I want to tell a story of a recent start up client of mine. This person, I will call him Steve, was a man who had worked hard his whole life and had recently retired from his job.
Steve had always dreamed of owning his own business. Restless with retirement, Steve thought now was the time to fulfill his dream. As we discussed his research into three different business ideas, Steve selected the one with the highest potential for creating revenue.
Then as we continued talking through the process of researching the market for the business, detailing the costs of start up, preparing the day-to-day operations, hiring and managing employees, controlling the overhead, the legal and tax implications, rent, insurance, advertising, I saw Steve's eyes start to glaze over.
Steve's initial energy and interest in business ownership began to fade as he faced the reality of the task ahead of him.
This leads to a very important question for every entrepreneur, "Do I really want to own a small business?"
The best way to answer the question is to look at it from three different angles. Ask yourself, "Do I have the passion? Do I have the money? Do I have the experience?"
The first question relates to your business idea. Are you committed to the product or service you plan to offer. In essence, can you sell it? Can you convince others of its importance, its relevance, its value? This passion for your product or service will be key to finding investors and making ever important sales.
Steve had a dream of owning a business, but had no real passion for any particular industry. Steve chose a business plan based on costs and revenues, but never awoke the capacity to own it and to sell it.
The next question is money. Do you have the funds ready to own a business? Can you pay for all the start up costs, location, marketing, and operations until the business can create enough cash flow to start paying for these things on its own? It can take up to three years to reach this point. Can you last that long?
If not, you will have to borrow. This leads to a frank assessment of your personal credit status, your history, your collateral, the amount of your personal investment. If you do not have anything at all to put down, it will be very difficult to finance your business.
Finally, any entrepreneur must look in the mirror and interview himself for the job he wants as a business owner. Is that person in the mirror truly qualified to manage all the aspects of the business?
Steve chose a business plan that was very different from what he had done during his professional life. Was he qualified to run a business in that industry? Did he understand the market, the customers, the pitfalls? Honestly, he did not. As we worked together, he started to sense it.
After much review and planning, Steve finally said to me, "maybe I should just get a part-time job in a business arena I know and save my self all this work."
I hate to talk someone out of their dream. But sometimes dreams are more savory when they remain a fantasy.
Some entrepreneurs have prepared to face the real life challenges of business ownership. Some try and fail as they gain experience. Some are simply not ready. An honest assessment of yourself, your passion, and your finances is a good way to address the question, "do I really want to own a business?"
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