10 things to consider before becoming an entrepreneur

Carol Roth - The Globe and Mail The following top 10 list is adapted from Carol Roth's book The Entrepreneur Equation Are you tired of working for someone else !o you think starting your own business could set you free Think again" The failure rate for new businesses is gloomy# $n fact% the great ma&ority of businesses 'up to (0)* fail within fi+e years# The reality is that the a+erage business does less than ,100%000 in sales% is not inno+ati+e% and has no plans for growth 'from -rofessor .cott .hane% in his book The Illusions of Entrepreneurship*# The ma&ority of businesses '/0)* do not earn a profit o+er their lifetime# 0et despite incredibly high failure rates% o+er / million people start a business each year# 1efore you decide to &oin the ranks of the self-employed% find out if business ownership is right for you# Are you ready to be an entrepreneur Consider these 10 steps# Step 1: Define your motivation. Ask yourself why you really want to start a business# Are you looking to get rich 2uick !o you want to showcase your talent or ser+ice Are you tired of your boss taking credit for what you do These are not reasons to start a business# 3n the other hand% if you lo+e the idea of running an entity% if you like creating systems and procedures% adore ser+icing customers% and if you thri+e on wearing many different hats and balancing responsibilities% then entrepreneurship may be something to look into# Step 2: Say hello to your new boss. 4ait% $ thought $ was in charge now# 5ot e6actly# 4hen you start your own business% you are no longer in control# And% you may not ha+e the freedom you think you do# .ee% you are controlled by your customers% in+estors% and lenders - and you are personally responsible for answering to all of them% all of the time# Step 3: Evaluate how well you work with others. Many people dream of opening a business as an escape - from the annoying coworker who won7t lea+e you alone% or from an o+erbearing boss# 1ut ha+ing a business doesn7t mean you no longer ha+e to interface with people# $n fact% it7s the opposite# To get clients% in+estors% and others to help you with your business 'including accountants% lawyers% and more* you7ll need to keep your people skills sharp# Step 4: Add up your responsibilities. 3wning a business is +ery much like raising a child# $t7s a 89:; &ob# 4ill you be able to respond immediately when your <child< has an emergency $f anything happens to the business 'including a loss of your in+estment money and income*% how will it affect your family or home life Consider the worst-case scenarios when e+aluating your responsibilities and impact to your current lifestyle#

Step : !ook at your mana"ement and industry e#perien$e. 1eing able to manage employees and +endors is the type of entrepreneurial skill you7ll need to ac2uire before starting your own business# 0ou7ll also need to know your industry inside and out% including aspects you may not be familiar with or may not e+en like% including marketing% accounting% and more# !on7t ha+e the e6perience you need .pend time working in a similar company% shadow a business owner in your industry% or accept an internship# Test the waters first with a trial run before you start your own company# Step %: &ake sto$k of whom you know. 1usiness comes down to not what you know% but whom you know# $f you don7t know many people% you may be tempted to o+erlook &ust how important it is to network and be connected# 1ut good connections are worth their weight in gold# They will get you interest from in+estors and lenders# 0ou7ll recei+e better financing% prices% terms% and conditions from business suppliers and professional ser+ices# And you7ll recei+e more customer referrals# Step ': (e honest about your relationship with money. Are you financially responsible !o you ha+e any money to in+est in your business% or will you be relying on others !o you panic about spending money or a+oid financial risk at all costs !on7t e6pect your relationship with money to change &ust because you7+e opened a business# 3pening a business re2uires money -- enough for you to start% operate the business and to li+e on -- as well as sound financial management# Step ): Assess your personality type. !o you prefer the <status 2uo< and like to a+oid the une6pected Can you handle a life of highs and lows - including financial highs and lows Could your sa+ings and bank account handle financial lows as well $f you are a person who likes stability and control% or if you prefer when things go as planned% the roller-coaster ride of a new business may not be right for you# Step *: E#amine the marketpla$e and your $ompetition. 1efore you leap into entrepreneurship% take a hard look at the marketplace and your competition# $s your market saturated with successful businesses $s your industry littered with so many bad businesses that it7s de+eloped a bad reputation 1oth good and bad competitors will influence &ust how successful your business will be# 0ou will need to market and brand your business to shine abo+e the good competitors% and to make up for the bad ones# Step 1+: &est your s$alability. The most successful businesses rely on automation and delegation# 4ill other employees be able to do your work $f not% can you teach others what to do in an easyto-follow format $f your business relies on your skills- and your skills alone - you might ha+e a successful &ob% but not a successful business#