If you are fed up with your 9 to 5 job and everything that comes with it, you have probably thought about starting your own business. For those passionate individuals who have an excellent idea for a product or a service, this may be the best time to be an entrepreneur.
But, this doesn’t make it easy. Even though the thought of building a startup from scratch is exciting, it can also be nerve-wracking.
Not everyone has what it takes to leave the comfort of a stable and secure job and pursue their dreams. Moreover, around 45% of startups fail within the first five years.
To determine whether entrepreneurship is the right path for you, you need to ask yourself the following questions.
Why are You Starting Your Own Business?
Put together a list of reasons why you're starting your own business in the first place. A year from now, when you will not have seen daylight in 3 months because your startup requires your constant attention, which of these reasons will still be here?
So that you will be able to endure all the hardships that come with running or starting your own business, you need at least one “Why” that will be compelling enough and strong enough to survive the drop in quality of life you may suffer when things get tough.
Your reasons may revolve around the passion that burns inside you, the cause you are fighting for, or the very idea you want to turn into reality.
Your reasons should not be things like:
- I have nothing to lose.
- I want to say, “I am an entrepreneur.”
- Everyone is doing it.
- It is the logical next step.
- A friend of mine proposed that we co-found a business and it sounds exciting.
What Makes a Successful Entrepreneur?
The most successful entrepreneurs share certain traits and characteristics. These qualities are the reasons why these entrepreneurs are successful.
Here are a few questions that can help you establish whether you will make a good entrepreneur when you're starting your own business:
- Do you have a strong desire to be your own boss?
- Do you have significant specialized business experience?
- Do you have what it takes to persevere through tough times?
- Do you possess high levels of energy that you can sustain over long hours?
- Can you conceptualize the whole of a company?
- Do the judgments you make in life usually turn out well?
If you have three or four no’s, it’s best to rethink your idea of starting your own business. However, don’t let this discourage you.
If becoming an entrepreneur isn’t the best step you could take now, it doesn’t mean it won’t be sometime in the future. Enlist the help of trusted advisors such as SCORE counselors, accountants, business owners, and find your very own mentor. They can teach you how to become an entrepreneur.
If you answered with “yes” to most of these questions, great! However, these aren’t the only qualities you need to have.
Consider the following as well:
- Willingness to sacrifice: You will need to work many more hours beyond the 40-hour workweek if you want to succeed. If you prefer working 9 to 5 and then relaxing in your free time, entrepreneurship may not be for you.
- Interpersonal skills: Aside from interacting with customers or clients, you will also have to talk to salespeople, lawyers, accountants, financiers, and a host of other people.
- Leadership skills: You must be ready to call all the decisive shots because everyone will be turning to you for answers.
- Optimism: You may have what it takes to weather the storm, but that doesn’t necessarily go for the entire company. When your team suffers a setback, you will be the one to boost their morale.
Do I Know How to Make a Business Plan?
A business plan is a written guide that details a company. Your business plan will be the blueprint for your company’s success. It should summarize both your vision and the goals for your business. If your answer to this question is “no,” don’t worry—you can learn how to write your own business plan.
And you don’t need to hold an MBA to be able to craft a good one.
However, you do need to make sure your business plan has all the important elements, including:
● Overview: What is your company about, what is your product, how much does it cost, who works for you, who are your competitors, etc.
● The Entrepreneur: Your personal details (name, address, etc.), education, motivation, goals, and practical experience.
● Formal requirements: Overall description of your business, research, legal status, name and location, etc.
● Marketing: What is your market? What do you have to offer? To whom? How will you promote your products? What buying motives will you emphasize?
● Investment and financing: How do you plan to finance your business to keep it running for the first three years? Will you put up any personal assets? How will you secure the funds? What is your credit score?
● Operating Budget: This section should include your turnover forecast, cash-flow projections, costs, etc.
● Personal expenses: This part should include your own fixed expenses, home equity, debts, etc.
● Executive summary: The executive summary is the first thing accountants, financiers, partners, etc., will read, even though it is the last item you will write. It will be a concise two-page summary of your entire plan, an expansion on the overview. It must persuade the reader that your idea is great.
Do I Need a Business Plan Even If I Am Not Planning to Apply for a Loan?
Yes, you do. Underestimating the importance of your business plan is one of the biggest mistakes you can make when starting up a business. The main purpose of a business plan is not to help you secure a loan but to serve as a guide for successfully operating the company.
It will force you to consider every aspect of your business and confront any problems the plan may highlight. It can help you learn about the viability of the venture itself.
For instance, it will help you figure out how much revenue you need to cover all known costs over time. If the revenue number is reasonable, you can continue with your plan. If not, you will have to rethink your idea.
How Will I Determine my Startup/Business Costs?
Managing your budget is essential if you want to start a (online) business (from home). Before you launch your business, you need to find out how much it will cost. Many aspiring entrepreneurs will borrow on the equity of their house, or even take out their life savings only to discover that they don’t have enough money.
There are many resources and sites that will provide you with the worksheets and guidelines you need to figure out the initial costs of your company. For instance, you can enlist the help of your local small business association.
How Can I Get the Necessary Funds to Maintain and Grow My Business?
You may not need a loan now, but you may end up needing emergency funding down the line. Work on building a good relationship with your bank. Even when you have enough funds, seek your banker’s advice.
Make sure you are well acquainted with every loan officer at your bank because you don’t know which one of them you will be speaking to in case you need a loan.
Banks always want to minimize the risks that come with borrowing money. Make it easy for your bank to see what you want and why you want it. If you develop a good relationship with your banker, ask them to hold on to your account even if they get a promotion.
Learn about your bank’s business plan and direction. Make sure you know the bank’s line of authority as well as its annual report. To keep up with bank news, get on their mailing list.
You can find out more about your bank’s lending policies by going to one of their seminars on commercial lending. It will also be a chance to make a good impression on the loan committee and show that you have an interest in what your bank is doing.
Where Will I Open a Business?
One of the most important aspects of your business will be its location. It can make or break you.
When choosing a business site, there are many questions you need to consider, including:
- Is there a competitor nearby?
- Will it be a quality site 10 years from now?
- What is the business climate in the area?
- How is the traffic flow?
- Will your suppliers be easily accessible?
- What are the costs of operation in the area?
- What is the tax burden?
If you plan on putting together a remote team and running an online business, you may not need to consider its location. However, you will need to invest in search engine optimization (SEO) to make your website visible to your target audience, develop a digital marketing strategy, get well acquainted with remote team management software, and find the right cloud solutions for your business.
Takeaway on Starting your Own Business
Before you launch your own business, you need to find out exactly what you are getting yourself into. Entrepreneurship can be an unpredictable road. However, by carrying out research and writing a proper business plan, you will significantly increase your chance of reaching success.
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