How to Know If You’re Up to the Challenge of Owning And Operating Your Own Business
by Scott K. Schmidt, Chief Financial Officer at U.S. Money Reserve
If you’ve always dreamt of owning and operating your own small business, there are a few things you should know before jumping in.
Starting your own business is at the heart of the great American Dream. Being your own boss, making your own money, pursuing your passion, and being able to pursue your dream of becoming financially independent are at the heart of why most people decide to try to start their own businesses. In fact, more than 430,000 small businesses get started each year, according to the most recent statistics from the Small Business Administration. On the flip side, roughly 400,000 small businesses close their doors each year. That can and should give you pause if you’ve ever considered owning and operating your own business.
You should ask yourself a number of critical questions before you decide to jump into owning and running your very first business. Here’s how to know if you’re up to the challenge of becoming a successful small business owner.
Be Ready to Work Hard
It’s no secret that small businesses require lots of time and hard work. Back in 2005, Gallup did a study that shows most small business owners work an average of 52 hours or more per week. While the statistic is pretty old, it’s commonly cited as the standard. Of those surveyed, 57 percent said they work a minimum of six days a week. If you have a family or others to attend to outside of your small business, that kind of work commitment can significantly infringe on the time you spend with your family and friends.
One of the first things you should do if you have a partner or family to consider is have a conversation with your loved ones about owning and operating a new business. Since your work will significantly impact them, your finances, your time, and your availability, the decision is best made together.
One way to pressure-test your idea for owning and operating your own business and a way to know if you can handle the added workload is to come up with a comprehensive business plan. Writing a business plan can help you hone your idea, learn more about your market, and do a real hard-number analysis of what you will need to make the business work. Creating a business plan is one of the very first steps you must take when you begin to get serious about starting your own business.
Prepare to Be Okay with Constant Uncertainty
Uncertainty is part of life, but as a new small business owner, you need to be prepared for feast and famine, especially as you begin the new business. According to a 2016 Bank of the West report, one of the top three concerns that business owners struggle with is uncertainty. In that particular survey, respondents said that uncertainty, always being on the job, and avoiding burnout are the biggest challenges they face.
So how should you prepare yourself for the uncertainty? First, it’s essential to understand what causes uncertainty in business. The worldwide economy and world events can have a significant impact on any small business. When the world economy softens, small companies tend to be the first places that feel the effects. As an example, take the global pandemic we’re currently facing in the form of COVID-19. There’s no way to know how long the virus might take to contain, and it’s already caused the closure of several small businesses all over the world. It has also had a significant impact on world markets. There’s simply no telling how long that impact will last, what form it will take, and which businesses will survive and which will crumble. Like the 2008 recession and the collapse of the auto industry, the impacts could be wide-ranging and quite severe.
In addition to economic issues, your business can be impacted by shifts in consumer behavior. Take the boom in the subscription model that has recently started to slide into a downturn, according to CNN. What was hot and booming one year might see a significant contraction the next. There is simply no way of knowing how consumer behavior might change from one year to the next.
To prepare for these kinds of uncertain events, it’s essential that you do your best to stay in the now and operate within your means — but it also means that you need to plan for multiple outcomes. You should also leverage your relationships to stay on top of potential changes and upcoming moves that could impact your business.
Be Ready to Ask and Answer the Hard Questions
Being a small business owner means being ready to ask and answer tough questions. The process of building your business plan will help you get to the heart of those questions.
Some things to consider when you are starting to think about opening your own small business include:
- What problem am I solving, and how much are people willing to spend to solve that problem? If you can’t answer this question right off the bat, then you need to do some work to refine your idea before you even begin to consider starting your own business.
- What are the minimum funds I need in order to start this business? Once you have a clear idea of what you need to begin your business, you can start putting that funding aside or start looking into ways to finance your idea. There are plenty of options out there for first-time business owners and startups. The Small Business Administration offers a wealth of information on financing options.
- Who else is doing this, and what is my own special addition or angle? Plenty of people have ideas for small business startups, but what makes an idea and a business unique is what you, as the owner and operator, bring to the table. Your experience, your background, and your location can all be unique things that make your business idea stand out. Consider the entire scope of your life while working on your business plan, and you might be able to better define what makes you the right person to start a particular business.
These questions form the backbone of what becomes your business plan. For each of them, plan to get deep and really dig into the answers.
Get a Mentor
One of the critical things you should do when considering starting a small business is to tap into your contacts and find a mentor who can help you navigate the start of a new business. You can choose someone you know or reach out to someone who you admire on LinkedIn and see if they might be open to mentoring a new business owner.
A mentor can help guide you through some of the potential pitfalls of starting a new business. According to Inc. Magazine, you are more likely to succeed as a small business owner if you have a mentor, by as much as 93 percent, in fact. Getting a mentor can help you hone your business idea and make it more marketable. It can also help you pressure-test your small business concept and ensure that it’s really a viable idea before having to spend a penny.
A mentor can also help connect you to others in the business space who might be able to help you. As a small business owner, networking is still crucial, and the better your network, the more likely you are to succeed as a first-time business operator.
To Succeed as a Small Business Owner, You Must Be Passionate
It should go without saying: Passion is a vital part of being a small business owner. I’m not talking about a passing fancy, either. At its core, passion is what drives you to do your best every single day and continue to show up even when things get hard. Without passion for your work or about starting your own business, you are more likely to throw in the towel and make decisions that might not benefit your small business.
One thing to note about passion is that it too can be learned. Maybe you aren’t passionate about something like managing payroll, but in order to run a successful small business, you need to be able to deal with payroll and manage it. By extension, your passion for being an entrepreneur and running your own business can spill into a passion for doing payroll.
The Bottom Line on Owning and Running Your Own Business
Owning and operating your own small business is an exciting prospect and one that thousands of people consider each and every day. There is a certain romanticism to the idea of being your own boss and running your own ship. The truth is that you need to do some deep soul searching and hard work before deciding to strike out on your own. Taking well-considered steps before starting your own business will help increase the likelihood of success down the road. By ensuring that you have the passion, are ready to do a lot of hard work, can log long hours, do a considerable amount of deep soul searching and questioning, and find the right mentor, you too can find success in startup life. Being your own boss and owning your own company can be one of the most rewarding and invigorating jobs in the world, but it helps to do your research before you decide to take on the challenge.
Follow U.S. Money Reserve on Youtube
