22 Dec
Small Business 101: Are YOU Suited to be an Entrepreneur?
Posted in Small Business 101 by Roger 9 CommentsWe’re rapidly approaching the end of the year, a time when we begin to think about what we’re going to do in the coming year. If you’re like me, your thoughts are probably turning to things like starting or expanding a small business, finding a way to earn money without having to go to work for someone else. But it’s one thing to think and fantasize about leaving your job and striking out on your own, it’s a whole different barrel of monkeys to actually do it.
There are some people who are cut out to be entrepreneurs, and others who aren’t. Much as we would like to believe that all we need is a good idea, some start up funds, and maybe a few employees to help us get things off the ground, there is more to it than that. Some of us just don’t have what it takes in order to be successful as a business person.
Let's See if You're Ready to Be Your Own Monkey!
How can you determine if you have the right traits to be a small business owner? Why, the same way we determine all personality characteristics nowadays: an online test! *canned sitcom laughter* Seriously, though, there are places to look to see what traits most entrepreneurs share. I like the one from Georgia State, myself, although our old friend, the Small Business Administration, has a checklist of their own.
Of course, since you’re already here, I may as well share the completely unofficial, based only my own experiences (including those with this very blog), Amateur Financier list of Entrepreneurial traits. *canned audience cheering* If you are seeking to start your own small business, you should ask yourself the following questions before you get started:
Entrepreneurial Quiz
Are you willing to work hard?
Probably the biggest determinate of the success of your enterprise (at least, of the ones in your control) is how much sweat and elbow grease you’re willing to put into your business or other venture. I’ve yet to hear of a business that requires little time and effort while still providing substantial monetary benefits (not counting various infomercial claims, of course). Starting a small business is like investing, putting in time in order to generate a profit in the future. Working on your business will require significant time, as much as a full-time job in many cases, if not more. If you are unable to put this level of effort into your enterprise, you’d likely be best served with a less time consuming investment, in something like mutual funds.
Are you a self-starter?
This is an important trait, one that goes hand in hand with out last trait. When you have your own business, there’s not going to be anyone looking over your shoulder, telling you what to do, setting deadlines, and providing regular feedback. You’ll need to be your own taskmaster, cheerleader, and manager, or your enterprise will simply fall apart if you don’t force yourself to keep your nose to the grindstone. (Well, if you have a spouse, they might help you to stay on task, but that all depends on whether they support your enterprise.) If you aren’t up for this level of work, you’ll be much better off finding a job you like, preferably at a stable company, gradually building up your savings and investments. (In spite of what Robert Kiyosaki would have you believe, gradually saving and investing while working a regular job is a perfectly reasonable and successful method of becoming rich.)
Are you willing (and able) to fail?
Let’s be honest, many businesses end up failing. Stores don’t get customers, manufacturers don’t get orders, even blogs sometimes find themselves not getting much traffic in spite of the bloggers’ best efforts. As an entrepreneur, you need to be able to accept these failures, learn from them, and move on with your next venture, and keep doing this until you find success. As for the ‘able’ part of this question, you need to be prepared for what will happen if your enterprise fails. Do you have adequate cash reserves to fall back on? Do you have a back up plan if your business isn’t a success (or isn’t a success as quickly as you’d hope)? Is your family going to be provided for should things take a turn for the worse? Ensuring that you know what do if things go wrong is important to guaranteeing you can try your hand at your own business without wounding your rump.
Are you confident in your enterprise?
Sorry if that last point brought you down, but hopefully your reaction was, ‘I’m prepared for the worst, but my business WILL achieve success’. Being confident in what you are doing may not automatically lead to success, but giving up on your business before its time is a surefire way to guarantee failure. The confidence you experience will help determine how much work you put into the business, how inspired any workers are, how much help you will offer to customers, and will generally improve your business’s chances.
Are you creative?
Creativity is one of those nebulous characteristics, which many people attempt to define with only moderate success. For our purposes, one of the major advantages of creativity is being able to deal with the many issues that will arise in the course of owning a business. Problems and difficulties will arise while running a business, and not all of them will have obvious, textbooks solutions. Being able to use your creativity in order to come to solutions for your problems is an important trait, one which is all but necessary if you start a small business and need to figure out how to solve problems. Learn, grow, and advance your skills, and you’ll end up coming out ahead. (See? Spend long enough discussing entrepreneurship, and even a pessimist ends up looking at the bright side of life.)
There you have it; meet these five requirements, and in my opinion, you’ve got a pretty good foundation (that is, yourself and your tendencies) to start building up your business. Good luck, and enjoy the life of a small businessperson.
(PS. To verify my identity to Technorati, I need to put this code up on the site to verify my identity: QAWWAA6GXBVG Soon, I’ll be Technorati bound!)
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Financial Samurai
on December 23 2009
Rog – I’ve got to admit I’ve answered YES to all your questions, yet i’m still chicken shit to do something completely on my own.
