Is running a business right for you?
More and more people are looking to start their own business, but is it right for you?
Since the pandemic, there has been an explosion of people looking to start their own businesses. For some, the time spent in lockdown was a time to reflect on what they had achieved whilst working for others. And for others, it was an opportunity to explore new adventures and think about starting their own business.
Starting a business is not for everyone people decide to start a business for all sorts of reasons. For some it’s simple, they see an opportunity with a new product or service and they leap into action. For others, it’s a hobby or sideline that has gained legs of its own and grows and grows and they suddenly find themselves hiring staff and renting premises in order to cope with the demand. Before they know it they’ve got a successful small business.
Here are five basic questions you should be looking to answer…
Do you consider yourself a risk taker?
It’s a myth that all entrepreneurs are serious risk-takers. It is true that they do take risks but as a rule, the risks are calculated and they understand the nature of the risks they take. So if by your very nature you are risk averse then perhaps starting a business is not for you.
Are you comfortable with financial insecurity?
Once you leave paid employment you’ll be responsible for your own income. This means that if there is not enough money in the business’s bank account, you don’t get paid that month. If this situation terrifies you then again perhaps starting your own business is not for you. If the business you’re looking to start needs a big initial investment can you find ways to finance it without risking everything you’ve built up over the years if it all goes wrong?
Are you a people person?
Your life as a business owner and entrepreneur will require you to influence and persuade people to do things for you. This might be getting people to buy things from you, or staff to work overtime. Either way, if you’re not good at communicating with people this will be difficult for you. Conversely, if you love being around people all the time working on your own for long periods of time in your small business may not be that enjoyable for you.
Do you like structured routines?
Being well-organised and good at planning will serve you well in your new business. As a small business owner, you will have to perform many different roles, some of which will be new to you. If you know you are a disorganised person, put things in place to mitigate this. Have the necessary structures in place, employ a bookkeeper for example as soon as you can to keep your finances in order. Invest in and use software that will make being organised easier. For example, www.monday.com, or www.asana.com are very good at helping you organise your processes and task that require completing.
Are you optimistic and resilient?
Being a small business owner can be tough at times. There’s no easy way to say this, you will have difficult times. If you grow too fast you’ll have problems fulfilling orders or maybe staff problems or cash flow problems. If you don’t grow at all you will have problems with cash flow. This means that there’s a good chance your finances will implode. There is a myriad of issues awaiting you that will need your time and attention to solve. This is why having a naturally optimistic outlook will serve you well. It can be easy to become disheartened if things don’t go to plan. Having someone to talk things over with is priceless, particularly if they’ve been there and done it. Consider employing a business mentor or coach to help you with your journey.
Weigh up any doubts.
Don’t worry about fearing failure. Worrying that your business won’t succeed is perfectly natural. It makes sense to think about how you would respond if your business were to fail. But if your fear undermines your work and confidence, then starting your own business may not be the right course to take.
Take steps to improve your chances.
Once you’ve assessed your skills and your situation, don’t be surprised or disappointed if there are areas of weakness. The important thing is to acknowledge these fully and to see how you can overcome them. This is why you should…
Start with the end in mind.
Before you start, spend some time thinking about why you want to start a business. Spend time thinking about what you are looking for from your business. Is it all about replacing your income from your current employment, or do you have a strong vision and mission that you feel compelled to achieve? Either way, it’s essential that you do the hard thinking and really understand your motives.
A well-thought-out business plan is essential if you want to be successful. It helps you think through your ideas, set goals and develop the necessary action plans before you dive in. Planning in some circles has a bad name, as Dwight Eisenhower said “Plans are worthless”, however, he did add that “In preparing for battle, planning is essential”. Planning can save you both heartache and money as rushing into your business without researching your market or planning your finances could be the quickest way to the poor house.
As part of the planning process, it’s important to establish the values that you and your business will live by. For example, what ethical, quality and service standards will your business adopt? These are important considerations for a lot of people. As an extreme example, if you’re a vegan it would be impossible to start a business that is involved in the animal trade. Knowing what your business stands for will allow you to establish who your business is for. And this can give you a competitive advantage. It enables you to differentiate your business and create something that is distinctive.
How to evaluate your business idea.
A good business idea is by definition a product or service that sells at a price point that’s attractive to both the consumer and the business providing it. Lots of people leap into business trying to sell something that they are either interested in or appear to be good at. However, this does not necessarily translate into something that people want to buy. Many business ideas look great on paper, but fail when the ‘rubber meets the road’. The only test that really matters is the marketplace. People either buy or don’t. You need to be able to answer these 3 questions:-
1. What problem will my business solve for its customers?
2. How are people dealing with this problem at the moment?
3. Does my product or service already exist? If not, how will my company be different or how will I improve on what’s already available?
Your idea could be brand new, but more than likely, there’s already something similar out there. Even the most ingenious business ideas rely on market demand. The real question is, is there room for one more? Either way, your answers will help you discover if you can offer a unique solution to an existing problem, or do it better than the competition.
Find your competitors
No matter how great your business ideas are, you’ll always have some kind of competition. And that’s no bad thing. The key when evaluating your business idea is to find your competitors, look at what they’re doing (or failing to do) and identify what you can do better.
Research direct competitors
Direct competitors are other companies who offer exactly the same product or service as you. For example, if you open a bicycle repair shop you’ll be in direct competition with other bicycle repair shops in the area. When you start your own business and Mike fancies a new bike or needs a repair you’ll be competing for his cash with other neighbouring bicycle repair shops and perhaps even the national chains that sell and repair bicycles.
Don’t forget about indirect competitors
Indirect competitors sell different products or services which satisfy the same need. For Bicycle repair shops there are many different indirect competitors depending on what use Mike has determined for his bike. If it is solely a means of transport then cars, public transport or even walking are competitors, however, if it is a means of exercise then gyms and other forms of exercise come into play. With respect to repairs, Mike could also decide to do the repairs himself.
Can your business idea compete?
Once you know what’s out there, consider how likely customers are to choose your company over the alternatives. Are your plans to compete for the same customers realistic? Will your customers have a reason to choose your business? This reason is called your “unique selling point” or USP and it’s what sets you apart from competitors.
Even if there are hundreds of bicycle repair shops in your area, opening a new shop might still be a viable plan if–for example–your USP will be that you’re the only shop in town that stocks certain specific spares or makes of bikes.
Why not take our startup quiz? You’ll get a personalised report for you to consider your options.
To take the quiz hit the button below. (This opens a new page).