Many people have a business idea floating around in their heads and this may be the moment. Opportunities are often abundant if you know where to look and there may well be a market out there craving your unique skills, expertise, and passion.
Although the past year has been a time of great financial strain, it’s also worth noting that many businesses are scaling back and shrinking their presence—leaving markets open for smaller, more nimble players. If you’ve had a business idea in your head for a while, you may be wondering if this is the right time to take on a new entrepreneurial endeavor.
Understand the Pros and Cons
As simple as it may sound, making pros and cons list when facing challenging decisions a good habit to start if you plan on going into business. Later, it will turn into a risk-reward table. Both have the same principle: being realistic about what could go wrong and what could go right. When you consider starting your own business, here are some factors to start off your pro-con list.
- You get to make your schedule. You will be the master of your destiny and your own boss.
- You can pursue a dream you’ve had for a long time. You will have something more than money to drive you.
- You will be creating a legacy that you can sell when it’s profitable or pass down in your family.
- Responsibility rests on you to generate revenue and ensure that expenses and taxes are handled.
- The money to invest or expand will likely come from your personal resources. If the business struggles, it will affect your financial standing and, eventually, your credit score.
- It may be harder to take time off, especially as you get your business growing.
- Without the resources for a full staff, you will have to do more than one task.
- You and your family are potentially losing the insurance you had through work. There are no more safety nets for your health or retirement.
Do You Know How You’ll Handle the Essentials?
One of the most stressful parts of this transition is realizing you’re in charge of it all now. You have to be ready and know where you can get the services, tools, and other resources you need.
Opening an office or store may sound simple until you add up the costs. You need furniture, fittings, and basic office supplies like a printer, ink, staples, paper, and more. All of these essential business items seem small, but the cost adds up in the end.
You will also be responsible for branding, marketing, communications, and customer service. Another hat you will wear is that of human resources. That means hiring, training, and handling all issues concerning any potential employees.
You may not be well equipped to deal with some functions and, for those, you will need outside assistance. If you can’t handle HR yourself, consider outsourcing. If you’re tech-savvy enough to deal with any computer issues, find out where you can get nearby IT help.
Are You Ready Financially?
Before you get carried away dreaming of the big bucks you will be making, you must be realistic about your financial situation and prospects. A healthy dose of skepticism will save you from making bad decisions as a startup.
Estimate what it will cost to start your business. The United States Small Business Administration recommends you have at least around $3000 to start a small business out of your home. It’s okay to start small; that way, there is less financial pressure as you move forward. Reduce every expense that you can—for example, instead of renting an office, start in your garage.
As your business grows, expect your expenses to grow as well. After setting aside money for startup costs, you should have a savings fund for your business. The fund will take care of your business during downturns. In general, this fund should at least cover six months’ worth of fixed costs. The savings will also help you take care of incidentals.
You should lay out your financial prospects in a realistic budget and cash flow statement. A budget will help you classify, arrange and direct your expenses. Cash flow is the lifeblood of any business, so ensuring that it is positive will improve your business performance. In your projections, never forget to account for taxes.
Are Other Areas of Your Life in Order?
Starting and running a business is a lot of work. It can take up a lot of your time and energy, so it may feel like you don’t have room for anything else. If you don’t find a balance, you could strain your personal and social life.
As you go into business, you will have to learn new things, stay up late, wake up early, and face difficult situations. Sometimes, life will add to the pressure with a new baby, a big move, or the beginning or end of a relationship. Your immediate family will likely be affected by your undertaking, so talk to them about their thoughts to get started on the right foot. You may need to adopt stress management techniques to help you get through the hard times.
Get Ready and Go
The leap into entrepreneurship isn’t an easy one. There are many uncertainties that you need to prepare for through careful planning. You will also need to be emotionally and practically ready for the strains of starting your business. With the right mindset, resources, and backing, you can make it if you believe in yourself.