We’ve all heard about the risks of starting up a business.
Often people who are starting up gain encouragement from well-meaning friends enthusing about how experienced and skilled the start-up candidate is. Kind words can perhaps unintentionally disarm an entrepreneur into believing that it is obvious they will succeed. So before you turn your great idea into a business, there are some tough questions you need to ask yourself. The time spent should be considered an investment. After all, it’s much better to face the tough questions before you start your business than later when you not only own the business in question but may find the answers really tough to handle.
Big Ask #1 – Do you have a sufficient skillset?
Do you have the basic skills to provide what the business is offering? Competing in the commercial market place will require professional experience greater than any an enthusiast or hobbyist will have acquired. Food outlets are classic businesses that attract people with an appreciation of great food and service who are competent cooks and expert customers. Commercialisation of any task takes it to a whole new level of professionalism with customers that will have great expectations. If you don’t have the skills already, take time to research what skills you need to acquire to succeed in your industry of choice.
Big Ask # 2 – Can you manage?
Let’s assume that you do have expertise in the core business. Do you have any experience in managing such a business? This sounds obvious but let’s be frank, doing a task at a professional level is not the same as actually managing the overall operation that supports the delivery of that product or service. Managing your own business is a hands on business. Find a course about managing a small business. Time spent on a course is not a delay to starting up you own business it is an investment in the main player of your business being you. Maybe if you are lucky you could find a friend in the same business to show you the ropes from a manager’s point of view. A week hanging around an operation can be a real eye opener as to how many cogs are really in a well organised machine.
Big Ask #3 – Do you know how to budget?
At this stage in your life, do you have a personal budget? You may wonder what that’s got to do with setting up in your own business, but the discipline of having a personal budget will provide a good foundation for a business budget. Running a business is just like running the family budget with added traps for young players. What can go wrong? Cash flow is the first risk. Earning money in your own business doesn’t mean that you actually get the money that is owed. A business budget will include collecting the money that you earn from your customers. If you don’t collect the money owed, you don’t get paid, though everyone else will expect and demand that you pay them. Cash flow has two obvious sides. Income from your customers and outgoings to people your business owes money to. The outgoings side of cash flow such as wages and rent will always be guaranteed to keep on outgoing. The income side is the challenge. Understanding cash flow management is a vital survival skill for anyone who is considering setting up in business.
Big Ask # 4 – Are you able to sell?
Can you sell ice to Eskimos? Many people who set up businesses are highly skilled. However, products and services don’t sell themselves. Many technically astute people really deep down are not salespersons. Ask yourself honestly, have you actually sold the product or service that you will be providing? Or do you have a partner who can sell? If you have any doubt, maybe a spell in a job as a salesperson would augment your skills before you set up your own business.
Big Ask #5 – Will you invest in learning?
Would you ask a stranger to invest in your business or is it just too complex to explain all the good points? Before you invest in your good ideas maybe just step back a little and invest in your best asset. You. Maybe a course for small business owners would give you the confidence to ask stranger to invest in your business. When you have that confidence and knowledge you may well be one big step closer to being successful in your own business.
If you’ve read the above and are ready for the challenge, then you’re likely brave enough to begin the set up process. Support that bravery with what some would see as humility. Attend seminars and short courses for small business owners, before you set up. Meet others who have started the journey. The bravery or humility to ask a simple or silly question of a veteran is what can separate successful people from those who became a business failure statistic.
About the Author:
Alan Manly is an entrepreneur with extensive experience owning and managing SMEs. He is also the author of When There Are Too Many Lawyers … There Is No Justice ($24.95), visit www.whentherearetoomanylawyers.com.au