Tips For Starting New Business
Thursday, April 23, 2009, 8:17 PM | Leave Comment
Thinking about starting a business? Make sure you can handle the stress and the strain – financial, physical and psychological. If you can overcome these fears – for some they are just that – along the way, the rewards might be greater than the job you were working at.
For some people, entrepreneurship is the best option around, a way to build wealth and do something you love without answering to somebody else. But it’s also a huge financial gamble – and some people, unfortunately, will discover sooner than later that it was not the right fit for them.
Here are some questions to ask to see whether you are up for the challenge of entrepreneurship.
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Are you willing to sacrifice your lifestyle?
Creating a successful start-up often entails putting in workweeks of 60 hours or more and funneling any revenue you can spare back into the business. Entrepreneurs frequently won’t pay themselves a livable salary in the early years and will forgo real vacations until their business is financially sound.
A few years ago, I owned a convenience store. I was putting in at least 15 hours a day for 6 days a week and on Sunday, I worked only 10 hours. I would look forward to Sunday when I was home by 8:00 in the evening.
Having no income for potentially a couple of years or very little, you have to be extremely frugal. That means no eating out, no vacation and no new clothes.
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Are you able to bear great financial risk?
Roughly half of all start-ups close within five years, so you must calculate your financial risks that come with owning a business – and realize that you could very well lose a sizable chunk of your net worth. Banks often won’t lend to start-up founders without a proven track record. When they do, they generally require the founders to guarantee the loan or credit line with their personal savings or home.
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Is your spouse also on board?
Failed ventures frequently break up marriages, and even successful ones can cause lots of stress, because entrepreneurs devote so much time and money to the business. You can avoid the heartache by talking at length with your spouse and family about how the business will affect home life, including the time commitment, changes in daily schedules and chores, financial risks and sacrifices. They must also understand the huge financial gamble they are making with you.
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Do you like to be your own boss?
In the early stages of a business, founders are often expected to handle everything from billing customers to hiring employees to writing marketing materials. Some new entrepreneurs become annoyed that they are spending the majority of their time on administration when they would rather be focused on the part of the job they enjoy.
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Are you comfortable making decisions on the fly?
With a new business, you are make all the big decisions – and there are a lot of decisions to be made without any guidance. You might not be used to that if you have spent years working in corporate America.
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Did you ever execute your ideas before and successfully?
One of the biggest differences between successful entrepreneurs and everyone else is their ability to implement their ideas. Examine your past objectively to see whether you have assumed leadership roles or initiated solo projects.
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Are you aggressive enough?
Nearly every step of the way, entrepreneurship relies on selling. You will have to sell your idea to lenders or investors. If you don’t think you are very convincing or have difficulty communicating your ideas, you might want to reconsider starting your own company – or think about getting some help.
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Do you have an idea you are passionate about?
It’s usually wise to find a business in an industry you are very familiar with; it will be much harder to succeed if you know little about the field. And you must be passionate about it so you don’t get bored with it down the road.
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Are you a self-starter?
You must realize that if you fail, you don’t get discouraged. You get up and start with another idea. You must be highly creative, energetic, impatient and very persistent – traits that help you persevere even when others lose faith.
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Do you have a business partner?
Finding a business partner who compensates for your shortcomings – and has equal enthusiasm for the business concept – can help mitigate the risks and even boost the odds of success. If you like to take risks and be in the spotlight, for instance, you might choose a cautious partner who prefers to work in the back room.
In a Nutshell
You have to ask yourself so many questions. Ask for help from family, friends, colleagues. Sometimes, you get an idea from others.
