At some point, most employees have entertained thoughts of being their own boss. If you’ve been dreaming of unlimited income, more family time and work that you actually enjoy, you’re not alone. More than half a million new businesses are started every month in the US¹. But long-term success is elusive; half of all new businesses will not make it to the five-year mark and only one third will still be around in 10 years.² If you’re thinking about going it alone, answering these questions will help you decide if you’re ready.
Why are you considering entrepreneurship?
Do you have a burning passion to run your own business or are you just unhappy in your current role? If daily structure, low risk and a regular salary are important to you, you might just need to find another job that is more challenging and enjoyable.
Do you actually have a value proposition?
So you have an idea but does it solve a problem? To succeed in business you need to identify a problem and come up with a solution that will solve it in such a way that many people are willing to pay for it. Your solution needs to be better than anything that is already out there or at least different enough that you can capture a niche target market.
Are you ready to do everything yourself?
You might be a great graphic designer, seamstress or baker but can you prepare a profit and loss statement? For the first few years of entrepreneurship, you’ll wear many hats. You won’t just do what you love; you’ll also handle security, insurance, payroll, tax-filing, sales and technology. And let’s not forget the paperwork – business ownership usually means filling out endless forms.
How do you feel about self promotion?
Your idea is great but can you sell it? To make money, you need to market your product or service in a clear and compelling way. You’ll need to use every channel – traditional and new – to spread the word, from pounding the pavement to posting on Facebook to interviews on local radio stations. You need to view every meeting, conversation and encounter as an opportunity to talk about your business.
Are you ready to work harder than ever before?
Many people go into self-employment to work less and you can make this dream a reality, but only after years of working harder than you ever have before. Your new business requires constant care and until you are successful enough to hire people, you will do everything. That means interrupted vacations, working on client presentations through the night and even less family time than you had before. And even when you’re not actually working, you’ll be thinking and worrying about the business.
Are you comfortable with failure?
The world’s most successful entrepreneurs admit to multiple failures but they weren’t defeated by them; they learned from them and persevered. Building a successful business means living with fear, uncertainty and the constant threat of failure for at least the first few years. If you go into entrepreneurship expecting a few setbacks and you’re resilient enough to bounce back, you just might have what it takes.
How long can you go without earnings?
It’s not uncommon for entrepreneurs to forego a salary for the first year or so. In the beginning, any money you make will need to be invested back into raw materials, marketing and other costs. Even if the business thrives, you’ll have expenses like salaries, rent, computers, insurance and other things to cover. And don’t forget hidden costs like health insurance and other benefits that might have been covered by your previous employer.
After you’ve answered all these questions, answer the most important question of all: “How much do I believe in my idea and myself?” Don’t even think about starting a business unless you are 100 percent committed to success. Competition is fierce and the market is cluttered so you need to believe in the potential of your product or service so much that you are willing to do almost anything to succeed.
Entrepreneurship can be grueling but if you make it through the first several years and learn from your mistakes, you’ll start to reap the rewards of financial security and freedom and the feeling that comes from knowing you built something yourself.