Obviously, we think it’s a great option. But whether you reached this conclusion because you’re tired of corporate life, just want to be your own boss or company downsizing has pushed you into it, here are a few things to consider.
Do You Have an Entrepreneur’s Personality?
Answering this honestly requires true self-assessment. To succeed as an entrepreneur, you need to be self-motivated and definitely self-disciplined. After all, you’re going to be calling the shots and you won’t have the structure of a corporation or a supervisor’s deadlines to frame your time. You’re going to setting your own goals and establishing your own timelines.
The buck definitely stops at your desk and you’ll be wearing so many hats that you’ll need to be able to prioritize among them to be successful…and to keep your sense of humor.
Trying Something New?
What do you know about the business you’re thinking about starting? Is it a profession or industry you know well, or are you thinking of starting a business that you have little or no experience in?
Entrepreneurs often decide to try something “new” when they start a business – this is riskier than working in an industry or profession that you know well, but it definitely can work provided you research it thoroughly.
Try to be realistic about how long your learning curve will be and make a plan about how best to learn what you need to know. Maybe find a mentor. Or explore the possibility of a franchise business that includes training for new owners.
Whatever route you take, research the business & the market you choose carefully before making a commitment, so that you increase your chances of success.
How Are You at Planning?
And perhaps most importantly, are you good at following through on your plans?
Building a business from scratch takes planning. You’ll need a business plan and a marketing plan to start. Many entrepreneurs just set up shop and hope that the business will come. Or they might start out with one or two clients and hit the ground running without thinking about how to grow beyond those clients.
Fundamentally, to build a business, you need a plan. Answers to questions such as: what kind of business structure to use, the cost of overhead, whether or not you’ll need employees, how much you can realistically earn, what your cost of goods should be, how you’ll market your services, what your cash flow will be, etc., etc., etc. all need to be thought out in advance and incorporated into your plan.
How Financially Secure Are You?
Can you afford to be in business for yourself or do you need a steady paycheck? How might this decision affect your standard of living? Will going into business jeopardize your finances in any way? Be very honest with yourself about this, because it’ll probably take longer to reach the point of having a steady income than you think.
Are You Good at Learning New Skills?
You’re going to be wearing a lot of hats and you’ll need to learn enough about each of them to either do it yourself or figure out who you need to hire and then manage them. And business doesn’t just walk in the door, so you’ll need to become adept at marketing yourself pretty quickly. Successful entrepreneurs are general pretty adaptable.
Figure You’ll Keep The Overhead Low?
If you’re starting out by working at home, you will need to be very careful not to be caught up in personal distractions. Setting up a separate space devoted to the business will help with this. Trying to run a business from the kitchen table isn’t impossible, but it sure is a lot harder.
Working from home has some great advantages in terms of flexibility and time saving – not having to commute immediately frees up your schedule. Just remember that business success requires focusing on the business first, not the personal chores.
Are You Prepared For The Toll of Long Hours?
Start-ups take lots of effort and fairly long hours. Are you prepared for the effects on your personal relationships, your other commitments and possibly your health?
Be realistic. You’re going to be working long hours and your attention is going to be 100% focused on your start up business to get it going. So consider how that will affect your overall lifestyle and your relationships. Think about ways to mitigate the effect on your relationships so it doesn’t become a problem and build in some stress relieving activities like exercise to keep you healthy.
Last, but Definitely Not Least
Everyone starts out believing they’re going to be successful, but starting a new business has a high degree of risk. So be sure you understand those risks and protect your family’s finances from inception. Your decisions about the type of legal entity you set the business up as (LLC, sole proprietorship, corporation, etc.) and how you finance your startup costs and initial cash flow needs impact your financial risk substantially. Make sure you understand the different options and get the legal or financial help you need. It’s worth the investment.