Hence, why I have a 3 year incubation period while I work, to see whether any success can come out of my site first before making the move. In actuality, I have a 10 year incubation period. If anybody can run a site for 10 years, ya gotta believe there will be some success no?
Financial Samurai´s last blog ..Playing Until My Knees Swell And Feet Bleed
Investor Junkie
on December 23 2009
@FS: Let me add this comment. It’s now over ten years ago I started a business. That partnership completely fell though in 2001 (a topic for another discussion)
I look at it as working out at the gym. What was once very difficult, is now very easy.
At the time it was a VERY hard decision for me to make. After all I was working for a startup that was about to go public. I tormented over it quite a bit and at the time was the hardest decision I ever had to make. In retrospect now I would have done it in a heartbeat and make much tougher decisions daily. After all my salary was somewhat being supported by other biz partner. Today it would have be a no brainier.
He’s what happened in retrospect. The company went public and, at the time was one of the biggest IPOs of that year. In the end their stock went to zero and went bankrupt. Most of my friends never sold their stock loosing any investment (I was fortunate enough to sell most close to the high point) The biz partner I started with was awful and I dumped him in 2001. Though the learning experience was second to none! What I learned indirectly was priceless, and was worth the price of admission.
I believe you are doing it correctly “baby steps”. I would keep it no longer than 3 years and actually I would keep it less than that. artificial timeframes do wonders on the psyche.
To comment on this article. I recommend reading the E-myth. You need to be a business person first, your technical skills while important are second. You must be a sales person/marketer first. Starting a business is very much a you vs. yourself. You are your own worse enemy and your business is the weakest in the area you are weakest in.
I could go on and on about this subject and will post some blog entries about this in the future.
Investor Junkie´s last blog ..Mint Review: Should I Use Mint.com?
Financial Samurai
on December 23 2009
Sounds good IJ. Thanks for your insights! A topic of a post in the making is “Is Making TOO Much Money A Curse”, which talks about fear and paralysis.
The problem with my industry is that the pay is not bad, which makes the cost of entrepreneurship that much greater.
Sounds like you’ve got yourself a passionate new self post or guest post to write IJ!
Financial Samurai´s last blog ..Are Credit Cards Weapons Of Mass Financial Destruction?
Investor Junkie
on December 23 2009
@FS: Like Nike says “Just DO IT”. Heck the CEO from Blulldog you interviewed, I’m sure was making more or similar to what you are making now? Why did he leave? Same reason we all do. To fulfill our dreams. In ANYTHING I do, I always ask the question, “when I’m old will I regret NOT doing it?”
Steve Jobs said to John Sculley when he was working at Pepsi “Do you want to spend the rest of your life selling sugared water or do you want a chance to change the world?” Granted Sculley ruined Steve and almost killed Apple, but that’s a whole other story.
Investor Junkie´s last blog ..Open a Chase Sapphire Card – Get 10,000 Bonus Points
Financial Samurai
on December 23 2009
I think most people who work, actually don’t really hate work as much as they think if they are given the decision to quit and face the unknown.
Shu at Bulldog made good coin indeed, but when he left, he was only an Associate then.
We shall see!
Financial Samurai´s last blog ..Playing Until My Knees Swell And Feet Bleed
Investor Junkie
on December 23 2009
So you are making the pain not great enough of not doing your own business over the pain of the unknown. I can say from experience, the worst fears rarely happen, it’s the one’s sneak up on you (meaning you never thought about) are the killers. It’s all about risk management, which (in a roundabout way) I talk about in this blog post:
http://investorjunkie.com/merry-christmas-we-are-canceling-service-with-your-company
So your company is basically “paying you off” to not start your business eh?
Investor Junkie´s last blog ..Open a Chase Sapphire Card – Get 10,000 Bonus Points
Roger
on December 24 2009
Wow, it’s not often I see such an interesting discussion inspired by my post (actually, this the first time I’ve seen something like this on my blog). I’m not really sure what to add. FS, I wrote this post more directed at people my age who might be tempted to start a business without considering just how much time and effort it can take. It sounds like you have a much different cost/benefit calculation than I would, and of course, you should do what’s best for you and yours.
@Investor Junkie: I’ll have to read The E-myth soon; it’s one of the many (oh, so many) books that I need read when I have the time and opportunity. I’ll take it, and all your other advice, under advisement for my own purposes. Thanks for stopping by and for all the great comments.
Financial Samurai
on December 25 2009
Rog – I’m just beginning to wonder whether people just like to argue with me! lol.
Merry Christmas! It’s 1am there, but only 9pm here!
Best, FS
Financial Samurai´s last blog ..Everything Is Rational – The Answer To All Things Irrational
Roger
on December 26 2009
Maybe; I know that I’m more inclined to response if I disagree with a post rather than agreeing with them. And merry *looks at the calendar* Boxing Day to you!