Should You Be Starting Your Own Business?

By Joe John Duran CFA

Are you sick of your job? Over-worked by your boss? Not paid well enough? These are some of the many issues that most employees confront at some point in their career. The inevi-table solution that comes to mind, and that resolves all of these concerns, is to become your own boss. After all, what could be better than working for yourself? Imagine doing whatever you want and setting your own income level. These are some of the reasons over one million new businesses are started every year in the U.S.

Sadly however, over half of those businesses fail within the first two years.

How do you start your own business when you already have a job and an income stream? What if you have a family to support? How do you take the leap while minimizing your likelihood of failure when the stakes are so high? We interviewed dozens of successful entrepreneurs for Start It, Sell It and Make a Mint (John Wiley and Sons, June 2004) to find out how they made the leap and soared to success. The following are three golden rules that will keep you from turning that leap into a plunge:

1. Be Honest

Do you have what it takes to run your own business? Are you persis-tent?

Do you have the fortitude required to weather the tough times? No matter how great the business idea, you will invariably face many obstacles along the way. You’ll need a broad range of skills in order to succeed, including the ability to understand financials and to prepare marketing strategies. In addition, brace yourself for significantly increased stress. Remember, not all people are suited to running their own business, so be objective and honest about your abilities and about the business opportunities is crucial - the dream may seem glorious, but can swiftly turn into a nightmare.

2. Be Patient

Remember, there’s no rush! If you already have a steady income stream, take the time to do your homework. Don’t leave a secure job situation for complete uncertainty on a whim. Re-member that every month you receive a paycheck and are able to continue to develop your business plan is one less month of personal expenses that you’ll have to cover. Building a successful business is not like a 100 yard dash; do not try to do too much too quickly. Think of this instead as a marathon, and spend time mapping your course and preparing. Focus, dedication and preparation are the keys to minimizing your risk.

3. Be Prepared

Put together a business plan with in-depth financials. Develop the concept of your product or service and speak to potential customers about it. Maybe even pre-sell some of the products you are going to be offering. The more certain you are about the viability of the business; the less risk you’ll be taking. In fact, aim to be so prepared that you’ll know exactly where your sales will come from over the first six months.

Taking the leap can be one of the most exhilarating experiences for those brave enough, but after the initial euphoria wears off, many entrepreneurs end up wishing they had their old jobs back. They yearn for the days when they could leave their job in the evenings without taking their stress and problems home with them. Along with these burdens, however, comes an invaluable asset: freedom. You can be your own boss. You can craft something special from scratch and pour your sweat into something you truly believe in. Taking the leap is not for everyone. And it certainly won’t be easy. But if you are honest, patient and prepared, the dream of success may soon be your reality.

Written by Joe John Duran CFA, author of Start it Sell it & Make a Mint (c) John Wiley & Sons, June 2004. He’s based in Los Angeles. For more entrepreneurial help, visit www.startitsellit.com.