Being your own boss might sound like it is the ultimate ticket to freedom and financial success – and it can be. But don’t be fooled into thinking you’ll be able to put in a few hours each morning and spend the afternoons networking over a round of golf. The reality is that most businesses require a lot of hard work – more than your standard 9–5 job and over a number of years – before they start to make a reasonable profit.
One of the first things that any potential small business owner needs to do is sit down with their family and discuss what starting their own business will entail. Basically, you’re looking at a lot of hours, with not much time for anything else. And while the idea is that it’ll pay off in the end and you’ll have more freedom, the beginning requires sacrifices from everyone and often financial sacrifices too.
The skills and attributes of an entrepreneur
You’ve had a great idea for your business. You’re also pretty confident that there’s a demand and that you can make money. These are important steps, but equally so is making sure you have what it takes to become a successful entrepreneur.
It’s important to be passionate about what you’re planning to do, otherwise you’ll find it hard to stay motivated when faced with a string of hurdles. Also, if your business is just another idea to make money and not something you’re passionate about, you’ll lack that key ingredient that will make your new business stand out as more attractive than established competitors.
You’ll have to make sacrifices – mostly of money and time – in the first few years. It’ll mean less time with your friends, less time for sport or hobbies, or even less time with your family. You’ll also probably be taking home less money and might need to sacrifice family vacations or put major household purchases on hold until your business is established.
You’ll face risk and uncertainty, especially if you’ve left a job with a steady income and pensions. Your business might not be in a position to pay you a salary for the first few weeks, months or possibly years. In addition, you might need to draw on your savings or even take out a loan to finance your business operations. It’s important to make sure you have enough money to support yourself and your business until it reaches the break-even point and starts turning a profit.
Your skill sets
When it comes to skills, you’ll obviously need plenty of knowledge about the product or service you’re offering, and experience to back it up. It’s also important to have good people skills, for handling both your customers and staff. There are other skills that you’ll need to learn if you don’t already possess them, such as marketing, money management including cashflow management, understanding finances and financial statements, and sales. It’s a good idea to do courses in all these areas, especially those you’re not that comfortable with.
Important questions to ask yourself
Then there are some questions to ask yourself, such as: do you thrive on challenge? Do you enjoy making your own decisions? Are you prepared to lower your standard of living because you may not be able to pay yourself for a while until your business starts to make a profit, and do you have sufficient savings or an alternative income to live off during the start-up period and potentially inject your own funds to stand behind your company? If the answer to any of those questions is no, it could be time to re-evaluate whether running your own business is for you. But if all of the above has only fired your enthusiasm, then you could well have what it takes to become a successful entrepreneur.