What’s the Minimum Business Knowledge You Need?
Some people believe that as long as you have good technical knowledge you don’t need to worry about the business side of things – that will sort itself out. After all (they say) Steve Jobs and Bill Gates didn’t have any business training and look at how things worked out for them. We’ll come back to Steve and Bill later – but first let’s have a chat about your driving…
You versus the Truck Driver
Do you need more knowledge and skill to drive your car or an 18-wheeler? If you said the 18-wheeler you’d be right, of course, but the difference mightn’t be as significant as you’d think. When you drive you need to know the rules and be able to read the road just as well as any truck driver. You need to be able to use the controls to maneuver your vehicle in the same way. Some things (particularly reversing!) are more difficult in a truck but the basic principles are the same.
You versus Tim Cooke
So – do you need more business knowledge to start your own business from scratch or to run Apple, General Electric or any of the other top multinationals? Once again the knowledge requirements are very similar. You need to do most of the things for your startup that Tim Cook and his managers are doing for Apple.
In fact, there are several reason why (it could be argued) you need more knowledge to start your own business. After all, CEOs like Tim Cook have dedicated staff to deal with each business function. You have to make every decision yourself. They also have a massive amount of information about the market and their customers. You have few, if any, customers and limited knowledge. Finally, they can afford to try things and let them fail a few times before getting them right. You don’t have the same flexibility.
Business Knowledge Matters
And what about Steve and Bill? Well they started their businesses at a unique time in history – the birth of an entire industry. Most of us won’t get that opportunity. And the competition is much more professional and intense now than ever before. But the main reason that business knowledge matters is that most startups fail. The figures are open to debate but a conservative estimate is that 3 out of 4 businesses fail in the first 5 years – in some industries the failure rate is much higher.
Why do they fail? One study claims that 76% of the failures are due to lack of management expertise or incompetence. Really, just lack of business knowledge – so it is really important. The trouble is you don’t have much time and there’s so much to learn – can we can make it any easier? The answer is “yes” and this video explains how it can be done:
The next video will explain exactly what areas of knowledge you need to develop. Your environment has much in common with the multinationals and large companies but there are also some significant differences.
That’s because large companies have support infrastructures in place. A manager can ask for something to be done and many people can make it happen – the manager don’t have to know all the details. Your knowledge requirements are different because – from now on – you’ll need to know exactly how it should be done. You’ll either have to do it yourself or instruct someone to do it properly. That’s why the next video is important. It shows exactly what you – as a first-time entrepreneur – needs to concentrate on.
Go to the Lesson 2