Source |Linkedin | By|Creel Prlce, enteprenur
Being an entrepreneur sounds like the ultimate dream job to an increasing number of people. You get to work for yourself, set your own schedule and earn a living doing something you really believe in. And then there is the Mark Zuckerberg factor – become worth billions and control the world.
And yet the stark reality is, this dream job can quickly turn to a nightmare if not approached in the right way. In fact, a 2017 report showed a 42 per cent increase in failure rate across the startup sector in Australia.
Such statistics are scary, but it reinforces the importance of knowing the key principles of entrepreneurship before setting off on an expensive venture. In my upcoming SBS series, The Employables, I take a group of jobseekers on an eight week crash course to turn their ideas into viable multi-million dollar businesses. Here are some of the lessons they learnt along the way.
1. Cash is king
There’s an old saying in business: “Revenue is vanity, profit is sanity, but cash is king.” Entrepreneurs have varying definitions of what this means, but at its core, cash flow is the most important factor in your early business’ success or failure. Without positive cash flow, even the most genius business ideas will be bankrupt.
The first step towards good cash flow is to focus on income first and foremost. Revenue, profit and valuation are imperfect tools to forecast the health of your business against. It may a good idea to hire an expert to help you lay the foundations for cash flow in the beginning, rather than reacting to the issues when they inevitably come.
2. Lean and mean
It’s tempting to splash the cash in the early stages. I see many startups with slick inner-city offices and employee perks that make work seem like a paid holiday. Unsurprisingly, they tend to struggle once the adrenaline (and cash flow) runs out.
It’s important to prioritise low overheads especially during this challenging stage. Keep a lean team and don’t sign up to unnecessary ongoing expenses. For example, hire a co-working space instead of forking out for a 3 year lease on the trendy office with your sign out front. It might not look as good on your Instagram feed, but it will save you lots of money down the line.