Starting your own business is one of the most difficult career paths to navigate, and even the most successful entrepreneur makes mistakes. But to really succeed, you need to take risks and understand you will not be successful right from the get-go. It takes a long time to grow a business — and even longer to turn a big profit.
For many that time never comes. According to a recent Bureau of Labor Statistics report, about half of all small businesses fail within the first five years. Some of the biggest reasons: lack of funding, a faulty business plan or poor management.
Aaron Kirman, star of CNBC's "Listing Impossible," is a prominent figure in LA's luxury real estate market who has raked in nearly $6 billion worth of home sales over the course of his 25-year career. His client base consists of heads of industry, celebrities, royalty, major lending institutions and foreign investors, and he has repeatedly been named Top Agent in Los Angeles. Yet even he admits he's made some mistakes along the way — in fact, one that cost him $1 million when he overinvested in a home early on in his career.
This fumble — now one of his biggest lessons for budding entrepreneurs — taught him that proper research is key whenever you are starting a new venture and that you should never underestimate your costs.
Kirman's lessons didn't stop there. The real estate mogul recently shared with CNBC some of the other things he learned along the way as he climbed the ladder to success and stardom.
Have a years' worth of savings stored away. Kirman says that before you being the 24/7 hustle of starting a business from scratch, you should have a years' worth of savings stored in your bank account. It's important to have a firm grasp of your start-up costs and how much you'll need for living expenses, he said.
"Always calibrate the cost of life and the cost of growing a business and ensure that you have enough money in the bank to do both of those things," he said, adding that not having enough can be detrimental to your quality of life and the future success of your business.
Be careful when computing your expected costs. The biggest mistake he sees young entrepreneurs make is incorrectly computing their operating costs. Especially for those who are just entering the real estate industry, he says there are two steps to take when computing costs: "One, figure out the highest number you can sell for in a conservative way. And two, be conservative in the cost of fixing and remodeling."
Tune in: "Listing Impossible" airs Wednesdays at 10 p.m. ET on CNBC.
SIGN UP: Money 101 is an 8-week learning course to financial freedom, delivered weekly to your inbox.
CHECK OUT: Get this new ID now, says travel expert: Soon 'that's the ID you're gonna need' to fly via Grow with Acorns+CNBC.
Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.
