How to be an Entrepreneur: Four Golden Rules

February 01, 2013

With so many sources of information for today’s entrepreneurs, it’s easy to get overwhelmed, but these four golden rules on how to be an entrepreneur can help you stay on track.

It’s tough to turn your start-up into a success, and there are so many sources of inspiration and guidance for today’s aspiring entrepreneurs that it’s easy to be overwhelmed. There are “how to be an entrepreneur” guides, websites and forums, college courses and business coaches. Although there’s no bulletproof method of becoming a successful entrepreneur, there are a few basic rules that every start-up should follow to thrive, rather than survive. Keep these four entrepreneur tips in mind and you won’t go too far wrong:

1. It’s the customers, stupid

Don’t get fooled by business self-help books into thinking that running a company is like waging a war, or playing a sports game, or a microcosm of life in the jungle or desert. It’s not about victory or a struggle for supremacy. One of the most important entrepreneur tips is about looking after customer needs. Period.

If you want to start up a business because you want to be your own boss, then think again. Because if you run your own firm then you will have lots of bosses – your customers. Their needs and desires should drive what you do. They will tell you quickly if they don’t like what you’re doing. But give thanks to these “bosses” each and every day – because without them you wouldn’t have a business.

As Robert Hiscox, the boss of our firm, says: “At the end of the day, everything you do must be tested against one measure: am I respecting or am I abusing my clients? Abusing them is a recipe for a quick death.”

2. Keep an eye on profits

The most important number to focus on in your balance sheet is the bottom line. It’s tempting to set eye-catching sales targets to motivate your team and impress investors, but you need to be careful you don’t lose sight of the bigger picture. The danger is that you become so focused on hitting your monthly sales targets that, before you know it, your business is heading into a tailspin. Your sales may be rising, but your cash flow is flat lining, because you’ve let your expenses run out of control. Bronek Masojada, the Hiscox Group CEO, says: “Profit is sanity, whereas revenue is vanity.”

3. It’s hard to live down a bad image

A good reputation is something that takes a long time to earn but a short time to lose. Trying to save a few dollars by cutting corners on customer service is short sighted, even if money’s tight. Do you return to stores or restaurants where you received poor service? Would you recommend them to your nearest and dearest? No. If you don’t tolerate poor service yourself then why should your customers? If you’re learning how to be an entrepreneur, a key part is recognizing what you appreciate as a customer.

The best way to build a positive image is to do the best for your customers every day. You can’t graft a good reputation onto your business; it has be earned. Socrates said: “The way to a good reputation is to endeavor to be what you desire to appear.”

4. Avoid becoming self-absorbed, but trust your gut

It takes patience, perseverance and a good dose of tenacity to launch a successful start-up, but it doesn’t pay to be lose sight of the big picture. Many new businesses fall into the trap of becoming so totally wrapped up in their Big Idea that they don’t ask themselves whether they’re going in the right direction or find out what their competitors are up to. Big mistake.

Find people whose opinions you trust and who are willing to mentor you. Listen to their suggestions and weigh up whether what they’re saying is right. You might need to make some big changes, but don’t be afraid to act decisively if they persuade you that your strategy is wrong.

But, having said that, don’t forget to also trust your own judgment. You can get lots of advice, but you’re the person who’s accountable for the decisions you make. Ultimately, it’s better to do what you think is right, than to do something people tell you is right, but your gut instinct tells you the opposite.

What entrepreneur tips would you add to this list for small business owners just starting out? Share in the comments below!