Launching Your Own Business: Are You the Type?
An Aesop's fable tells about a winter encounter between two dogs, one wild and the other the pet of a prosperous man. The pet, warm and well-fed, envies the independence of the untamed dog. The wild dog, often near starvation, envies the abundance and predictability of the domesticated dog's life. When they ponder whether they could switch places, the wild dog realizes he's too attached to freedom to take the leash and the house dog decides he loves security too much to try escaping.
The characters in that fable easily could be an entrepreneur and a person who works for someone else. True, a wild dog often can eat well and a domesticated dog may have to suffer through its master's lean times. But each sees life in a different way, and each has a different level of tolerance for hunger and uncertainty.
What are some of the indicators that you may be ready to strike out on your own? First, are you the type of person who can start and run a successful business? Look at the descriptions below and see how many of them fit your situation. If you recognize yourself, read on.
- You know more than your co-workers about a certain thing but they get paid more than you do. Work is the place where life's unfairness often shows itself. Most people have worked with bosses' pets or whiz kids with credentials from the right schools who get fast-tracked to important projects or big promotions. They often don't know as much as the people below them on whom they rely for research and support. In most cases this leads to grumbling by the people who are passed over, but little else.
Being passed over or unrecognized may be the goad that leads you to consider heading out on your own.
- You know more than most people about a certain thing, but no one pays you for it. We've all known people who love something and are good at it--the neighbor lady with a green thumb; the shy kid who knows everything about computers; the teen who has a magic touch with cars; the friend who has an uncanny sense of taste and smell, and cooks divinely. None of these people get paid for what they do. But each is potentially a businessperson: a nursery owner, a computer security consultant, a specialty auto repair shop manager, a restaurateur or caterer.
You, too, may have a hobby that you could turn into a business. Remember, that business doesn't have to be exactly the thing you're good at. Say you love fishing and are good at it. If you go into business as a fisherman, you won't make a lot of money--increasing depletion of fishing stocks and environmental regulations make commercial fishing a hard proposition these days.
The professionals at your credit union can help answer questions you have about starting your own business.
But what if you parlay your skills into a charter fishing operation that takes people out to sea or upriver to good fishing spots? Because you're offering a custom service, you can charge high fees. As your reputation grows, your business moves onto a solid footing.
- You can't take what you do any more. This is more than just being sick and tired of a job. Weariness alone usually isn't enough. Everyone gets burned out at one time or another, but a vacation or promotion usually cures the ailment.
This isn't just about wanting the suffering at work to stop, but replacing it with something else more fulfilling. You've reached the point where no pay raise, promotion, or change of duties will make your job fulfilling again.
- You've always wanted to be independent. You've spent years thinking how you would do things if you were boss. The thought of trying out your own methods for running a business excites you.
- You've always wanted to be or do a certain thing. You've done well in your current line of work, but still wish you'd pursued another career. You're approaching an age where it is now or never.
Inventory your assets--personal and financial
Do you have what it takes to be a successful businessperson?
- You can work without supervision. This not only means being a self-starter, it also means being a self-stopper--knowing when to take a breather. People who need supervision have to be told when to start and when to rest. When you're on your own, these are things you must tell yourself.
- You can work long hours. According to a U.S. Trust Co. survey, 71% of the affluent (the wealthiest 1% of Americans) work more than 40 hours per week, and 31% work more than 50 hours. Putting in long hours is no guarantor of wealth, but there seems to be a correlation between amassing wealth and doing the hard work to obtain it.
- You are willing to learn and master several skills. Entrepreneurship may be your natural temperament, but few people are born knowing how to write a business plan, raise capital, balance books, do sales and marketing, or deal with employees and customers. Just as you did in high school or college, you have to master certain skills before people will give you a diploma--or their business.
Even if your business won't bring you into contact with the public, you'll deal with employees, clients, suppliers, and government officials.
- You are willing--and able--to take financial risks. How much risk are you willing to take? The level of risk can ratchet up quickly: How about approaching your in-laws or strangers for funding? Would you put your house up as collateral? Can you imagine the prospect of bankruptcy or homelessness?
There are no correct answers to these questions. But as you contemplate ever riskier actions that you could take, the point where you find yourself saying "No way!" is where your ultimate comfort level lies.
- You have a skill or idea that your research tells you is saleable. Research, formal and informal, includes:
- Personal experience with clients
- Talks with noncompetitors in the same field
- Internet and public documents searches
- Association meetings
- You know when not to quit. Are you the kind of person who, when an obstacle arises, immediately begins looking for a way around, under, over, or through it? When you make a plan, do you also make a backup plan? The mindset is one that takes into account that there will be inevitable delays, omissions, and disappointments--everything from a worker who shows up late, to a botched order, to a client who can't make a crucial payment.
- You know when to quit. This doesn't mean folding up your enterprise and going home. It means knowing when to stop pushing. Perhaps you're planning to hire your smart, extroverted niece to handle sales, but later realize she has no aptitude for it. Knowing when to quit means dropping the attempt to make her a salesperson, with no regrets, and moving on.
- You are aware of the personal risks you're running. This one is a biggie, because the risks involve your marriage or significant other, your loved ones, family, friends, reputation--and your health. Knowing the risks is not the same as saying you are willing to risk all of these things. It means being aware that long hours, frustrations, money worries, and juggling business and home life will place immense strains on everyone involved.
You may have a hobby that you could turn into a business.
That's why an important part of thinking through your commitment to a new enterprise is to plan to give yourself time away from its demands. This isn't goof-off time or self-indulgence. It's acknowledging that part of your success will depend on stepping back and restoring your energy and perspective.
- Do you have the talent? Not do you think you have it, but do you have it? If you've watched any of the "American Idol" type of TV talent shows, you know that many of the participants have no clue that they can't sing.
Ask people whom you've worked with--as a professional, an employee, a volunteer, a student, a teacher--for an honest appraisal of your strengths. Their answers, which either will confirm or deny your own opinions, also may surprise you. What you think is your quiet determination might be seen by others as stubbornness. On the other hand, someone might say that an exhausting volunteer stint chairing a successful school bond initiative demonstrated your ability to see the big picture.
- Do you have the people skills? Earlier we discussed how being passed over at work or having your expertise exploited but unrecognized can lead you to go out on your own. If you're contemplating a business that involves a lot of person-to-person contact, one of the most important (and hardest) questions to ask yourself is, "Do I relate well to people?"
If your answer is no, you have a problem. Start-up businesses that depend on people skills, such as consultancies and retail shops, are not the kinds of places you want to turn into classrooms for crash courses on being agreeable, overcoming shyness, or toning down aggressive personalities. Even if your business won't bring you into contact with the public, you'll still have to deal with employees, clients, suppliers, and government officials.
What can you do? Consider partnering with someone who has social skills. Many successful enterprises parcel out front-office and behind-the-scenes tasks to the partners best able to do them.
If you must go it alone and know you have an abrasive or retiring personality, be prepared to spend time either cycling through employees or dealing with the consequences of your inability to clearly say yes or no.
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