Entrepreneurship, to an outsider looking in, may appear exciting and glamorous. Business owners get to set their own schedules, work at their own pace and follow their dreams. It’s so appealing that many envious individuals (with an idea and an entrepreneurial mindset!) may feel like it’s time to ditch their 9 to 5 jobs and become an entrepreneur themselves.
The reality of entrepreneurship, of course, is that it’s a lot of hard work. Becoming a small business owner means seriously committing to the business every day. You must be able to overcome challenges, be driven to reach your goals, and have a well-constructed business plan that lays out the groundwork of your startup.
Think you can handle it? Ask yourself the following questions to determine if you’re on the right path.
Do you have a viable business idea?
What kind of business are you starting? For as much as you may think your offerings and services may be a hit with customers, you’ll need to be able to test whether or not that idea can be turned into a viable business.
Figuring out if you have a viable business idea means asking yourself specific questions. For example, what makes the idea unique? Is there proven demand for what you’re doing in the industry? You’ll further detail these answers in a thorough business plan, which we’ll discuss more in-depth momentarily.
In addition to asking questions about how viable your business idea is, you’ll need prospective customer feedback. Family members and friends often provide entrepreneurs with unconditional support. However, they may not be able to be as honest and objective about your idea. Reach out to individuals that you would target as prospective customers. Conduct surveys or focus groups that allow you to better determine if there’s interest in your offerings.
Did you create a business plan?
If you’re exiting a full-time position to become an entrepreneur, you need a plan. More specifically, you need a business plan that will provide the foundation for your startup.
Here are the essential sections every business plan must cover:
- Executive summary: This details what your business does, its industry, where it will be located, how it makes money, and why consumers want to pay for its offerings.
- Business description, concept and strategy: This section goes a little bit more in-depth about your business. Here, you should be able to note where the business idea came from, what makes your business idea unique, the goals for the business, and steps necessary to reach them.
- Industry analysis: Who makes up your competition? This section will outline the competition, both direct and indirect, to your business.
- Market analysis: Who is your target audience? Flesh our your demographics and plans for capturing, retaining and attracting this audience.
- Organization and management: Outline everyone working at your business. If it’s just you, create a biography for yourself that includes your background, experience and core responsibilities.
- Financial projections: Tables are kept here that detail projected profits and losses and the company’s cash flow.
- Financing request: Will you need funding from investors in the future? If so, outline how much you’ll need in this section.
- Appendix: This part of the business plan is where other miscellaneous business items, like your trademark registrations and letters of incorporation, may be kept.
It’s important to note that writing a business plan doesn’t automatically mean that the business itself will be successful. However, it does mean that you have an understanding of the business idea and a vision for the future. This document will guide you forward in that journey, and also be examined by potential investors interested in financing your company.
Are you financially prepared?
Becoming an entrepreneur means saying goodbye to certain financial certainties you might have previously taken for granted, like regular paydays. From here on out, you’ll need to track the following aspects of your financial health:
- Startup funding: You may utilize your own savings, take out a loan, apply for grants or utilize alternative funding as a means to fund your startup.
- A financial safety net: Establish a few nest eggs to fall back on if money is tight during a particular month or unexpected expense surfaces.
- Input vs. output: If you’re not already tracking how much you spend versus what you earn, now’s the time to create spreadsheets so you have a clear understanding of how much you’ll need to make to survive personally and professionally.
- Existing debt: Before taking on the debt of the business, try to pay off any other outstanding debt you may have first, like student loans or credit cards.
Is your business incorporated?
Incorporation isn’t typically one of the first things a new business addresses, but it should be taken care of as soon as possible.
By incorporating or forming an LLC, you provide your new company with liability protection. This means that your business is considered to be its own legal, separate entity. In the event that something unforeseen should impact the company, having incorporated it will ensure your personal assets are not affected.
Can you maintain the hustle?
Entrepreneurship really is a grind. What the outsider sees looking in (that flexible schedule, the ability to pursue your dreams, the Instagram shot of your work desk) is only a snippet of that life.
The reality is that your schedule will consistently keep you “on” around the clock. You’ll be chasing your dreams, but also learning how to solve the challenges that come with them.
Ultimately, you can succeed as an entrepreneur if you have a viable business idea and a drive to set your company into motion. Remember to set aside some time to rest up and recharge where you can, even if it’s just a few minutes. Keep your “why” for being in business at the forefront of your mind, and give it your all each and every day.