Starting a business is a long-term commitment. And as with every worthy endeavor, preparation is key to success.
In business, I am of the opinion that there are two important types of preparations: Mindset preparations and Technical preparations.
Why are these two preparations important?
Statistics reveal that 20% of small business start-ups fail within the year of opening shop. Another 30% fail within the following four years, while additional 17% fail in five more years. That means by the end of the tenth year, only about 33% of all the businesses that opened shop ten years earlier will still be in operation.
The costs of business failures are very high. The entrepreneurs, their investors, employees, customers, suppliers as well as local economies and governments all bear the brunt of these failures. This is aside the emotional and social costs that also go along with the financial.
We can try to do better than that by understanding the causes of business failure and also through sufficient preparations before and robust actions after opening shop. As to the causes of business failure, there are literally hundreds of possible factors. But for our purposes here, I group them into two broad categories:
- Psychological factors, that have to do with the emotional makeup and the social skills of the entrepreneurs, and
- Technical factors, that have to do with the mechanical issues of running a business.
Mindset preparation, our subject here is, obviously, an attempt to mitigate against the psychological (emotional and social) causes of business failures. Technical preparation will be discussed in our next post.
What is mindset preparation? Mindset preparation is about three components viz; scenario construction, strengths and weaknesses assessment and emotional and social capacity development.
The scenario construction component is about mentally building real life business situations and checking on how you would respond to them. It is not about your ideal and preferred choice of happenings: your dreams. Rather, it is about the real kind of incidences and occurrences that happen in business life.
The strengths and weaknesses assessment is about understanding how you are likely to respond to different possible situations that you envisage. Are your ‘normal’ responses the best? If not, what do you need to learn or develop in order to be able to respond optimally in such situations?
The emotional and social capacity development is about developing your emotional and socials skills to continously improve your ability to optimally respond to issues as they arise.
Overall, mindset preparation is about linking the realities you will face with your dreams by, sort of, flying in the clouds but keeping your feet firmly rooted to the ground!
Ask yourself tough questions and provide truthful answers. Questions should include, but not be limited to,
- How do you handle a hardworking but dishonest staff?
- Are ready to work hard? I mean really hard?
- Can you stand the long and inconvenient hours of the hard work?
- Do you know what your fears and apprehensions are?
- Can you ask for support when you need it?
- How do you handle minor setbacks? What about major setbacks?
- Can you fail without feeling like a failure?
- What if your bank calls their loan?
- What happens if you don’t have cash to cover the payroll?
- What happens if your uninsured debtor goes bankrupt?
- How comfortable are you with frequent changes in the market place, and your political economy?
- What do you do if you lose your best staff in a road accident?
- What are the things you cannot stand?
- Will you stick the course, or give up in difficult times?
- What happens if a fraudulent foreign supplier sends you substandard raw materials, and you are unable to trace them?
- Can you do without the support of your loved ones?
How do you handle this exercise?
- First you have to take your time. Don’t rush through it.
- Read biographies of successful people, they are often replete with different situations that they went through and how they handled them.
- Discuss with mentors and businesspersons that have been there done that.
- Generate your scenarios out of theirs and imagine how you would respond to each situation.
- Find out if your response is the most optimum. If not learn how best to handle such situations.
- Stagger the process over a reasonable period and go through each exercise at your most productive and private times.
- Engage only those whom you trust will offer truthful and sincere opinions and assessments.
- During each session, write notes.
By the end of the exercise, you would have:
- Created and imagined through all sorts of desired and unwanted scenarios,
- Gotten a pretty good assessment of your strengths, weaknesses, interests, apprehensions, fears, skills, as well as how best to handle varying situations.
- Identified emotional and social areas you will need to continuously improve upon.
The more scenarios options and their best solutions you internalize, the more likely you are to respond appropriately in real life. Equally important, if you widen the possible optional scenarios you are likely to face, you wouldn’t be surprised or disappointed when they do occur! You would just do what needs to be done to keep you going without loss of enthusiasm.
Every journey starts in our minds. The more our minds are prepared the more likely we are to succeed. The more we internalize optimum responses to different possible scenarios the better we stand to succeed. Things happen spontaneously and some responses must just be almost on reflex! Mindset preparation makes that easy and possible.