Think you’re ready to start your own business? Answer these 4 questions
At some point, most people wonder what it would be like to start their own business.
Perhaps you’re tired of your current role and you’re yearning for something more, or you have a business idea that just won’t leave you alone. But being ready works on both an emotional level and a practical level.
So let’s look at four key questions to ask yourself – to see whether you are primed to go it alone.
- Can you afford it?
- Do you have experience?
- Are you ready to be the boss?
- Can you deal with failure?
1. Can you afford it?
No one has never-ending savings, so some clear thinking is needed here. A quick checklist is a good way to figure out where you currently stand and how to answer the ‘Can you afford it?’ question.
- Do you have enough capital to fund your new business?
- Do you have savings to support yourself/family?
- Can your co-founders (if you have them) cover their funding responsibilities?
You also need to think clearly about timelines – what kind of period will your savings cover, and is that long enough to give you the best possible shot at getting your business up and running. One to two years is a marker often used initially.
So a full and detailed analysis is needed to get started, as well as a realistic assessment of just how difficult it may be to raise more funds when they’re required.
“It’s almost always harder to raise capital than you thought it would be, and it always takes longer. So plan for that.” Richard Harroch, venture capitalist
With this in mind, it’s important to look at two things simultaneously. First, figure out what you can do for free, keeps costs to a minimum, and use your savings where needed. Get the company on its feet.
Second, look at how you could raise further capital down the road:
- Friends and family
- Angel investor
- Venture capital
There is always going to be an element of risk, but by taking an honest look at the numbers, you will be in a much better position to answer this vital question.
2. Do you have experience?
Again and again we see stories of startup founders who seem to come from nowhere only to earn billions of dollars from their one amazing idea.
Of course the truth is that in almost all cases they had been thinking, and working, in their discipline for a considerable length time. They had developed a level of expertise before going alone.
As entrepreneur Dan Lok puts it:
“I would come to realise that rich people weren’t rich because they owned businesses – they were rich because they had high-income skills.”
Having those ‘high income skills’, that expertise, is what’s going to carry your business. So before you make the leap, ask yourself if you really do have enough experience at this point. Do you know your niche inside out?
The answer to this question is paramount when choosing whether now is the right time to start your own business. Do you need to gain further expertise, either at work or perhaps returning to education?
3. Are you ready to be the boss?
As motivational speaker Tony Gaskins puts it: “If you don’t build your own dreams someone will hire you to build theirs.”
Is it that straight-forward though? You may want to be the boss, but are you ready? According to one study, the number one reason (55% of respondents) given for wanting to start a business was to be your own boss. And it’s easy to get swept along by the excitement of it all.
So rather than separate pros versus cons, it’s worth seeing them all together, in one place, because in all cases they’re just different sides of the same coin.
- You are the final decision maker – but everything depends on you
- You control the finances – but there’s no steady paycheck
- You can’t get fired – but you can go out of business
- You can decide your work hours – but it’s hard to switch off
- You answer to no one – but bad days mean lower profits
If the first part of the sentence rings more true, then you may well be ready. A little fear is normal, but if the second parts of those sentences overwhelm you, then you may need more time before you step out on your own.
4. Can you deal with failure?
Here’s the really tough lesson. Failure, in some form, is inevitable. It’s how you cope with it that counts.
“Don’t worry about failure; you only have to be right once.” Drew Houston, Dropbox co-founder
True, you only need to be right one time. The question is whether you’re mentally prepared to put everything into starting your company and you’re happy for that to dominate your life with no guarantee with success. And if it does fail, you have the strength to pick yourself back up and continue.
Having a strong support network around you is important for your emotional wellbeing during this time. It’s also vital to develop the skills needed to separate the failure of your business, or an aspect of your business, from the failure of you as a person. They are not the same.
Understanding what you can do to boost your energy back up after failure is also important. In short, it’s being your own business mentor, understanding your own psychology, and while you can’t stop failure, you can prepare emotionally for it. So when it does come, in whatever form, you’re able to tackle it and move on.
Are you ready?
How you answer these four questions isn’t a definitive guide as to whether you’re ready, but it’s worth thinking about what your initial impulse was while reading. Fight or flight? If it’s the former, you understand there are challenges ahead, but you’re more than ready to face them.