4 Self Reflective Questions for Would-be Business Owners
So, you’ve been thinking about giving notice to your corporate overlords and setting out to chase the American dream on your own. You’ve probably laid awake at night and visualized what your success could look like. Maybe a charming little retail store on main street, or your company logo (you bought 2 years ago off fiver) proudly branded on the side of your new truck. You’ve probably googled startup business plan, scrolled through some click bait articles, and maybe even bought the form your own LLC pack off legalzoom. (BTW: you probably don’t need to register in Delaware). You’re so close to success you can almost taste the freedom in the air.
So, what are you waiting on? The right time? The no risk guarantee? Maybe it’s the stomach-churning anxiety you try to ignore. Maybe it’s walking away from the steady paycheck of the last 10 years at your secure job (yeh your friends are right; you are a little crazy). Unfortunately, there is no fool proof formula for determining the right time to become an entrepreneur or small business owner. There will always be risks and uncertainties. However, there are a few self-reflective questions that can help guide your decision.
1. Do you a viable business idea or a dream?
Sounds like a simple question, right? Yet, every year millions of people open businesses that are destined for failure, because there was never a viable opportunity at the start. Nearly half of the new businesses created will shutter within 5 years, according to the SBA. Interestingly enough, that percentage has stayed fairly consistent despite market shifts and macro-economic changes. https://www.sba.gov/sites/default/files/Business-Survival.pdf So before we continue ask yourself if there is really a market demand for your coffee flavored tooth paste, or 4-in-1 body wash (shampoo, conditioner, body soap, & mouthwash)?
2. Is your family supporting and onboard?
It’s easy to have the discussions with your spouse regarding all the upside potential of being your own boss. In reality, the conversations you need to be having are the “What Ifs”. What if we aren’t able to cash flow positive after 6 months? Are you both willing to take out that HELOC loan? (What if they won’t approve you because you no longer have a W2?) What if store traffic doesn’t warrant hiring full time staff? Are you okay to skip the annual family vacation this year? What if you won’t be at a single Saturday morning soccer game? I promise you, no matter how confident you are, these are the questions you need to have before you the launch the business.
3. Are you financially prepared?
As the Owner/President/CEO of your newly created entity, you will have two primary jobs. Provide the best product and/or service for your customers, and Don’t run out of money!
Whatever back of the napkin figures you’ve arrived at, double or triple them. Think you’ll be at breakeven in 6 months, plan for a year. If you’ve calculated your startup cost as 100K, find access to 200K.
Cashflow is the number 1 killer of startups, and unfortunately it leads to closing doors while often still holding the debt. As we alluded to earlier, nothing is fool proof, there is no guarantee, but creating contingency plans and having access to additional capital before you need it is critical.
4. Repeat questions 1-3
Seriously. Be honest with yourself (and your spouse). Analyze and reanalyze until everyone is on the same page. Then, if you’re satisfied with your answers and ready to go forward. It’s time to run your business through a startup SWOT analysis, that we will be discussing at length in the near future.