Professional guidance is key to entrepreneurial success
This story is produced and presented by our sponsor, LBMC
Entrepreneurship is not for the faint of heart, and statistics support this truth. According to the Bureau of Labor Statistics, after three years of operation, more than 30 percent of new businesses fail. By the five-year mark, that figure is more than half. And after 10 years, only about a third of businesses are left standing.
Those are daunting odds, to be sure. But surprisingly (or perhaps not, if you consider success stories like Facebook’s Mark Zuckerberg or Sara Blakely, founder of the Spanx line of women’s intimate apparel), millions of Americans still make the decision to start their own businesses each year. In fact, the 2016 Kaufman Index of Startup Activity reports released by the Kaufman Foundation in August reveal that more than 550,000 Americans launched new businesses each month during 2015.
On a local level, the startup spirit is just as strong: Tennessee comes in 20th in a state-by-state ranking of startup activity, while the Metro Nashville area jumped from 23rd to 16th in a ranking of the most entrepreneurially active cities over the last year.
“Entrepreneurship is not an easy road, but it can be very personally rewarding for those who succeed,” says David Morgan, CPA, founder of Brentwood-based LBMC Financial Services. “Working through major problems and making the right decisions, while having a trusted advisor that you can turn to for good advice, is crucial to breaking through to success. No business is going to develop exactly like your initial plan.”
Success aside, expert guidance may very well mean the difference between failure and viability for burgeoning businesses. This is especially true, adds Morgan, because most people grossly underestimate the resources necessary to launch a company.
“Entrepreneurs always underestimate the time it will take for their business to become successful, and they also underestimate the amount of capital they will need to invest before their business can become cash flow positive,” he says.
One of Morgan’s basic tenants for aspiring entrepreneurs is that it almost always takes longer and always costs more than you think.
“Many start-ups fail simply because they are not able to stay in business long enough to become successful,” says Morgan.
For Middle Tennessee’s robust community of startups, entrepreneurs have access to many resources designed to improve their odds of success. The Nashville Entrepreneur Center offers three different membership levels; at just $15 per month, members receive free access to community events (including the Tennessean-sponsored “Sip It: Nashville Conversations,” featuring discussions with local entrepreneurs from creative fields), while $100 per month nets unlimited meetings with an entrepreneur advisor.
Meanwhile, through the local chapter of the Entrepreneur’s Organization, members have access to executive-level education and an accelerator that helps business reach next-level success.
“The last thing a talented individual with a good idea needs to do is to spend most of their time on compliance matters that must be done, instead of working on strategy and sales,” Morgan says.
As Morgan points out, without adequate sales, there will be no successful business.
“The other side of that coin is that if the compliance matters are ignored, the business will face major issues down the road, which could cause the business to fail just as it was beginning to take off” says Morgan.
The solution, then is outsourcing.
Morgan says expert advice can help entrepreneurs with financial matters, including helping them to establish good processes and records, understand cash flow and prepare reasonable projections.
“If an entrepreneur can outsource many of the routine back-off functions and spend most of their time using their special skill that led them to start a business, they will have a better opportunity for success,” says Morgan.
Aaron Margulies, a surgeon who owns his own practice, agrees. He first outsourced his personal accounting needs and later sought that same peace of mind and professional experience for his business as well. Margulies says it’s helpful to have a partner who can handle employment benefits and make sure there are no surprises.
“Most importantly,” says Margulies, “I trust them to advise me on what I need to know.”
When companies can focus on the logistics of starting and running a business, instead of worrying about administrative tasks like managing payroll and health insurance, entrepreneurs can have the time and mental freedom to focus on the core of their business — and becoming successful.
This story is produced and presented by our sponsor,LBMC