Think hard
before starting a business
Do you have what it takes to start your own business? Since 85% of all new businesses fail
within the first five years, your odds for success seem slim. While the primary reason
cited for failures is usually an overall "lack of business", much of this can be
explained by the owner's not possessing the type of personality that would lend itself
well to being successful.
Over the years, I have advised many people on starting their own businesses. I like to
start out by asking prospective business owners a number of questions that reveal
characteristics of their personalities that are conducive to either business success or
failure. If you are thinking about going into business for yourself, here are some of the
questions you should be asking yourself:
1. Are you self-motivated? Many people want to start their own business because
they say they are tired of working for someone else and want to "be their own
boss". The key here is whether this is motivated by current job dissatisfaction or a
genuine desire to undertake a new venture. Successful entrepreneurs are people who have a
vision for what they want to accomplish and have the natural skills and instincts to carry
it out. Many people need constant monitoring, supervision, and direction in order to get
their jobs done. People who would make good potential entrepreneurs are those who always
look for ways to do the job better, are not afraid to suggest them to company management,
and are not content to continue to do things the normal way just because that's the way
the "system" works.
2. Are you well organized? When leaving the safe and secure confines of a
regular paycheck, you also lose the support structure that most companies provide. Now, in
addition to performing the work necessary to earn revenues, you have to worry about all
the other things that it takes to run a business, such as marketing, accounting,
personnel, and legal issues. The ability to manage many activities all going on at the
same time and tackle new ones that you've never done before is an important consideration.
Business owners are constantly faced with new challenges and have to deal with them,
especially when they are in startup mode.
3. Are you a "people person"? Most people would say that they were a
"people person", but not in the same sense I'm referring to. If you are going to
be a successful business owner, you are going to have to enjoy an activity that many
people hate: sales. Whether it's selling to friends or strangers, individuals or
companies, men or women, marketing is an integral part of the business. Many business
owners who don't like marketing simply ignore it. Those are the folks who indicate the
reason for their business failing was "not enough business". Also not to be
overlooked is the aspect of people management, whether it is your own employees,
customers, or colleagues. Communications skills are critical in being able instruct your
employees on how to do their jobs, make sure your customers are happy, or form a joint
venture with another company.
4. Do you enjoy working hard? I wouldn't view business ownership as your ticket
to an early retirement just yet. Many people start their own businesses because they are
tired of being slaves to their company and think that they will have more time and
flexibility. On average, business owners work longer hours and have lower incomes that
their employee counterparts. So why do it? The reason is the that the work itself is more
challenging and rewarding, but it is work nonetheless.
5. Are you good with numbers? You don't have to be Einstein, but you will need
to have some reasonable analytical skills. This is because you will constantly need to
make important business decisions, and it would be desirable for them to be informed ones.
You will want to formulate budgets, make sales projections, decide which suppliers to use,
track employee salaries, evaluate manufacturing options, invest in new ventures, etc. All
of these decisions hinge on your ability to interpret information and decide how to act.
In addition, the main processor and delivery vehicle for information, the computer, is
best utilized when put into the hands of someone that knows what to do with it.
The rewards of business ownership can be great, but so can the risks. If you are
considering starting a business, you will need to make a very honest assessment of your
personality even before looking at the pragmatic aspects of the business itself.
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