Should I Start My Own Business?
Q: I have a stable full-time job. But I’m not fulfilled. I’d like to start my own business. How do I know if I’m ready?
A: Millions of Americans dream of starting their own business. The risks are high, and many small businesses fail. But the rewards are high, too. Entrepreneurship isn’t for everyone. Before you quit your job, here are some questions to ask yourself:
Am I an expert? If you are hanging out a shingle as a consultant or professional of any kind, you should be an expert. That is, you should have a unique knowledge of the topic that people will really think is worth paying for. It’s not enough to have a passion for a field if you don’t have the skills to add value for your clients.
Do I need a boss? Being your own boss sounds nice, but not everyone is cut out for it. Do you honestly have the self-discipline to wake up early each day when no one else is making you do it? Do you have the focus to tell your friends you can’t make a party or lunch because you have to call a bunch of strangers to drum up business? That’s not an easy thing to do.
Do I have a business plan? If you don’t have a detailed business plan – one that includes a marketing and sales strategy, a plan to manage cash flow, a plan to raise needed capital, and an exit strategy for when you will sell or retire, you probably aren’t ready to quit your day job … yet. For a sample business plan, visit the Small Business Administration at www.sba.gov.
Do I have enough cash? No matter how careful the planning, businesses are almost always much more expensive to start and run than we think they will be. Think about your worst-case scenario – then double it. That’s probably very close to the mark. What happens if sales don’t meet expectations? What happens if you have to spend more on inventory, insurance, technology or staffing than you had anticipated?
Can I price appropriately? Remember, you will be paying for your own benefits, your own retirement plan, and your own self-employment taxes (15.3% in most years!) No one will be taking income taxes out of your check, either. So, you will have to set aside that money on your own. You may have to charge twice what you think it costs to survive.
Can I sell? As a business owner, you are your own chief salesperson. There is nothing in the world that is so good it doesn’t have to be sold. If sales make you uncomfortable, it may be tough for you to make a business work. You should embrace the chance to do sales.
If you can answer all these in the affirmative, you might be cut out for entrepreneurship. Eventually. You can have all the personal characteristics required, but the timing may not be right. The market may not be there yet, or you may need to acquire some additional skills. But it’s not too early to start networking.
If you’re ready to start a small business we’re here to help. View our business services, accounts, and loans.