The inherent problem with entry-level entrepreneurs relying on others for advice is that successful entrepreneurs all take different paths and much of their advice isn’t applicable to an individual’s specific business. We look at success stories without digging into the failures they made along the way to get there and miss the opportunity to learn how to avoid them.
World-renowned entrepreneur and Shark on ABC’s Shark Tank Daymond John warns against judging success by the power of someone’s name or image. “You can’t judge success by somebody’s public stature. Public persona is not success. I can’t emphasize that enough.”
What’s more important than learning from their successes is learning from their failures, as the majority of businesses fail for the same reason – they run out of money. Running out of money happens in many different situations and because of many different circumstances, but it’s far less likely to happen to companies that have a firm grip on their financials. “The only thing that is fundamental is finance,” said John, who risked everything on his business without understanding the financials of his business and the impact of borrowing. That gamble paid off, but John had many things in his favor, including an extremely popular brand and excellent partners and mentors.
Entrepreneur: “John admits that as a young entrepreneur he was fortunate to find strategic partners who believed in him and taught him what he needed to know, he says. When he started his clothing brand, FUBU, he didn’t have the first idea about how to prepare his business to accept institutional funding.”
“I was so busy just trying to sell stuff that I didn’t have a structure to even take in capital or be able to report quarterly to people,” said John. He now encourages other entrepreneurs to be smarter with how they approach starting and operating their business. “You take affordable next steps and you do what you love…I shouldn’t have mortgaged the house. It wasn’t an affordable next step.”
Take an hour today to raise your financial IQ. Here are some places to start: