So you have an idea. And you’re convinced it’s going to be the Next Big Thing. You’re even seriously thinking about throwing in your day job so that you can turn this brain spurt into your very own business.
Before you resign from your secure job and start planning lazy days around the pool while your yet-to-be-hired minions are running your yet-to-be-created empire, it’s worthwhile to consider a few critical factors.
1. Are you passionate about it?
Running your own business is damn hard work. While it can be romantic to think that you can work your own hours and call your own shots, the reality is that you’re often burning the midnight oil just to get it off the ground.
So ask yourself how passionate you are about your business idea. Is it the sort of thing that you wake up thinking about? Or it is simply that you’ve identified an opportunity in the market and know you can make money from it?
Whatever your answer, it needs to be underpinned with passion. Without it, your idea is dead before it even gets off the ground. That because it’s your passion that is going to get you through the tough times. And yes, there will be tough times. But it’s your passion – your crazy, obsessed belief in your idea – that’s will drive you forward.
On the other hand, if you view this business idea merely as a money-making opportunity, just remember that it may take a while before your cash-flow can provide you with the rock star life to which you have yet to become accustomed. So make sure you can dig deep and find the motivation to get you through the days when the EFTPOS machine breaks down, your supplier is late with his delivery and a customer complains vociferously about something that is totally out of your control.
2. Have you done your research?
This one is a doozy. I’m often asked to mentor people who are starting their own businesses. They’ve registered their business name. They’ve surveyed all their friends who wholeheartedly back the concept. They’ve even mapped out their strategy for world domination.
But after I ask only four or five questions, it becomes apparent that their initial idea for a business model is fundamentally flawed. “Research” isn’t simply asking your network whether your business idea is a good one. That part’s easy.
It’s not even about sussing out the competition. That’s easy too. It’s about thinking of every scenario, risk, cost and tax implication associated with your business idea. And then some.
I prompted one woman I mentored to do more research into the costs of selling her product. She was floored at the result. After investigating the idea properly, she discovered that her product was going to cost her four times the original estimate. She had to rethink the viability of her entire business.
3. Is it scalable?
If you truly want to be an entrepreneur, you need a scalable business. Let’s say you are a chiropractor. If you hang out your shingle and operate on your own, then your business is not scalable because there is only one of you – and only 24 hours in a day. There is a ceiling on what you can do and earn.
But let’s say you own a chiropractic clinic where you can employ or contract other chiropractors. This means clients are reliant solely on you to provide care. As long you can keep employing new chiropractors in your clinic, your business is scalable. And it can grow without you having to work extra hard or longer hours.
This is one of the biggest mistakes I see aspiring entrepreneurs make when they start out. They have a great idea but their business model is reliant on their input and involvement. If it’s not a model that can grow and expand then you’re not really starting a business, you’re just creating a job for yourself.
4. Will you get repeat business?
If you want a successful business – one that has potential to really grow and thrive – it’s vital that you are able to get repeat business from your customers. The gym and the coffee shop are perfect examples. Customers come back all the time for their regular workout or caffeine fix. On the other end of the scale, a wedding photographer would struggle to get repeat business from the same customer – for obvious reasons!
When you provide a great product or service, customers come back to you again and again. You don’t have to spend lots of money trying to market to and acquire new customers because you can rely on a huge chunk of your repeat customer base to keep you in business.
5. Do you have an entrepreneurial mindset?
Entrepreneurship is about taking risks. If you love the security of a regular paycheque and get stressed at the thought that you may not know where you next dollar is coming from, then be honest about whether the entrepreneurial lifestyle is or you.
Also be honest about what the entrepreneurial lifestyle really looks like. Many entrepreneurs will attest that they have never worked harder in their lives. That’s because, when you run a business, the buck stops with you. And if you’re starting out, then you are not just the business owner, you’re also the accountant, marketer and, sometimes, even the cleaner. It takes a while before you’ll have the cash-flow to outsource those tasks.
Ready to take the plunge?
Did you expect that no holds barred analysis of the entrepreneurial reality? The point isn’t to discourage you from becoming a business owner. The aim is to ensure you’re walking into it with your eyes wide open.
I see too many businesses fail, often because the founder is clinging to some romantic notion that they can run a business full of air kisses, networking, cocktails and successful team meetings, interspersed with regular stints in Bali to recharge.
That scenario is certainly possible. But it’s usually only one part of the story. Few business owners talk about the stress, the heart-stopping cashflow projections, the failures and the difficulties.
Yet despite its challenges, being an entrepreneur can also be one of the most exciting and rewarding journey in the world.
If you want to start a business in 2015…I can’t wait to hear all about it!