Am I Ready?
Ninety percent of restaurants fail in the first year. Fifty percent of small businesses fail or close their doors within five years of opening. Everyone has heard these frightening statistics about small business ownership. Unfortunately, a lot of small businesses do fail, but the actual statistics are relative to the study that collected them. Entrepreneurship is an extremely taxing profession. However, with proper research, relentless dedication and a burning passion for the business success can be achieved.
That is a decision you will have to make but you do not have to make it alone. SBDC consultants work with you to evaluate your readiness and your business idea. Once you have committed to the idea of starting your business, they can provide assistance and guide you in the decision-making processes. Request an appointment with a SBDC consultant in your area.
Emotional and Physical Readiness
Operating and running a small business is not easy and requires commitments of time and effort well beyond the “9 to 5″ work schedule. You can expect 60-80 hour workweeks. Some say it is more like “24/7.” You will have to deal with the loneliness “being the boss” sometimes brings. And it is not just about you personally. Have you considered the impact of small business ownership on members of your family and others with whom you have significant relationships? You will have less time to commit to these relationships, and yet your business success will greatly depend on their support.
As a new business owner you will be your own boss, and you will be required to multi-task with confidence and competence. Organization, self-discipline, accountability to others, networking, reliance on an advisory team, and attention to details will make all the difference in your success or failure.
Feasible Business Idea
Many variables determine the feasibility of your business idea. Having initial clients or product sales are insufficient bases for starting a business. The long-term success of your business depends on how much you know about the market within the industry; how well you understand the consumers and the competition; how well you are able to get your product to the market; and, how thoroughly you can get information about your product to consumers. Successful entrepreneurs are “customer-needs focused”; they deliver a product customers need or want.
You must know the market size, the potential number of customers for your product or service. You must know how fast the market is growing. Is it a new growth, mature, or declining market? Will you distribute your product or provide your service locally, regionally, nationally, and internationally? How will you position your product or service in the market? The consumer often prefers getting “more for less money,” but quality products and services often impact the consumers’ decision to buy. Your product or service must offer features that make consumers choose yours over the competition.
You must consider the barriers to market entry. Start-up costs for a manufacturing operation are extremely high compared to a home-based consulting business. Other barriers include seasonality, lengthy business start-up time, existing or upcoming government regulations, and expertise you may need but don’t possess.
You will need financial resources to start your business. Bankers and investors expect you to invest in your business before they assist with loans or equity investments. Simply put, you cannot start a business without capital, which means you must come up with the cash to get the business started. Some entrepreneurs find family members, friends, or partners to invest in their business idea.
Grants to start a business are extremely rare. Ask the business owners you know and odds are you won’t find one that started with a grant. As the old saying goes, “It takes money to make money.” This is particularly true when you are thinking about starting a business. You will need to identify how much money you’ll need to get started. Expect that you’ll have to provide 20-30% as your investment in the business.
And it is not just the money. Are you aware of monetary controls? Do you have an understanding of financial statements and how they help you monitor the financial soundness of your business? If not, then you will need to hone your financial skills or consider hiring or contracting this expertise.
Have you wondered “How do I know I’ll be a successful business owner?” While there are no guarantees, successful entrepreneurs:
- Possess an inner drive or passion to be independent
- Have the ability to set and achieve goals
- Are persistent yet flexible and adaptable
- Have a willingness to work hard and “give what it takes”
- Have confidence in their ability to succeed
- Are self-disciplined and possess leadership and organizational skills
- Have confidence to take calculated risks and make decisions
- Accept change as a driver of success
- Are self-starters
- Have a sense of urgency
- Have a sense of realism
- Successful entrepreneurs take calculated risks, recognize the value of relationships, and know the market, the consumer, and the competition. They plan for success.