Starting a Business
Starting a business can be exciting and rewarding.
According to the Small Business Association, over 3 million new businesses open every year.
Unfortunately, 50 percent of those businesses will fail in the first year, with 95 percent failing in the first five years.
In order to make sure that your business is not among that number, you should take several considerations before starting your business.
Aside from the legal and accounting issues that are apparent in the forming of a business, issues best answered by your accountant, attorney, or both, frame the issue of your business in terms of the following questions: Do you have what it takes? It is important that you have all the resources you need to have a business, or at least have access to those resources.
You need the time to do it, the money to fund it, the people to help, the knowledge to execute your idea, and the energy to manage it all.
In addition, you also need to possess a variety of personal characteristics, such as perseverance, good money management skills, time management, and multi-tasking.
A good sense of humor helps, too.
Are you able to fail? When you start a business, you take on the risk of letting yourself and the people around you down.
You need to ask yourself if you can handle it if the business goes bust after six months and you are left without a penny, and possibly with large amounts of debt as well.
In addition, if your start-up money is coming from friends or family, can you handle it if you lost their money too? No matter how you look at it, when you start a business there is a risk of failure too.
However, the important thing here is like all other areas of life, we learn from our mistakes in businesses too.
History shows us even the greatest entrepreneurs today have been through their fair share of failures.
One must analyse what are the series of actions that contributed to this failure, make notes of these elements and ensure in future they are not repeated.
Can you handle setbacks? When you own your own business, you have to be able to accept the small setbacks without letting it affect the rest of the business, or your life in general.
There will be times when a payment does not come in when you hope it will or a shipment does not come on time; sometimes business will be slow and other times so busy that you have to work morning to night just to get it all done.
As a business owner, you have to be able to handle that.
Aside from protecting your own sanity, the people around you (e.
g.
staff, suppliers, customers/clients) will be affected by changes in your behavior - moods are contagious.
Can you accept your company outgrowing you? There is an overwhelming tendency for successful businesses to outgrow their founders- can you handle that? It may seem odd to ask this question so early on, but it is an important one.
As your business grows, it will need your involvement less and the needs you are able to fill may change.
If you do not accept that as a truth early on, you may find yourself sabotaging the success of your business inadvertently.
Will your idea work? You may have a great idea for a product or service, but will it work, really? How do you know? The best businesses are based on solid pieces of marketing and product research.
Do you know what your target customer is looking for in the product or service you intend to offer? (e.
g.
features, pricing, availability, location) Do you know what is happening within the scope of that product or service? (e.
g.
new technology, popular trends) Are you an entrepreneur or a manager? Lastly, and most importantly, are you an entrepreneur or a manager? Most people are either one or the other.
Entrepreneurs tend feel very comfortable in the development of the concept, the creation of the brand, or the marketing of the product or service, but less comfortable with the actual day-to-day running of the business.
In contrast, some people are really great managers; they know how to motivate staff, manage the books, develop promotions, communicate with suppliers and distributors, etc.
Many manager-types do not know the first thing about actually starting a business.
You need both to be successful.
According to the Small Business Association, over 3 million new businesses open every year.
Unfortunately, 50 percent of those businesses will fail in the first year, with 95 percent failing in the first five years.
In order to make sure that your business is not among that number, you should take several considerations before starting your business.
Aside from the legal and accounting issues that are apparent in the forming of a business, issues best answered by your accountant, attorney, or both, frame the issue of your business in terms of the following questions: Do you have what it takes? It is important that you have all the resources you need to have a business, or at least have access to those resources.
You need the time to do it, the money to fund it, the people to help, the knowledge to execute your idea, and the energy to manage it all.
In addition, you also need to possess a variety of personal characteristics, such as perseverance, good money management skills, time management, and multi-tasking.
A good sense of humor helps, too.
Are you able to fail? When you start a business, you take on the risk of letting yourself and the people around you down.
You need to ask yourself if you can handle it if the business goes bust after six months and you are left without a penny, and possibly with large amounts of debt as well.
In addition, if your start-up money is coming from friends or family, can you handle it if you lost their money too? No matter how you look at it, when you start a business there is a risk of failure too.
However, the important thing here is like all other areas of life, we learn from our mistakes in businesses too.
History shows us even the greatest entrepreneurs today have been through their fair share of failures.
One must analyse what are the series of actions that contributed to this failure, make notes of these elements and ensure in future they are not repeated.
Can you handle setbacks? When you own your own business, you have to be able to accept the small setbacks without letting it affect the rest of the business, or your life in general.
There will be times when a payment does not come in when you hope it will or a shipment does not come on time; sometimes business will be slow and other times so busy that you have to work morning to night just to get it all done.
As a business owner, you have to be able to handle that.
Aside from protecting your own sanity, the people around you (e.
g.
staff, suppliers, customers/clients) will be affected by changes in your behavior - moods are contagious.
Can you accept your company outgrowing you? There is an overwhelming tendency for successful businesses to outgrow their founders- can you handle that? It may seem odd to ask this question so early on, but it is an important one.
As your business grows, it will need your involvement less and the needs you are able to fill may change.
If you do not accept that as a truth early on, you may find yourself sabotaging the success of your business inadvertently.
Will your idea work? You may have a great idea for a product or service, but will it work, really? How do you know? The best businesses are based on solid pieces of marketing and product research.
Do you know what your target customer is looking for in the product or service you intend to offer? (e.
g.
features, pricing, availability, location) Do you know what is happening within the scope of that product or service? (e.
g.
new technology, popular trends) Are you an entrepreneur or a manager? Lastly, and most importantly, are you an entrepreneur or a manager? Most people are either one or the other.
Entrepreneurs tend feel very comfortable in the development of the concept, the creation of the brand, or the marketing of the product or service, but less comfortable with the actual day-to-day running of the business.
In contrast, some people are really great managers; they know how to motivate staff, manage the books, develop promotions, communicate with suppliers and distributors, etc.
Many manager-types do not know the first thing about actually starting a business.
You need both to be successful.
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