I was on a hike with a friend this weekend who shared with me that she is planning on starting a business. She has been working in her industry for many years, finds her employers to be disappointing at best and is sick of making money for someone else. She came to me for advice and a potential investment, but I first wanted to understand why she was starting the business in the first place.
As I interviewed her, I realized that there are four key questions that every “entrepreneur” should ask themselves before they decide to quit their day job.
1. Are you ready to be married to your trade?
My best friend and hairstylist set off to start her own salon a year or more ago, full of energy and vision for her company’s potential. She spent countless hours in the salon, built out elaborate marketing strategies and turned down numerous vacation and party invitations, all in the name of entrepreneurship. But in the end, she realized that she preferred being someone else’s employee.
She hadn’t accounted for the cost of entrepreneurship. In exchange for “freedom,” you can never turn off. You have the expenses of inventory, rent, payroll, but no one else is there to help pay your bills. When the buck stops with you, it is easy to become obsessed, lose sleep, and give up many things you care for in life in order to stay afloat. Entrepreneurship is the hardest job you will ever have with less pay than you expect or deserve. Be sure that it is something you are ready to commit to.
2. Are you really that good at what you do?
One error that entrepreneurs consistently make is over-inflating their own skills, ability and/or product. I know that you know you are better than your co-workers. And I’m sure you think you are better at running things than your boss. But have you ever managed a business ledger before? Have you had to hire and fire employees? Have you had to find money to cover expenses when no customers were coming in the door?
Being good at your trade is not enough. You have to be able and willing to take on the other important factors of running a business or be willing and able to pay someone else to manage these things for you. Otherwise, your entrepreneurial journey will be a short one.
3. Are you ready to take on larger bills and more debt?
Another friend decided to start a coaching business when 1) he was unable to keep a steady job and 2) he was unable to pay rent. I truly believe that he has admirable skills in his space, but had to question his motivation and readiness for entrepreneurship. Starting your own business is not a silver bullet for solving your debt problems. In fact, 8 out of 10 entrepreneurs end up failing, largely with greater debt than when they began.
If paying rent and cell phone bills is tough today, I would strongly recommend that you not consider taking on the additional financial burden of running a business.
4. Is this decision driving you or are you driving it?
This is my favorite question to ask after speaking with thousands of entrepreneurs over the past decade. Who is making the decision to start your business? Are you weighing your options, noticing that the job market is tough, and deciding that it is better to start a business than to look for another job? Does the idea of drafting a business plan seem like a chore? Are you looking for direction, and in response deciding to start a business to help you find yourself?
Or does your idea, product or concept consume you? Do you find yourself talking about it with anyone who will listen? The cashier at the grocery store, the stranger on the bus, your second cousin. Are you constantly waking up in the middle of the night to write down ideas for potential sales strategies or product improvements? Do you feel a twisting in your stomach that can only be explained as a fear of failure, but that you can only relieve by trying?
I’m a big believer that, when the time is right to start your business, you will know. It will no longer be your decision. And any of the down sides or risks are consumed by your pure drive to succeed. You still may fail in the end, but you’ll have much more fun in the process if you start for the right reasons.