Kevin O'Leary's 5 Best Tips for Starting a Business

Focus on these things to be successful in business.

As the star of CBC's Dragons' Den and ABC's Shark Tank, Kevin O'Leary has earned a reputation as a tough but fair judge of business proposals. He's also a successful entrepreneur in his own right, with interests in everything from software and wine to mutual funds and hockey. In other words, he knows a thing or two about what it takes to start and grow a successful business. Here are five of his best tips for anyone looking to do the same.

1. Do your homework

"Money may go to bad people but it never goes to bad ideas," says O'Leary. This means doing your due diligence. You have to know everything about the market, the opportunity, the competitive landscape, and your team. "If you're talking about something like a hot sauce, or a food product where the ability to get shelf space is practically zero -- that's not really interesting for me. I tend to be focused on the product, the service, the market and of course, the people. But right out of the gate if it's an overly competitive space: that's a huge negative."

This means taking the time to really understand your industry inside and out, identifying potential risks and opportunities, and building a strong foundation you can add to as your business grows. Know what works and doesn't work, and be prepared to move on.

2. Be frugal

O'Leary is famous for his no-nonsense approach to business, and that extends to how he runs his own companies. "Never waste money in the startup phase," O'Leary urges. This might mean making some sacrifices in the early days -- like working out of your home or forgoing fancy office space -- but it will pay off in the long run when you're able to reinvest those savings back into your business. 

O'Leary states that most businesses fail because, "Their growth projections are wrong. Their revenue projections are wrong and they run out of money; that's why 8 out of 10 businesses fail." Being frugal and watching your cash flow is critical to success.

3. Focus on sales

"Whatever you pay attention to grows. Quit wasting time and money," says O'Leary. "The most important thing for a startup company to do is to focus on sales, that's what the first two years are about.” 

"If you are not willing to do that work -- to get up in the morning with a small company and go get revenue, then you are not going to be a successful entrepreneur. It's that simple." Revenue is what will ultimately fund your growth and allow you to scale up your operations. So even if you're not profitable at first, as long as you're bringing in money, you're on the right track.

4. Know when to quit

One of the most important decisions you'll make as an entrepreneur is when to walk away from a failing business venture. "If you can't make money after 36 months, it was a hobby not a business," says O'Leary. Don't be afraid to cut your losses and move on to something new. "If you don't know how to pivot, you're going to zero." It might be painful in the short term, but it will save you a lot of time, money, and heartache in the long run. 

5. Build a great team  

Surrounding yourself with talented people who share your vision is one of the keys to success in business -- and life. "I would not be where I am today without the amazing team I've built around me," says O'Leary. "Find people who are smarter than you are and who complement your skillset." This way, you'll have the best possible chance of achieving your goals -- whatever they may be. 

Starting a business is no easy feat -- but with hard work, dedication, and these five tips from serial entrepreneur Kevin O'Leary, you'll be well on your way to building a successful company of your own!