Have you ever thought about running your own business? Perhaps you have an awesome idea for a product or think you can provide a service there's market demand for and you're considering hanging up your shingle.
Before you branch out on your own, it's important to really think about whether you have what it takes to be an entrepreneur. While all good companies start with a great idea, a good concept is just one very small part of what you need to build a successful business. Entrepreneurs need to have many talents, and not everyone is well suited to be a CEO.
To help you decide if charting your own course is likely to lead to success, ask yourself these six questions.
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1. Are you willing to work really hard?
While being the big boss may seem like a good gig, the reality is that entrepreneurs who are successful typically end up working way more hours than salaried or hourly employees do. Eighteen hour days and seven day workweeks are common for business owners, especially during the start-up phase -- and even in established companies, CEOs always have to be ready to respond to a crisis.
The upside is that if you're starting your own company, you probably love what you do and all those long days will pass in the blink of an eye as you devote your efforts to building something you're proud of. But, since work/life balance is often impossible when you're running your own business, you must be ready to make the necessary sacrifices to succeed. If you're just hoping to make a quick buck, find another line of work.
2. Are you comfortable tackling complex tax and finance issues?
Running a business doesn't just involve executing your creative plan for success. There's also a lot of behind-the-scenes logistical work that goes into keeping a company functioning.
For starters, you'll need to make sure you're complying with basic IRS obligations, as it's more complicated to handle taxes as a CEO. You may need to make quarterly estimated tax payments even as a sole proprietor, and a whole other level of complexity is added if you incorporate your business, if you hire employees and must manage tax withholding, or if you must collect sales tax.
You also need to have a financial plan for your company to ensure you're profitable and must always maintain accurate financial records. Sure, you can hire a Chief Financial Officer, an accountant, and a bookkeeper -- but bringing on these professionals comes at a cost and you might have to handle some of the finances yourself when you first get started if you can't afford to pay. Of course, even once your business is established and you have a finance team, you still need to be able to oversee and understand the financial metrics that tell you whether your organization is performing well.
3. Are you comfortable with taking big risks?
If you start a business in your garage that requires no big financial investment, the risk of becoming an entrepreneur may seem minimal.
But, if you want your company to grow and you want to earn a full-time income from it, there will come a time when you need to take big leaps and hope for the best.
This may be when you buy your first piece of really expensive equipment, when you decide to buy a competing company, or when you need to turn in your notice at your current job so you can devote yourself to the business full-time. While the risks will differ for every business, inevitably, you must be willing to take many chances as an entrepreneur -- so if you're risk adverse, opting for a job with a steady paycheck is a better fit.
4. Are you a good leader?
When you're running your own business, you not only need to be self motivated but you also need to be able to motivate and inspire others to follow you.
Most businesses will need to hire employees as they scale up, and you need to be ready to provide direction and motivate staff members to commit to your company's success. Being a good leader doesn't come naturally to everyone and you can learn leadership skills, but you need to be willing. If you'll spend your life uncomfortable when people look to you to manage and make decisions, becoming an entrepreneur may not be a good career move.
5. Can you sell yourself?
Business owners need to sell their product or service, but they also need to sell themselves. You'll need to convince investors or lenders to fund you at some phase during your company's growth and you may also need to convince talented people to come work for your start-up because they believe in your vision.
Developing a marketing plan for whatever your company is selling is often easier than being able to inspire others to buy into the idea of your business -- but it's the latter that can help to make a company such a great success.
6. Are you willing to fail?
The sad reality is, most small businesses fail. Your first venture may not be a successful one, but your fifth venture might. So if you truly have the entrepreneurial spirit and you want to create a company that will stand the test of time, you need to be willing to experience setbacks and bounce back.
Even established companies inevitably will experience projects that aren't a great success, so it's essential you can recognize when it's time to change course, accept sunk costs, and get back on track -- without losing the drive to innovate even if projects don't always work out the way you'd planned.
Being an entrepreneur can bring great success -- or great failure
Owning your own company is scary because the success or failure of your business determines whether you'll be able to put food on the table and help employees keep a roof over their heads.
While there's potential to build something amazing, you must be ready to do what it takes to succeed. If you've answered yes to these six questions, you may just have what it takes to achieve the dream of building a business that can support you and become your lasting legacy.
