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THINKING OF STARTING A SMALL BUSINESS?

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Part 1. Three Questions to Ask Before You Start Your Own Business

Thinking of starting a small business? You’re on the right track. There’s a lot of thinking to be done before you start your own business.

Starting a small business is one of those huge, life- altering events. Think of it as a marriage; running a successful small business takes the same depth of commitment and desire. As in a marriage, you’re going to be living with your business 24 hours a day, 365 days a year. Like any relationship, if you want your small business to be successful, you’re going to have to work at it. And it’s going to have its ups and downs and surprises.

But on the positive side, if you’re the right person with a solid plan, starting your own business can be the most satisfying, exhilarating experience of your life.

Examine Your Heart  

The first step is to examine whether or not starting a small business is right for you- not your neighbor, friend, coworker, or whoever else is trying to tell you that you should start your own business.

The main quality that you have to have to start your own business is a burning desire to do it. Running a small business isn’t for the ambivalent or indifferent. You have to really, really want to be your own boss, transform your dream into reality, or market your product or service.

Look inside yourself and ask these three basic questions before you start your own business.

  1. Do you really want to operate independently and be the person making all the decisions and shouldering all the responsibility?
  2. Are you willing to work hard and make the sacrifices starting a small business entails?
  3. Do you have the self-confidence and self-discipline that will enable you persevere and build your new enterprise into a success?

If you’ve answered “no” to any of them, you’re probably not ready to start your own business. Overnight success stories are just that…stories. The reality is that success is won through hard work over time. And you want to start and run a successful small business, don’t you?

If you answered all three of these basic questions positively, then you’re ready to think seriously about starting a small business. But not everyone who wants to start a small business is cut out to actually run a business. Are you enough of an entrepreneur?

 

Part 2. The Entrepreneurial Qualities

Are you an Entrepreneur? There are certain traits and attitudes that make some people more suited to running a successful small business than others. In one study where entrepreneurs were given a list of attributes and asked to rate their importance for success, the seven most highly ranked qualities were  perseverance, the desire and willingness to take the initiative , competitiveness, self-reliance, a strong need to achieve , self-confidence, and good physical health (William E. Jennings, “A Profile of the Entrepreneur “ in Entrepreneurship: A primer for Canadians).

None of these are particularly surprising; you’d expect a person who was a successful entrepreneur to be self-reliant and self-confident . The qualities that the same group of entrepreneurs ranked as least necessary for success may surprise you, though; a strong desire for money, patience, being well organized, and having a need for power all ranked at the bottom of the list.

Human Resources Development Canada presents a very similar view of the qualities needed for entrepreneurial success in their booklet Minding Your Own Business.

Their “Reality Check for Small Business Owners “ emphasizes qualities such as persistence , self- confidence, and flexibility . For instance, entrepreneurs “believe that they control their own destiny , they refuse to be at the mercy of others or of events. As a result, they take the initiative in starting projects and getting ideas, off the ground.”

All of these sources equate being a successful small business person with being an entrepreneur. That is, the underlying assumption is that you need to have a sufficient number of “entrepreneurial qualities” to run a successful business.

Feeling better about how your personality fits the entrepreneurial profile? Good! You wouldn’t be reading  this article if you weren’t a self-confident, energetic person who enjoyed challenges . But even if you have every entrepreneurial quality every study has ever listed, you won’t get anywhere if you’re not equipped to put all those positive traits into action. What are the abilities you need to succeed when you start your own business?

 

Part 3. The Abilities You Need To Start Your Own Business

What abilities do you need to have to succeed in starting a small business? According to studies conducted by the Bank of Montreal Institute for Small Business, “The Six Success Factors “for starting a small business are self-motivation, business and industry knowledge , organization and management capabilities , marketing skills, customer/vendor relations , and vision.

Business and industry knowledge should be near the top of anyone’s list of requirements for small business success. After all, how many skis or snowboards are you going to sell if you don’t know anything about the products or the sport? You can acquire this knowledge through trial and error when you start your own business, but you will probably have to declare bankruptcy before you learn all you need to know.  My theory is that lack of knowledge is one of the prime reasons so many new business fail.

While entrepreneurs themselves didn’t rate being well organized highly (William E. Jennings, “A Profile of the Entrepreneur” in Entrepreneurship: A Primer for Canadians), it’s logical that organizational and management abilities are also absolute necessities for business success. You’re not going to be able to satisfy many (if any) clients or customers without these skills.

People keen to start their own businesses sometimes forget about the managerial and administrative skills necessary to run a business; if you’re going to start a successful small business, you need to have or develop expertise in money management, managing people, directing business operations , and directing sales and marketing operations.

What are the other abilities you’ll absolutely need if you’re going to start your own business? When twenty-one inductees into the Babson Academy of Distinguished Entrepreneurs were questioned about the principal reasons for their success, only three abilities were mentioned by all twenty-one; responding positively to all challenges and learning from mistakes, taking personal initiative, and having great perseverance (“Assessing Your Potential for an Entrepreneurial Career”, Manitoba Industry, Trade and Tourism 1999.) As the authors point out, all three of these behaviors can be learned!

Investing the time to learn the skills you need before you start your own business is especially wise because once you’ve decided to put so much energy into starting a small business, you’re going to want it to develop into a viable, thriving enterprise. Sadly, there’s a large percentage of small businesses started each year that survive less than two years. Read on for tips on how you can avoid business failure.

 

Part 4. Avoiding Business Failure

Most small businesses fail because of mismanagement. According to Statistics Canada, (“Failing Concerns: Business Bankruptcy in Canada”, November 1997,) most businesses fail because of weak general management, weak financial management or weak marketing capabilities.

23 percent of Canadian small businesses fail in their first year and 22 percent fail in their second year, which means that 45 percent of the small businesses started in this country don’t survive more than two years.

How do you avoid business failure when you‘re starting a small business? Preparation and planning are key.

This article is all about the first step in preparing to start your own business, exploring your attitudes and abilities to determine whether or not you want to start your own business. From here, if you’ve decided that starting a small business is right for you, the next step of preparation is to decide what kind of business you want to start and begin working on your business plan.

When you’re wondering if you’re suited to start your own business, quizzes are fun, but it’s important to remember that getting a low score on any of these “tests” doesn’t mean that you’re not cut out to be an entrepreneur and that you should forget all about ever starting a small business. Research leads to many generalizations that are not true in the individual case- and you may be the exception.

What do you really want to do and why do you want to do it? “Do what you love” is still sound advice: having a passion for what you do will fuel your commitment and give you the energy you need for the long haul. Thinking of starting a small business? What is your “burning desire” and how can you shape it into a reality that will provide you with both satisfaction and a profit? That’s really the only question you have to answer to start your own business.

By Susan Ward

Culled from About.com 

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