Advice for Entrepreneurs from Jim Muehlhausen

Dream of starting your own business? Starting a business isn’t easy and not everyone is cut out for entrepreneurship.  Knowing the risks and benefits can help you make the right decisions. In a recent interview, business coach Jim Muehlhausen offered advice for small business owners and potential entrepreneurs. Read below for his answers to some common entrepreneurship questions.

What are the biggest mistakes small business owners make?

Creating an un-leveragable business model. Many small businesses depend upon the owner to wear multiple hats to make the business work. If the business model does not generate sufficient margin or revenues, the owner cannot remove these hats and take the business to the next level. I recommend testing all business models at http://businessmodelevaluator.com

There is a mentality that no one can do things as well as you can as the CEO, although in some ways this is true, is not a sufficient way to run a business. An employee may never care as much as you, however, employees also don’t have 38 other tasks to complete. Instead they have the flexibility to devote more time and attention to a task than an owner or President of a company may. Therefore, they will typically do a better job if the owner can let go of control.

Typically, entrepreneurs that feel “no one can do it as well as me” have hiring and training issues.  Bad hires and poorly trained people will always be worse than the entrepreneur.  Proper investment in training the right people is how to escape this trap.

Who is cut out for entrepreneurship?

I have seen many varied personalities be successful as entrepreneurs. You don’t need to be a gunslinger type personality to be successful. You have to be a calculated risk-taker and a hard worker – that’s it.

For most businesses, someone with a sales bias will be more successful than a purely operations-focused individual. Ultimately, there are two types of businesspeople- those who think that sales and marketing is the lifeblood of an organization, and those who think that sales is that annoying thing that gets in the way of what we REALLY do.  If someone is the latter, they should probably work for someone else.

Is entrepreneurship a good option for recent college graduates or career-changers?

For college graduates gifted in technology, entrepreneurship is a great option. Many examples exist of young entrepreneurs hitting it big: Mark Zuckerburg, Bill Gates, etc. The danger of going to work for yourself young is that you tend to learn lessons the hard way. I recommend working for another company for a few years and making your mistakes on their dime.

For career-changers, entrepreneurship is a great option. The biggest issue I have seen with this group is security related. This group is used to having the employer sweat the paycheck. Now that anguish is theirs. In some situations, relationships can be tested as spouses or significant others cannot deal with entrepreneurial uncertainty.

How can small businesses prepare for the next economic downturn?

You can’t, though there are several mistakes entrepreneurs make early in recessions.

  • They think the recession or downturn will get better. Early in recessions, things get worse, not better.
  • They don’t cut expenses fast enough or deep enough. Entrepreneurs need to take a lesson from big business on this one. Big businesses are much better about over-cutting in anticipation of issues.
  • They feel guilty about letting people go. Your employees had a job before they met you and they will probably not retire from your company. You are not the only employer in the world.  It is admirable to have compassion for people you are letting go. However, many entrepreneurs jeopardize the stable employment of the remaining employees by keeping others on the payroll too long. The entrepreneur’s responsibility is to the ongoing viability of the organization and its people, not to provide employment.

Any other advice or words of caution for potential entrepreneurs?

  • I see a boom in franchising and entrepreneurship. It is clear the corporate America would prefer as few “old people” as possible. The over 40 crowd costs much more than a 25 year old. Corporations have continued to improve the ability to operate with as few expensive old employees as possible. Once you hit 40, entrepreneurship is a great option to leave the corporate rat race.
  • Entrepreneurship is the best job in the world. You can get paid extremely well, have complete flexibility, and have fun while working. Entrepreneurship can also be the worst job in the world. You can get paid nothing, feel like and indentured servant, and have inordinate stress. Make sure you have a solid business model and a good plan before you start.

About Jim Meuhlhausen:

Jim Muehlhausen CPA, JD graduated from Valparaiso University with a B.S. in Accounting, passing the CPA exam while still in college. While subsequently attending the Indiana University School of Law, he became the youngest franchisee in Meineke Discount Muffler history (1987-1991). After successfully selling that business, Jim founded an automotive aftermarket manufacturing concern. During his 9-year tenure, the company achieved recognition from Michael Porter of the Harvard Business School and Inc. Magazine in the INC 100 Fastest Growing Businesses. Over the past eight years, Jim has personally coached hundreds of business owners in more than 3,500 face-to-face coaching sessions and has clients in North America, Europe, Asia, and the Middle East. (www.51errors.com)

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