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Questions to Ask Yourself Before Starting a Business
Deciding to start a business takes careful analysis of your mental, social and financial readiness. Marcia Layton Turner, a Rochester, N.Y.-based marketing consultant and author of The Unofficial Guide to Starting a Small Business, provides her thoughts about the preplanning stages.
Q: What's the most important consideration for would-be entrepreneurs?
A: Your commitment to the idea of owning a business is most important. Why are you thinking about starting a business? Is it because you are reacting to your own work situation-perhaps becoming fed up with your boss? Were you just laid off? Or is it something you've always wanted to do and think now is a good time? The only hope of success is if you really want to do this.
You need to be sure there's a market out there and a demand for your product and service. [You also need to be] willing to stick to it and have the necessary resources. When you start your business as a reaction to something else, you don't have those things in place.
Q: How else do you gauge your mental readiness?
A: When you start a business, you need to be aware that you have to invest a lot of time, money and attention. Ninety-five percent of your attention will go into making this business a success. You and the people around you need to be aware of that and accept it. If there are considerable limits to the number of sacrifices you're willing to make, then being a business owner might not be the right choice.
Q: What kind of impact can this decision have on your family?
A: Do you have the support of your partner or spouse? If one partner wants to start a business, and the other one is concerned about how it will impact their relationship or lifestyle, it can be difficult to maintain the relationship and start a business.
Make them part of the equation, so they don't feel left out. Gather information about the type of business you want to start and share it with your mate. Paint them a picture of what it's going to look like once you start the business. If they can see how it benefits both of you, then they're more likely to be supportive.
Q: From a practical standpoint, what kind of financial resources do you need?
A: You cannot start a business without money. Even if you intend to have a bank loan, any financial institution will make sure you will invest a sizeable portion-even 20% - yourself. There are startup loans, but the bank won't give you all the financing; they need to see that you have something at risk beyond your time. If you don't have the money, you need to find it through family and friends or continue working until you have the money.
You [also] need money set aside to sustain you while you're starting the business. You still need to pay your mortgage or rent, you still need to buy food, and most people still need a car. It probably will be several months before you can take money out of your business. Setting aside six months' worth of expenses is a smart idea.
Copyright 2008 Wells Fargo
