Running A Business: The Most Important Thing You Need To Understand

Having passion for something is all you need for success in business.

It’s easy to start a new business, all you need is an idea.

Anyone can start or run a business.

If you are financial need, starting a business can solve your money problems.

These are just some of the false promises you may have seen on blogs or other websites.

The internet is full of resources, especially for people looking for advice on starting a business.

Some are good while others…not so much.

There are sites dedicated to broad topics and there are sites that are dedicated to specific niches.

There are sites that are excellent resources for both experienced and newbie entrepreneurs alike. But, there are also some that give shoddy advice from people who have no business–no pun intended– giving advice.

failed business

So, with all of this information out there, why is it that people looking to start a business still overlook the same basic principle? It’s likely one of two reasons: people just don’t want to think that it applies to them or the folks that write about business topics assume that it is common knowledge.

What is this things that seems to be so important that I’m even writing about it?

The answer is simple:

Not everyone is meant to run a business.

You would think that everyone knows this already, but it’s really not as widely known, or understood, as you may think. Why else would such a large percentage of businesses fail within the first five years? Why else would people lose their homes, families or entire savings throwing good money after bad supporting a failing enterprise? 

The qualities possessed by an entrepreneur in any given area are certainly important components of business success, but the truth is some people are just meant to be an employee rather than the boss.

Normally, you would think that the problems with running a business come from inexperience, trying to wear too many hats, failing to put the emphasis on the bottom line, forgetting things like legal issues or not understanding taxes. But those are normal things that can be resolved with coaching and time.

I see it every day: clients who get glowing reviews from customers on their work, but whose businesses lose money year after year. It doesn’t matter if it’s a florist, a musician, a graphic designer, a dry cleaner or any other profession, not everyone is meant to run a business.

Some of the people have trouble closing sales. Some have issues collecting on contracts. Others have trouble balancing their time and other interests. Some waste money on poor marketing decisions.

Many people just don’t seem to “get it”: being good at something is one thing, while building a successful business around it is a completely different story.

There is something that successful business owners have that can’t be quantified or even described other than labeling it as the “x-factor”. It’s something that goes beyond passion, or a specific talent.

It’s a painful reality for many would-be entrepreneurs.

In fact, even if you do have success in one business, that doesn’t mean you will be successful in any venture or industry, regardless of how much passion you have.

If you’re into reality shows, you probably see it all the time and don’t realize it:

  • Restaurant Impossible
  • Bar Rescue
  • Car Lot Rescue
  • Kitchen Nightmares
  • Hotel Impossible
  • Mystery Diners
  • Restaurant Makeover
  • Salon Takeover

These shows all feature businesses that for one reason or another are failing and need rescuing from professionals in the field and they only exist because of this concept that not everyone is meant to run a business. Almost all of the people showcased had a passion for their business but what hat they didn’t have was a clue about how to actually run the business. It took an expert to come in and essentially put everything in place, and the owners were merely left to manage going forward.

In fact, even if you do have success in one business, that doesn’t mean you will be successful in any venture or industry, regardless of how much passion you have. 

You can see it in the sports world too:

  • The Maloof family is wildly successful in the casino and development industries, yet after purchasing the Sacramento Kings, failed miserably at running the franchise.
  • Stephen Ross built his fortune in real estate and is currently taking tons of heat for his failings as the owner of the Miami Dolphins.
  • Washington Redskins owner Daniel Snyder made his money in marketing and communications (he owns Dick Clark Productions) but has had 4 winning seasons in 22 years of owning the team and has had several negative encounters with fans.
  • Donald Sterling, a real estate billionaire and owner of the Los Angeles Clippers has the reputation of being the worst owner in sports with his team being the losingest team in professional sports under his ownership.

Some people may try to argue that even the worst sports teams are valued very highly, they fail to realize the fact that it is the success of the whole that brings up the perceived success (and values) of the individual teams.

So, the next time you see someone unthinkingly throw out the idea that a business will solve your money issues, or that it’s easy to start a business if you have a passion or are skilled in a particular area, take a moment to think about all of things you were just presented with.

It’s easy to say that starting and running a successful business is easy, but it takes more than simple words to do it.

And, for the record:

Passion without direction spells doom for a business.

An idea without a plan doesn’t do anything for a business.

Obviously, from the previous points, not everyone can run a business.

The thing you need to remember is there are always negatives to any situation or opportunity. Even if they’re not glaringly apparent or if no one talks about them much, they still exist.

  • http://twitter.com/moneybeagle Money Beagle

    I think you raise a good point that many people simply don’t have the mental makeup to be an entepreneur. That takes nothing away from their knowledge or ability to do a great job, it’s just certain things are probably barriers to being successful.

    • http://www.dollarversity.com Eric J. Nisall – DollarVersity

      There’s just something to it that a majority of people can’t grasp. And it works both ways. I know some people who run businesses even though they don’t have the first clue about the product or service yet know how to be successful being in charge of anything.

  • http://www.myfijourney.com/ My FI Journey

    I’ll admit to having no business running a business. I know myself and I don’t have those soft skills to close sales and take care of clients. Now when it comes to actually getting the work done, I’m your man. But business development, not so much.

    • http://www.dollarversity.com Eric J. Nisall – DollarVersity

      There isn’t anything wrong with that either. It’s like every other thing in life, people excel at different things. The best thing is being able to recognize what your limits are and respect them.

  • Brick By Brick Investing

    A lot of people take offense when someone tells them they aren’t an entrepreneur or shouldn’t be running a business. But the fact is, if everyone ran a business there would be no employees. There’s nothing wrong with being an employee, in fact being an employee is much easier than being a business owner in my opinion. All too often movies and the media glorify businesses owners, typically after they have struck success in their business. Hardly ever do you see all the long hours, headaches, and paperwork associated with it.

    • http://www.dollarversity.com Eric J. Nisall – DollarVersity

      Tell me about it! How the hell would anything get done if everyone was running the business but nothing was getting done? And never mind the hours, and headaches–what about the failed relationships, addictions to drugs & alcohol and depression that results from the failures. Of course, the highs are the money makers for the media, not the real-life cases that show how unglamourous it really is most of the time.

  • http://clubthrifty.com/ Greg@ClubThrifty

    Ha! I was waiting for what the punchline was going to be and you got me. I didn’t expect that…although, I think that is true. Not everybody has the makeup to be a business owner, and not everybody even wants to be one. Fun article Eric!

    • http://www.dollarversity.com Eric J. Nisall – DollarVersity

      You have to be on your toes when you come here Greg!

  • http://www.mightybargainhunter.com/ John Wedding

    I’m not a stellar business owner, but I am one nonetheless. I wonder how much of my mediocrity comes from having been in low-risk situations for the first thirty years of my life: getting a PhD, and then getting a stable job. I was practically groomed for a lifelong salaried position. Certainly there’s got to be something for just learning early, getting an early understanding of risk/reward, etc.?

  • http://www.mightybargainhunter.com/ John Wedding

    I’m not a stellar business owner, but I am one nonetheless. I wonder how much of my mediocrity comes from having been in low-risk situations for the first thirty years of my life: getting a PhD, and then getting a stable job. I was practically groomed for a lifelong salaried position. Certainly there’s got to be something for just learning early, getting an early understanding of risk/reward, etc.?