Step 1: Do you have what it takes?
There are a number of different reasons for starting a business. Some individuals are interested in "trying something new." Others work to solve a problem or meet an expressed need, want independence, or are trying to increase their income. Whatever your reasons for going into business, you must do so with your eyes open. If you are like most people, it's likely you haven't thought as much about the downside of going into business as you have about the bright side. A great deal of thought and research should go into making a decision that will affect you and your family for a long time to come.
Risks
- Failure. Entrepreneurs must assume the emotional and financial risks of failure. In fact, the failure rate for new startup businesses is high.
- Time. A major drawback to starting a small business is the tremendous amount of time it takes to make the business successful. Most report 60-70 hours per week as normal. Small business owners spend an average of 12 hours a day, 6 days a week on business activities.
- Family. Because of the strain of operating a business, families can suffer. Many entrepreneurs find that the lack of time for family, community, and personal activities is the highest price they pay for business ownership.
- Money. Most startup businesses have their own money at risk. It is normal for small businesses not to earn a profit in the first two years. If you need financing, you will be expected to provide 20% or more of the total funds. The number one reason that small businesses fail is because they did not have enough working capital to survive the first two years of operation.
Rewards
Naturally, there must also be some rewards or no one would ever start a small business. These are different for each person but some of the common positive aspects are:
- Independence. For many, the freedom to act independently is chief in their decision to "be their own boss."
- Money. The financial returns from your own efforts are not limited to normal work for normal pay. You have the chance to make a lot more money than you can make working for someone else.
- Fun. Many entrepreneurs describe what they do as fun - that is, they really enjoy what they do!
There are three key areas that you should evaluate before jumping into a business endeavor headfirst: your personality, your business skills and your lifestyle. We've provided three assessment tools for you to use to determine how ready you are for starting a business. Your results from the checklist will let you know if you are prepared to start a business and areas where you may need to develop some additional skills and training. After you have completed the checklists, move on to Step 2.
NOTE: These assessments are taken from the NxLeveL Guide for Business Startups, a 10-week class taught through the Idaho SBDC. We recommend this excellent course as the best way for would-be entrepreneurs to learn and develop the skills necessary to run a small business and complete a business plan. Look in our training calendar or call the SBDC office nearest you for the next scheduled course.
Additional Information:
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