligations are unique in their ability to drive entrepreneurs to grow sales and fix problems on the fly. They force business owners to muster every last ounce of effort to ensure their firms succeed, he argues.
That’s all true, but as powerful and effort and dedication are, there is a limit to how far they can take a person.
Walk through downtown New Brunswick and you’ll see a streetscape pocked with vacant storefronts. Some of the recently shuttered businesses were new, like a natural foods store that didn’t even last long enough to replace the previous tenant’s sign out front. Others were well established.
Though I’ve never met the owners of these former businesses, I’ll assume they are motivated, hard-working people who poured considerable effort into making their ventures work. I’ll also assume the closing of their businesses wreaked financial havoc on their lives.
Stories like these are common, but I meet dozens of entrepreneurs who dream of starting capital-intensive businesses like restaurants or retail stores. They could borrow against their home equity to start these risky ventures, and the prospect of living on the streets might motivate them to succeed.
Or, they could end up on the streets.
I urge entrepreneurs like these to start small. Would-be restaurateurs ought to begin with catering businesses and those who wish to own a boutique ought to start online or at vending events. These avenues allow business owners to hone their sales skills, build a following and — perhaps most importantly — determine the extent to which they really like plying their respective trades. Along the way, they can save up enough money to move responsibly into a storefront location.
Do some aspiring entrepreneurs abandon good ideas at the first hint of adversity?
Some may say these people would have persevered had their financial futures depended on achieving business success. Maybe, but it’s also possible they would have failed anyway, losing their savings in the process.
It’s important to urge new business owners to pursue their ideas and seek success; that’s what I spend a lot of my time doing. But in my experience (which is, granted, far less expansive than Brodsky’s) the strongest and most fulfilling businesses grow from internal motivation, not external financial pressures.
So if you’re thinking of building an expensive business in hopes that customers will come, consider what it’ll cost you if they don’t.
Photo by ironypoisoning