Do You Have What It Takes To Start Your Own Business?
Many people are tired with the hustle and bustle of a traditional job, they are tired of not being in control of their time, their schedule and their life in general. Becoming self employed seems like a great way to get away from this. However, starting a business is not as simple as many may think and it is possible to try and start a business when you are not really ready to do so, this article takes a look at some of the questions you need to ask yourself when trying to determine if you are ready to start your own business.
You need to begin by taking a look internally, and asking yourself questions to figure out if you as an individual is ready for entrepreneurship.
Ask yourself and be honest! Your financial future can hang in the balance!
- Do you like starting new things and seeing them through
- Do you like solving problems
- Do you know what your strengths and weaknesses are
- What kind of skills do you posses that will assist you not just starting your business, but the day to day running of your own business.
Are you a risk taker? Starting a business is exciting and be ready for a roller coaster ride of ups and downs! But some people can’t handle the “ups and downs” that come from being self employed. The stress is just too much for them. One of the most important and fundamental questions you need to ask yourself is what is your risk tolerance.
Are you risk adverse or do you love risk, getting into business is a risk. If you are not prepared to take risk, then this may not be the field for you. Taking a risk here doesn’t mean gambling, it is taking calculated risk, risk that you know you have a very good chance of having a favorable outcome. As a rule of thumb, you should never spend or invest anything you are not willing to loose.
Ready To Take The Plunge? Time To Analyze Your Business Idea?
Unfortunately, not every business idea is a good one and just like how you will take a look at you as an individual, you need to take a look at your business or business idea and ask a number of questions.
- What need does this satisfy?
- Who is the target market?
- Are there any companies out there doing what I am thinking of doing? How will I do it better or different?
- Do I have a solid business plan WRITTEN out?
- Do you have the right skills to run the business? If not, can you hire someone? Or perhaps even partner with someone w/ the skills you lack?
- Do you have the right people as part of your start-up team?
How do you plan to get the word out?
If you build it, they will come….well that only happens in the movies! A poor marketing plan has sunk many an entrepreneurial dream. Ask yourself these questions;
- Do you have a marketing budget in place to start your own business
- How do you plan to get the word out?
- What research have you done that makes those avenues a potential good source to find customers?
- Even local businesses require a website. Whether you sell a product or service in your own backyard or something that can be used world wide. You need a piece of real estate on the web! Make sure you include in your budget both online and offline marketing.
What will my start up cost be?
You also need to know where the money is coming from to start your own business, whether it will be from business loans, personal investments, angel investors, families and friends among others.
- Start up business loans – Most people try to get a loan first when they decide to go into business for themselves. The first thing you need to do is get your credit in order before you apply. If you have bad credit, only submit to banks and finance companies that will lend to bad credit borrowers. People with good credit are more likely to get approved. Start up business financing is considered high risk, so be prepared for higher interest rate loans. Some start ups take out personal loans to fund their business, since if they have good credit they will get a better interest rate. But that doesn’t allow you to build business credit, which is something every business should try to build.
Be prepared to submit your personal financial information (such as bank statements and tax returns) in order to get a start up business loan approved.
- Using your personal investments? Many people dip into their 401ks in order to start a business. This is risky. If this is the route you decide to take, think long and hard about the impact on your future. If your business doesn’t work out and you have to close your doors (unfortunately many start up businesses fail in their first 2 years) you don’t want to have drained your retirement funds. Again, if you can’t afford to lose it, don’t spend it.
- Angel investors are individuals that will lend you the money for a piece of the business ownership. Some will lend the money for a set time and have an exit strategy. Some may be your partners for life. Make sure you get everything in writing and know exactly how the “partnership” will end.
- Family and Friends is one of the most common ways businesses get started. But that can be a double edged sword. If things go well and you are able to pay them back, you have a happy family. If you are not able to pay them back, you may have created a huge strain on your family and friends and torn those bonds asunder over the unpaid debt.
Answering these questions in a honest way will provide you with insight as to your readiness to start your own business.
About the Author: Irish Taylor has worked in business and consumer financing since 1990, specializing in financing businesses and consumers with credit problems. Startupbusinessloans.com is one of the sites she writes for.