A lot more people fantasize about starting a successful business than actually do it. And there’s good reason for that: the numbers. While they vary from one expert to another, the underlying figures tell us that a lot of small businesses fail – many within the first 18 months. So before you set yourself up for failure, what advice do you need to determine whether becoming an entrepreneur is what you really want in 2015?
At the recent World Entrepreneurship Forum, I spoke with Melinda Emerson, known online as “SmallBizLady.” Author of the book, Become Your Own Boss in 12 Months, Melinda was recognized by Forbes as the #1 woman for entrepreneurs to follow on Twitter. She has been a thriving entrepreneur for nearly 15 years, and as you might expect is a champion of small businesses, reminding me that they make up 99% of U.S. employer firms.
Melinda outlined the small business “essentials” below:
Why Do I Want to Start a Business?
Your motivation for starting a business is the foundation that will set you up for success…or not. If you constantly think “if I ran this company, I’d do it better,” you may make a good business owner, or you may just want out of a bad job. If your passion solves a problem that someone is willing to pay for, then that’s a great start for your business endeavor.
Do I Have the Entrepreneurial Mindset?
Entrepreneurs think a certain way. They are constantly looking for ways to improve upon existing products and ideas. They’re willing to take risks (that, in fact, is a large part of running a business), and aren’t afraid to try new things. They’re motivated by control, freedom, money, problem solving, and creativity. If you are highly risk-averse, you might need to keep your “corporate job.’
Do I Have the Energy to Start This Business?
Not every moment in your life is ripe for starting a business. Evaluate if you have any competing priorities. If you recently had a baby or are caring for aging parents, you probably need to focus on that without adding something as gigantic as a new business to the mix. You need to be at the top of your game energy-wise to become an entrepreneur.
How Much Money Do I Have Saved for this Business?
One of the first things I talk about in my book is creating a financial plan. This is key as you will most likely self-fund your new enterprise. It is essential that you have enough money to fund your first year of business operations and up to two years of household expenses. You should also maintain an emergency fund for your household.
If you don’t have much personal savings or a sexy enough idea to launch a crowdfunding campaign, you can save until you have enough. Your best bet is to start your business while still working. It will help you keep the stability of a steady paycheck while slowly growing your company. Then when your business gets beyond barely breaking even to generating real profits, you can hand in that resignation letter.
Do I Have a Supportive Spouse or Family?
Don’t underestimate the importance of your family’s support. After all, they are the ones that your late nights at work and small (or non-existent) paycheck will affect most. Discuss your desire to start a business with your spouse to gauge whether you have their buy-in. If you know that your life partner is highly risk-adverse, come to the table with financial facts and a timeline for how long you will pursue this business. An unsupportive spouse can kill a business faster than a poor marketing plan.
Is There Demand for My Product or Service?
You may think your business idea is genius, but before you invest time and money into it, see what else is out there. Does the market even need your idea? You may discover that another company has already created your idea. In that case, you need to decide if you want to give up or rethink your idea to come up with a “secret sauce” that will make you stand out.
You need to know — before developing your product — if it solves a problem that people actually care about and would pay for.
Do I Have the Confidence and Skill to Run a Business?
Being a successful entrepreneur takes confidence. You’ll be selling yourself as much as your product or service. But consider whether you have the necessary skills to run a business. Most of us have some technical skills, but management skills are another matter, but they can be learned. Simply make a plan for how you’ll learn the ins and outs of marketing, management, sales and finance. Then, when you can, staff up with people who do have the expertise that you are lacking.
Now That You’re Ready to Start a Business…
If you’re still reading, I’m glad you didn’t run screaming for the hills as you worked through the questions above. If you’re ready to get started with your plan for business success, we will end with the Emerson’s 6-step planning system:
- Get Your Life Plan Together. You need to identify your motivation, skills, and personal and professional goals first, before you ever write a business plan. The questions above will give you some idea of what you want your life to look like as a business owner.
- Construct a Financial Plan. Track your expenses for 30 days.Draft a budget for your household costs. Look at how much you spend, and decide what you can cut to build your savings.
- Create Your Business Model. Spend time researching your market, your competitors, and your customers so you can ensure your product will solve a problem. Focus on your customer’s pain.
- Develop Your Marketing Plan. Determine your niche customer andstart building your online brand including your website and social media profiles.
- Write a Business Plan. You must plan for success, it will not just happen to you. Try enloop.com for free business plan software.
- Launch While Working. Learn your early business mistakes on someone else’s dime. Work both your job and your business, until your business can replace your corporate salary.
Having asked yourself these hard questions, you’re better prepared for what lies ahead. And while the start will take a lot of time, energy, and money, the journey ahead is well worth the investment.
This article was written by Matt Symonds from Forbes and was legally licensed through the NewsCred publisher network.