I've been asked what it's like being your own boss before and have developed a standard response:
It has its ups and downs. On the downside my boss is an obnoxious jerk that pushes me relentlessly.
On the upside I'm sleeping with his wife.
Have you given any thought to leaving the "security" of a regular paycheck and going out on your own? If so, this entry is for you. It is my not so humble opinion that working for yourself - owning your own business - is one of the greatest experiences a person can have. I equate it to the difference between living in your parents home and going out on your own and getting a place to live as a young adult. It is initially pretty frightening but the feeling of independence and growth is incredible and once you’ve done it successfully you cannot imagine going back to live with Mom and Dad.
I recognize that not everyone is cut out to start his or her own business - or even work outside the structure of a corporate environment. The skills required to start and then successfully run a business are not always the same and require that you switch gears quite a bit.
I’ve collected a list of attributes that can help you determine if you are the kind of person that can start your own business. I’ve been networking with the owners of businesses of all shapes and sizes for many years and found quite a few common themes that I hope you will find valuable.
You are a good candidate to start a business because…
You are willing to take risks
This is the most obvious one – so obvious I hesitated including it on the list. Starting a business is a risky proposition. You need to be sure that you have set yourself up as much as possible to absorb the risk associated with starting a business, especially the financial issues. Only you can determine what level of risk is acceptable but a good rule of thumb is to have enough money or financial security squirreled away to last you through the time it would take to land a regular job. I’ve known people that didn’t feel comfortable until they had a year of living expenses and others that had virtually no savings, just a surplus of confidence.
It may be possible for you to start your business while you are still employed by someone else – if so, that’s outstanding. Just make sure you are not going to violate any employment agreement you may have with your company and, if it’s at all possible without jeopardizing your job, let your boss know what you are doing. It is much easier to operate in the clear light of day.
You are an optimist (but a pragmatic one)
If you are going into business by yourself it is critical that you are an optimist. Not someone that lives in a state of denial the entire time mind you – you have to be realistic – but someone that sees positive potential in most things. If you are constantly looking at why something will fail you are going to go out of business pretty quickly. It is the job of others to tell you why something can't be done.
This is not to say that you cannot have pessimist as a partner. Very often having someone that balances out an optimist and throws a dose of reality on the situation creates a good balance.
You have a vision for your business and can share it with others
Having a good idea is one thing, being able to articulate it well and get others excited about it is another. If you are going to be the one that starts the business you have to be able to get others excited about it. Keep in mind that friends and family will usually love anything that you present to them. Get outside of your circle and comfort zone by asking people that would be potential customers or clients.
The list of people that you need to convince that you have a great business concept is quite long: potential employees, bankers, venture capitalists, partners, distributors, landlords, etc. All of these folks will want to hear from you why they should take a risk on your business.
You can modify your lifestyle
When you are first starting out it is critical that you can adopt a frugal life style. While you were gainfully employed you may have eaten out often, taken nice vacations or bought a new car every couple of years. You need to be able to adjust that quickly to take up the slack and minimize your financial risk. That frugality will help you with the business as well – it’s all a mindset kind of deal.
A frugal life style will lead to a closely monitored business.
You have a great relationship with your life partner
If you are living with someone or are married, it needs to be a strong relationship. Some people have successfully started and built up businesses while they were in a lousy relationship – the business became a sanctuary, something that kept them away from the person they didn’t really want to deal with anyway. Others have had a relatively fragile relationship fail when faced with the time commitment, stress and financial burden associated with a new business.
This one is very personal for me. I was blessed with a fantastic wife that supported me every step of the way. On the days I just felt like I couldn’t deal with it I had her to turn to. When I questioned why I was going through the painful process of starting my business I would look at the photos on my desk of my wife and three children. It was all the inspiration I needed to make it work.
If you are in a relationship you need to know if your partner is going to support you. It will not be all happiness and light mind you – my wife and I got into many heated debates on issues that were complicated by the stress of running the business. If however we had a defective relationship it likely would have failed.
You are a jack-of-all-trades
Have you ever been described or described yourself to others as a jack-of-all-trades? If so, that’s a good thing when starting a business. If you are starting the business by yourself then you are obviously the CEO, but until you get employees you will also have a couple more key titles:
- VP of Marketing: You need to develop and execute a plan to promote your product or service.
- VP of Sales: You have to develop a sales process and make it happen
- VP of Development / Production: Someone has to build your product or provide that service. That someone is you. Outsourcing it? You still have to manage it.
- VP of Support / Customer Service: You will need to deal with customer issues and resolve problems people have.
- VP of Finance / HR: Run your accounting software (Quickbooks is a popular choice), pay the bills and manage any employees you may have.
Depending on the type of business you want, one person can pull off all of these roles and still lead a semi-normal life, though like anything else you need to be pretty good at them if you want it to be successful.
You get easily frustrated with bureaucracy
As companies grow larger they develop processes and systems to help them run more efficiently. Over time those processes evolve and change and can become less efficient. If you are working in a company and see all the places where processes can be improved or eliminated, you have a trait that is valuable in starting your own company.
If you work for a company that is unwilling or unable to change an inefficient bureaucracy and it drives you nuts, you have some of the fuel required to power your business.
You want financial independence
One day you look at your finances and realize that while you thought you were running hard in a race you are actually running on a treadmill. Between car payments, a mortgage, living expenses, etc. you make a decent living but you are not advancing your lifestyle to your satisfaction. If you have children then it’s even more pronounced because you have their living expenses and education to worry about as well.
In my experience the best way to provide yourself with the opportunity for financial independence is to control your own destiny, and that means starting your own business. Not every business is destined to create great wealth for the person that starts it. Many people create life-style businesses that generate just enough revenue to pay the owners a good wage.
Whether you are creating a business with the intention of selling it to obtain wealth or you are creating a long term life-style business, either can provide you with financial independence.
You don’t give up easily
A critical characteristic for a person starting a business is persistence. You need to be able to face rejection and failure not as a personal thing but as a challenge to improve. A new business faces many obstacles that will tear you down and make you want to run screaming for the perceived safety of regular employment if you let them get to you.
You must have a “Yeah, we can take that hill” mentality and like a good challenge.
You like to work really hard
The final attribute I’ll talk about is your work ethic. If you want to build a successful business you have to have the capacity to work very, very hard. You will often hear people say that it’s not about working harder; it’s about working smarter. That mindset is great for employees that have well defined jobs but fails when it comes to a person starting a business. You have to work smarter AND harder because there is so much to do.
If you are a clock-punching kind of person then clearly you should not be starting a business.
Do you have it in you?
I tried to keep my perspective and advice as general as I could so if you were thinking of starting virtually any kind of business this would apply. In future articles I will get a little more specific to Internet and software based businesses.
I hope you enjoyed reading this as much as I enjoyed writing it.
Copyright © 2008, David Alison. All rights reserved.