It seems like everyone is an entrepreneur or entrepreneur-wannabe these days. And while its great for the local economy and our own sense of accomplishments, starting your own business is - to be quite frank - not for everyone. Too many people are going into it with either dollar sign eyes or blinders on.
Leaving an established company and starting your own is a risky move. Very risky. Extremely risky. Bloomberg places the failure rate for new businesses at 80%. You read that right. EIGHTY PERCENT.
Does that scare you? Good. You at least have a realistic approach to what youre considering. Before starting your own business, you need to ask, answer, evaluate, and analyze. Should you start up a new business? Depends...
Examine Your Reasons Under a Microscope
There are good reasons to strike out on your own, but there are just as many (and probably more) bad ones, too. You need to be brutally honest with yourself about why youre evening considering it. The wrong reasons make success practically impossible. Some bad reasons include hating your current job/colleagues/boss, wanting an easier/more flexible schedule, wanting more money, and feeling restless. Why are they bad? Well, the schedule and money reasons are essentially laughable...youre working harder and longer for less salary, at least in the beginning phase (which could last years). Hating your current situation is a decent reason to look for a position with a different company, but its unrelated to starting your own company. Restlessness can quickly be reduced by asking for new or additional responsibilities for your current position.
Some good reasons? Seeing a need in the market that you can fill. Having the experience and drive to set out on your own after years in the industry. Recognizing an unaddressed problem in the industry that you can fix.
Be brutally honest here. WHY do you want to start your own business. Evaluate your answers.
Dollars and Cents
If youve identified your reasons why, and they seem like good, strong, positive ones, you next need to examine your financial situation. Starting a business is expensive. It takes a lot of money, with very little (if any) coming in for weeks, or even months. Can you afford it? Besides saying goodbye to your steady paycheck, remember that youll also be losing other benefits like dental coverage, paid holidays, health insurance, learning stipends, and many others. You need to cover them now. Youll be spending more as you launch your business. Can you stay above water until the break-even point?
Your reasons are good. Your finances can support you. Its time to SWOT yourself. A SWOT analysis - strengths, weaknesses, opportunities, threats - is usually done for a business or industry, but youre going to do one for yourself and your idea. What are your strengths? Weaknesses? As an entrepreneur, youll need to be a master of:
- Marketing and Promotion
- Time Management
Do you include any of those in your weaknesses? If so, youll need to rectify that, and fast.
As for opportunities and threats, you need to evaluate and analyze the market and competition. Can your target market support another player? How is your product or service different (i.e. better) from similar ones? What key opportunity exists for you? Who is the main competition in this market, industry, or niche? Read up on them. Identify ways you can beat them at their own game, but also highlight the ways they have your number.
The often-cited motto in real estate is location, location, location. When deciding whether to launch your own business, you should live by research, research, research. Yourself. The market. Your target. Your competition. Learn everything you can about each one before making any decision.
If your reasons are noble, your bank account is robust, and youve thoroughly researched everything to your satisfaction, then it may be time for you to just do it. But before you give your two-weeks notice, you do need to discuss the matter with your family. This decision affects them, too. Are they supportive? Will they be there for you in any way they can? If so, you have a green light. If not, while not necessarily a deal breaker, it will make a difficult transition and endeavour even more so. Go in knowing that.
Entrepreneurship can be amazing. It can be the best decision of your life. You just need to go in educated, knowledgeable, and ready to work hard. Very hard. Extremely hard. Ready and willing? Then make it so.
Photo Credit: Lars Plougmann
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