Are You Ready To Become a Business Owner
Many people aspire to become entrepreneurs. The thought of owning your own business and having the freedom to set your own schedule is very appealing, not to mention the ability to earn an income that is not capped by what an employer is paying you.
There is no denying the incredible rewards that can come from being in business for yourself. But as with everything else that is worthwhile in this life, owning a business is not easy, and it is definitely notfor everyone.
You may have heard that roughly 20% of small businesses in the US go under within their first year, and only about half of them make it to the five-year point. And these numbers do not even take into account the devastating impact that COVID-19 has had on many businesses in 2020. Suffice it to say that success as a small business owner is far from guaranteed.
You want to be a business owner, that is great. But the real question is, are you ready to become a business owner? In other words, do you have what it takes to take on the challenges that you will face and make your business successful?
Here are five questions to ask to evaluate whether or not you are ready to make the leap into entrepreneurship:
Think of the top three reasons you want to be in business: Your primary motivations for wanting to become an entrepreneur will play a major role in the success of your business. There is nothing wrong with wanting to earn more money and wanting a more flexible schedule, but it should go beyond that. Somewhere in your top three, you should have a reason that will keep you going on those difficult days when it seems like all of the forces are working against you.
Some good reasons for going into business include:
- Being passionate about the product or service you are offering.
- Going into an industry that you are highly skilled at with the ability to use your talents to serve others.
- The desire to make a positive impact in your community.
- The opportunity to be creative and do something unique and better within your business and industry.
You should also look at the money you will earn not as the end goal, but as a means to accomplish other things that are important to you. Examples include giving your kids a quality education, purchasing or building your dream home, traveling more, and securing a comfortable retirement.
Being risk averse: Most people desire both freedom and security. However, some place a higher value on comfort and security, while others value freedom and adventure. You need to find out where you come down on this question, because it will have a lot to do with whether or not you should become an entrepreneur.
Entrepreneurs by their very nature are gamblers who are not afraid to take a risk. They know that there is a chance of their business failing, but they are willing to take that chance for the potential reward of becoming a greater success. If you are risk averse and want more security and certainty in your life, then entrepreneurship might not be right for you.
You also need to look at what your spouse and family think about you getting into business. This is going to be a roller coaster ride, and you will need their full support, especially when you are going through the valleys. Have an honest conversation with those closest to you about the risks that this will involve and their willingness to back you in this venture.
Do you have the energy and stamina to run a business: Being a business owner is a lot different from having a 9-to-5 job. You can’t just leave your work at the office on Friday afternoon and pick it up again on Monday morning. Entrepreneurs may have a flexible schedule, but this also means working long hours and often dealing with problems that come up late in the evening or on weekends.
You will need to have the energy and stamina to put in the time needed for your business to thrive. Going back to the first question about motivation, if you have strong enough reasons for wanting to be in business, you will most likely be able to find the energy to do the required work.
How well do you handle criticism: As a business owner, you will have employees to manage (unless you are a solo operator) and you will have customers/clients to service. And no matter how likable you are, there will be times when you will take heat for the decisions that you make. A good business leader will recognize the value of constructive criticism and be willing to use it as a potential opportunity to make some improvements. They will also understand that some critics will never be satisfied and know when it is time to dismiss their criticism and move on.
Do you have access to capital or financing to get started: How do you plan to finance your business venture? If you are purchasing an established business, for example, you will need to have access to cash and/or the ability to finance the transaction. In most cases, you will need a combination of both.
Do you have enough of your own capital to at least come up with a down payment? Are you able to get bank financing, or financing from alternative sources such as friends and family, crowdfunding, or seller financing? You will need to answer these questions and make sure all of the numbers work before you are ready to become a business owner.
Looking to Purchase a Business this Year? Contact a Local Business Broker: If you believe you are ready to become an entrepreneur and you want to buy an existing business that has already been established, the next step is to speak with a business broker. Also known as business intermediaries, business brokers specialize in matching buyers with the right opportunities from sellers in your area. They can work closely with you to help you find businesses for sale that would be a good fit for your passion and skillset.