Do I have what it
takes to start and maintain my own business? It's the
question most people don't ask until much later down the road. Some avoid it because they fear that
logic will get in the way of their dreams. These people
put themselves at a tremendous disadvantage and are many times
more likely to fail. Others simply get their foot in the
door on a new idea and things snowball quickly. Before
they know it, it's too late to go back. Either good or
bad, these people are stuck. While its hard to turn down
self-employment, foolish entry into business ownership should
never be pursued. Think things through and plan.
Running a
small to medium sized business may not require an in-depth
knowledge of any particular field, but it will require a diverse
set of capabilities in various disciplines. It may not be
important to know everything right away, but you had better be
able to pick things up as they are required of you and to adapt
to the ever-changing environment surrounding you. Most
computer hardware enthusiasts turn their passion into their
trade and are surprised at the demands of business ownership.
Being the company tech or builder isn't all that is involved in
running a business. Marketing, accounting, sales, etc. may
require a much greater portion of your time (things you may not
be all that interested in). How well you adapt to change and
take on new responsibilities will ultimately determine whether
or not you will succeed.
Ultimately your ability
will be
characterized by the uniqueness of your talents. Many businesses fail because they are replaced or weeded out by
other companies who can offer everything they can and more.
While success is never guaranteed, if your service or product line is unique you just may
increase your chances of staying afloat. To make it in an
established industry by adopting established methods is asking for failure.
It's much easier to sell lemonade in
front of a grocery store than it is to sell lemons and sugar
(unless your prices undercut theirs).
If your ability
is not in question, turn to your desire. This is
oftentimes the hardest thing to gauge because people interested
in business ownership can underestimate the amount of
added work and responsibility they will be taking on.
Owning a business may seem like an exciting proposition while
you're just getting started, but once that novelty wears off you
may find it to be far more work than it's worth. An
important thing to realize is that very little happens
'automatically' when you own your own business. Insurance
policies, website updates, daily operations, accounting
procedures, bookkeeping, technology advancements, data entry -
you may just have to have a hand in everything that goes on. This can be a tremendous drain on your time
and may be more than you thought you had bargained for. With
this, there is little guarantee that you will be
compensated for all of the extra time that you put in (in fact,
you may make much less than you did in your previous line
of work).
To illustrate
this, lets take the Payroll/Tax procedure as an example. As an employee
to a company, everything from tax withholdings to overtime
calculations may be done for you by someone in payroll (someone
who you may never have to come in contact with). Your
greatest concern could very well be getting your paycheck to the
bank and keying in your tax numbers when April comes around. As a business owner, every task you don't pay someone else to do for
you will be YOUR responsibility. Recording expenses and
accounting entries may be tedious, but there's no way around it.
Tax-time may induce never before seen anxiety that can't be
fully planned for, but it'll hit you the same time every year. Depending on how large your company
becomes, you may have to devote several hours each day just to
bookkeeping, reconciling accounts, data entry, filing, etc.
Should you choose to hire an accountant, all that you pay him
will be money out of your pocket (when it hadn't been before). With every freedom
granted in self-ownership comes a cost that must be paid.
If you feel
confident in your ability and desire, the last major area of
concern will be with your availability. Most important
to this area is a consideration of your finances. If you are in need of a steady paycheck to
meet your expenses, the risks of business ownership may be too
great (especially a startup). Depending on your particular situation down the
road, there may come a time in which you will have to operate at a loss (and
work gratis) for an undetermined
period. Being able to handle this will all but
determine whether or not your business survives.
Small business owners are in the highest divorce bracket because
these issues carry into the home. While separation of
business and personal is the goal, for most it seems more like a
myth. Your personal life may be entirely driven by the
happenings in and around your work-life and you will have to handle that. If you are fortunate enough to turn a profit that an income
can be drawn from, you must also determine whether or not that amount
will satisfy the
lifestyle you wish to lead. Don't be too greedy here as
sacrifices are common to every business owner. Just make
sure that
you will make it through your days without too much discomfort.
Other concerns with finances
may come with startup and operational costs. For most
service-based industries, this cost may seem reasonable and
manageable (through personal finances or notes obtained).
If you wish to start an inventory-driven business, however,
requirements may take on a different form.
Dependent on inventory turnover numbers and baseline numbers
needed to stock your shelves, this can vary tremendously and may
require you to take on a great deal of debt. Taking on
debt for your small-business oftentimes involves risking personal liability,
making your attachment to the business even stronger. As
with any other personal loan, its essential that your credit
score be accurate as possible and free of any major flaws.
Other options do come in the form of business loans , but it may take time to grow
your business to the point to which a lender will offer you one. Personal loans are much easier to obtain and are a
common form of startup financing, but they come at a high risk
to the owner.
Availability concerns also come
in the way of time. Many entrepreneurs take on a
small-business endeavor with the false idea that the
small-business will simply supplement their current income.
This is most true of eBay businesses owners who run a limited
(stress-free) number of auctions per day. It isn't to say that running a
side-business won't help or increase your financial position,
but rather, the work required in running 2-3 auctions on eBay
pales in comparison to that of running a full-fledged small
business. Low volume on a non-involved medium is more of a
hobby than a true profession. It's easy to be fooled into
thinking that you can quit your job and pursue your hobby with
more money coming in than ever before. Income is never
a direct function of effort. If you are making $100 doing
1 hours worth of work on the side, don't get caught up into
thinking that you can make $800/day ($200,000/year) by quitting
your job and putting in a full workday. Nothing
comes that easy.
To a small business, the time
you put in will be the most telling element in the determination
of its success. You may never again clock in at 9AM or
leave the office at 5PM. Though if you are willing to put
in what it takes and are successful at what you do, the rewards may
all prove to be worth it in the end.
Self-employment is the American
dream and each of us shares a certain desire to control our own
financial destinies. The important thing to realize is
that this desire can blind you at times and force you into a bad
decision. Setting up a business plan and having other
people take a look at it is always a good idea. Seek help
from this website, business professionals, bank officers, online forums,
college professors, or advisors in your area. After all
factors have been accounted for, if there is still a light at
the end of the tunnel make the jump. Taking risk is a part
of the game and few rewards in life are sweeter than being your
own boss.
