Are You Ready to Start Your Own Business?

Jan 20, 2023

Thinking about starting your own business? Here are some key considerations to ask yourself to help decide if you’re ready!

There are many reasons to want to start your own business. Many workers don’t feel valued, and not just monetarily, by their employers. Then there’s the allure of freedom – freedom of time and money and no one to answer to. 

But it’s more than the yearning for freedom or change that determines if you are ready to start your own business.

The idea of freedom – freedom of time, freedom of money, freedom to create the way you want to create – can be a siren song. But it’s not that simple. There are still people to answer to.

It’s a shift to being responsible on a different level. 

Instead of being responsible to a boss, an entrepreneur is responsible to their customers. Alternatively of being responsible to show up on time, an entrepreneur is responsible for getting the work done on time. Instead of being responsible in exchange for a paycheck, an entrepreneur is responsible for everything.

In exchange, the entrepreneur gains unparalleled freedom.

Pre-questions for prospective entrepreneurs

The first question to ask yourself is whether or not you have a valid idea. Nearly any idea can be valid, but not necessarily valid to get what you want out of your entrepreneurial journey.

If you’re not sure whether or not your idea is valid, you can try to validate it. You can do some research into how similar ideas have worked, or survey prospective customers to see their responses. 

You also need to gauge the market. Businesses need customers. Some businesses thrive off a small number of repeat customers; others need a steady influx of new customers. 

As a prospective entrepreneur, you need to know who your potential customers are, how many you will need, and where and how you will get them.

Entrepreneurs frequently wear many hats. If you’re a business of one, you’re responsible for everything. But you may not want or need to do everything. You’re still responsible for it, but you may not be the best person to do it. 

You need to assess the roles needed for the business against your strengths and weaknesses. For example, sales and bookkeeping are very different skills. Both are necessary. But not all people are good at all roles. Some also may not like some of the roles needed to effectively run their business.

There is a solution

Looking at their strengths and weaknesses, entrepreneurs can determine if they should do a role themselves or hire someone else to do it. Initially they may not be able to afford to hire it out. In other cases they may have to because they’re not able to do it themselves.
Together, having a valid idea, within an accessible market, and with the required roles covered, determines the viability of a potential business. Failure of any of the three can lead to failure of the business. But viability is only step one.

Make a business Plan

Viability is the first step in the plan, as we just addressed. Your analysis of your idea, your market, and your roles is the foundation of your plan. Next we need to address some obstacles and opportunities in getting to implementation. A solid business plan helps you avoid surprises that could derail an otherwise sound plan.

A business needs a legal structure. 

It can be as simple as operating as a sole proprietor and having the business finances flow through your personal tax return. Or you may be better off with a formal structure, such as a C corp or S corp or a partnership. The form of corporation establishes your tax structure and affects your potential liabilities. This is one you should generally get legal advice on.

You will likely need insurance

We live in a litigious society, and there seems to be too many lawyers. And we also can make mistakes or have accidents and, no matter how careful we are, someone may get hurt in one way or another. So we need insurance to take care of problems we wish wouldn’t happen but need to recognize might happen anyway. 

You need to consider technology

Do you need to be or should you be online? Is this within your skill set or will you need help here? Do you need technology for payment processing or other reasons? This needs to be thought through and spelled out.

In determining viability, you assessed where and how you would get customers. At that level you determined it was doable. Now you need the nuts and bolts of it. How, specifically, will you go about getting customers? What will you do if that’s not working? What’s your plan B? 

And then there’s finances. 

This is a big issue. One of the main reasons new businesses fail is that they run out of money before they become profitable enough to support their owner or owners. 

It may take time to build a customer base, you may or may not need inventory, and you will have expenses of some sort, depending on the nature of the business. You need to consider how long you have to get the business to the point of generating enough money that you get some for yourself and know how you will pay your bills in the meantime.

Other considerations

There will generally be other areas you need to address depending on the type of business you’re considering. You may need a location or inventory or licenses or permits, etc. But this should all be analyzed in advance so you know what and when and how it is all getting done.

 The bottom line

The path to entrepreneurship is not for everyone. It’s rarely easy and it’s rarely smooth sailing. But it can be unfathomably rewarding. It can provide for unparalleled freedom and unparalleled rewards. With freedom comes responsibility. 

Entrepreneurs don’t escape responsibility; they live and breathe responsibility; responsibility on many levels, to customers and employees, to suppliers and partners, to communities and society.

For those who wish to trudge this path, some examination of their idea can make the difference between success and failure. 

By examining your potential business in context of where and how you will work it, you can come to a reasonable decision as to whether or not you are ready to start your own business. 

By doing your homework in advance, you can greatly improve your chances for a successful launch, and ultimately all of the rewards of being your own boss.

If you're ready to take the next steps in starting your business, you'll need a trusted financial services partner. Arizona Financial offers a full suite business banking services to help you reach your goals.