There are a number of different reasons for starting a business. Some individuals are interested in “trying something new.” Others work to solve a problem or meet an expressed need, want independence, or are trying to increase their income. Whatever your reasons, you must do so with your eyes open – this includes considering the downsides just as much as the bright sides of owning your own business. A great deal of thought and research should go into making a decision that will affect you and your family for a long time to come.
- Failure. Entrepreneurs must assume the emotional and financial risks of failure. In fact, the failure rate for new start-up businesses is high.
- Time. A major drawback to starting a small business is the tremendous amount of time it takes to make the business successful; most report 60-70 hours per week as normal. Small business owners spend an average of 12 hours a day, 6 days a week on business activities.
- Family. Because of the strain of operating a business, families can suffer. Many entrepreneurs find that the lack of time for family, community, and personal activities is the highest price they pay for business ownership.
- Money. Most start-up businesses have their own money at risk. If you need financing, you will be expected to provide 20% or more of the total funds. It is normal for small businesses not to earn a profit in the first two years, and the number one reason that small businesses fail is because they did not have enough working capital to survive those first two years of operation.
Naturally, there must also be some rewards or no one would ever start a small business. These are different for each person but some of the common positive aspects are:
- Independence. For many, the freedom to “be their own boass” is chief in their decision.
- Money. The financial returns from your own efforts are not limited to normal work for normal pay. You may have the opportunity to make a lot more money than you can make working for someone.
- Fun. Many entrepreneurs describe what they do as fun – that is, they really enjoy what they do!
There are three key areas that you should evaluate before jumping into a business endeavor headfirst: your personality, your business skills and your lifestyle. The assessment tools below will help determine how ready you are for starting a business, pinpointing areas where you may need to develop some additional skills.