Entrepreneurial spirit is high these days, and it is good to see. It happens when people come to terms with a lack of opportunity in their career lives. Stratfor has a good article on how the middle class has changed over the decades since the 1950s. The American assumption of an improving lifestyle has deteriorated and some people have responded by embarking on their own ‘bold ventures’.
If you are thinking of starting your own business, here are some questions to answer first:
Do I have an entrepreneur’s personality? – You have heard it before: the long work hours, financial insecurity and lack of moral support from family and friends. Take these things into serious consideration because they are very real elements of the entrepreneurial lifestyle until your business reaches the tipping point and starts earning comfortable money. Many people think they can take the risk and stress, but find out later that it was much more difficult than they had imagined.
Nearly everyone can be a successful entrepreneur – eventually – and the chances are greatly enhanced by a realistic outlook on what is required, right from the beginning. Spend some time imagining what you would do if you had to work 16+ hours every day, with little or no income, facing investor rejection and complaints from your friends and family. Then think about what you can do to survive that for a year or two or three.
How feasible is my business idea? – This is something more would-be entrepreneurs need to spend time investigating. There are several reasons why your idea will not make a good business: It is unrealistic because customers won’t buy it, thinking they don’t need it or it will be too expensive. The technology that supports your idea is not in wide-spread use yet and may not be for some years to come. It will cost more than you can expect in revenues.
Feasibility can be improved by taking baby-steps and building your business on the basis of revenues and incremental success. If your target market is not accepting yet, offer something it will accept, and build from there. If costs will be too high, downsize your idea until it can be profitable, and build from there. Never overestimate the contribution of early-adopters of technology. They don’t always show up and they also don’t buy enough to ensure your company’s success.
What will you do if it becomes clear you have misjudged? – Having a ‘Plan B’ is vital to an entrepreneur’s success. In fact, it is a good idea to have an additional Plan C and Plan D. How will you bootstrap if you don’t get any venture investment? How will you tweak your idea if nobody wants to buy it? How will you recover if another company comes out with a better product? What will you do when you run out of money?
The most successful entrepreneurs are versatile, tenacious and not afraid to ask for help and advice. In a recent interview with LinkedIn, Richard Branson admitted that a good deal of success is based on pure dumb luck in addition to informed risk-taking and hard work. The more you can do to prepare yourself for the difficulties, reduce your risks, keep your plans realistic, and continue tweaking till you get it right, the greater your chances of success.