Entrepreneurship –
If you’ve recently started your own business – or if you’re thinking about it – you have a lot of company. Entrepreneurship is becoming an increasingly popular career choice in today’s marketplace.
While many individuals go on their own for positive reasons – a passionate need to be independent, a burning desire to turn a hobby into a profession, or the love of a challenge – others have chosen the entrepreneur route in response to more negative situations, including layoffs, frustration with their current workplace culture, or a need for greater flexibility in their lives.
Clearly, people start their own businesses for various reasons. But entrepreneurship is not for everyone. It’s important to consider whether you have what it takes to not only start a business but to run it successfully.
You’ve probably heard that start-up statistics are grim. The truth is that just 30% of business start-ups survive more than five years. Stories of overnight successes and young millionaires are rare. The hardworking, determined, visionary who dedicates long hours and endless energy to his business is the more realistic picture of today’s entrepreneur.
Entrepreneurs face a myriad of internal and external challenges. Within their companies, they need to offer a superior product or service. They need to manage cash flow and maintain profitability and hire and retain the right mix of people. Externally, factors such as access to financing, the economy, government regulations, and technological issues impact entrepreneurs on a regular basis.
Many small businesses fail because of weaknesses in general management, financial management, and marketing (Statistics Canada, “Failing Concerns: Business Bankruptcy in Canada”). Undercapitalization – or insufficient funds – is another common pitfall. Michael Gerber cites the “entrepreneurial seizure” as a primary reason for failure in his book “The E Myth, Why Most Small Businesses Don’t Work, and What To Do About It.” Gerber says many entrepreneurs pursue the dream of being their own boss but fatally assume that an understanding of the technical nature of a business is enough to achieve success.
To avoid becoming a casualty of the start-up craze, it’s critical to be aware of the pros and cons of running a business. Sure, you have the potential to earn gobs of money, you can set your own hours and be your own boss. But there are many long hours, substantial risk and lots of dirty work required in the growing stages of any young firm.
Are You an Entrepreneur?
Running a business clearly requires more than having a dream. While the desire to fulfill a dream will fire you up, you’ll need practical skills, self-motivation, creativity, a competitive spirit, physical and emotional stamina, and a willingness to take risks in order to thrive as an entrepreneur.
A large part of running your firm will involve doing what you love – providing a product or service to your customers. But an equally important aspect will center around doing everything else. A new business owner serves as tax collector, manager, marketer, accountant, lawyer, bill collector, analyst, technician, and administrator.
One recent study of entrepreneurs (William E. Jennings, “A Profile of the Entrepreneur”) asked subjects to rank several traits and attitudes related to business ownership in order of importance. Results showed the most important attributes to be:
- 1. Perseverance
2. Desire and willingness to take initiative
3. Competitiveness
4. Self-reliance
5. Strong need to achieve
6. Self-confidence
7. Good physical health
Filling out the bottom of the list were some surprising attributes, including a strong desire for money, patience, organizational skills, and a need for power. Today’s entrepreneurs, it seems, are more interested in competition and achievement than in money or power.
So do you have what it takes to run a business? Ask yourself these questions to help you decide.
- Are you willing to work long hours and make the sacrifices necessary to get your business going?
- Do you want to bear the responsibility for all business decisions and responsibilities related to your company?
- Are you independent, disciplined, and committed to becoming an entrepreneur?
- Are you ready to serve multi-roles within your organization, at least at the outset?
The most important thing to consider is whether you have the skills – or the willingness to obtain them – to manage a business. Successful entrepreneurs are not just good at their chosen field, whether it be consulting, cooking, or child care. They are good at running a business with all its daily responsibilities, willing to learn from mistakes, and able to maintain a clear view of the “big picture” at all times.
Technical skills, including an ability to maximize the Internet as a marketing tool, are an increasingly important component of entrepreneurship. In addition, basic knowledge of management, finance, and marketing is essential for the budding entrepreneur. While some successful entrepreneurs cite their graduate-level educations as providing the necessary training for running a business, others say the school or hard knocks has served them well. Most agree, however, that entrepreneurs need practical, hands-on business experience to handle the complexities of business management.
Finally, successful entrepreneurs often allude to good old-fashioned luck as playing a role in their success. The reality is that successful business owners prepare themselves to recognize and seize opportunities when they arise.
Where To Start
Once you’ve decided that you possess the intelligence, creativity, skills, and guts to run a business, the real work can begin. Taking time and energy in the early stage will allow you to reap tangible rewards as your business grows.
Gather as much information as you can about your idea. Learn about the industry, the best ways to deliver your product or service, your competition, and potential obstacles. Talk to other entrepreneurs about what has worked for them, and read relevant trade journals, books, and business publications. Attend some gatherings of a professional association of entrepreneurs or prospective customers. Stay abreast of trends within your chosen field and keep current on issues affecting entrepreneurs.
Create a detailed plan for your business. If your venture will require any outside funding, you’ll need a business plan. These plans are a key building block for any successful business. Set goals for your business, then break the goals down into achievable steps. A good plan will help you maintain focus at a time when things can become overwhelming.
Networking can begin immediately when starting a business. If you’ve chosen to keep your day job until your business gets going, then maintain good relationships at work. Tap into professional organizations and your personal network of friends and family. Keep in mind that effective networking creates mutually beneficial relationships. Be prepared to give as well as get referrals, information, and support. Entrepreneurs who are willing to reciprocate during the networking process will be remembered positively when opportunities arise.
Research all financial aspects of your business. Access to capital is the “make or break” of many firms, so learn about the various ways to obtain funding – friends and family, bank loans, venture capitalists, angel investors. Know exactly how much money you have to start the business, how much you’ll need to get going, and how much you need to make to achieve your goals.
Determine what types of equipment and materials you may need. For some – consultants, writers, coaches – a computer and a phone line may be sufficient. Those seeking to manufacture products may need to set up an entire assembly line.
Human resources are a huge asset to successful firms. While it may not be realistic when a business is just starting, hire out your weaknesses as soon as possible. If bookkeeping is a time-consuming chore, hire an accountant. Get an assistant to handle clerical work. Spending some resources in this way is smart because it frees you up to spend time strategizing and growing the business. Business owners who get tangled in the day-to-day running of their operations cheat themselves and their organizations.
Trying to decide when to give up your day job can be tricky. Go gradually. Wait until you have some regular clients lined up, a plan in place.
Starting a business can be overwhelming, especially for those who are maintaining other employment. Remember to carve out time for friends, family, and fun. Create boundaries between your business and your personal life and honor them. This will help you maintain creativity and avoid burnout, a common entrepreneurial disease.
Entrepreneurship is not for the faint-hearted. There is not magic formula. But for those willing to work hard and take a chance, dreams can come true.
© 2003 Impression Impact, Inc.
All Rights Reserved.
