Before starting a business, you need to determine if you’re ready to become a business owner and there are several factors to consider before you do. Why do you want to start a business? How much money do you want to make? Do you understand what business owners do and how they’re different from entrepreneurs? Let’s examine the main points to consider when thinking through whether starting a business is right for you.
Can You Be a Business Owner?
If you’ve never been a business owner, you may be wondering if it’s something you could do. Well — you can. After meeting with over 700 aspiring and successful business owners as a business consultant, I can tell you that there is no “entrepreneur type.”
You may have to start small so that you can slowly learn entrepreneurship skills. But if you doubt yourself, remember that yes, you definitely can learn the skills needed to build a successful business.
Confidence is key. If you’re not confident in your abilities, then customers, clients, and vendors may be less likely to work with you, especially if you’re a new business. Confidence will also allow you to take decisive action, which is an important skill to have as an entrepreneur.
So, before reading on, decide now: You can be a business owner.
Business Owner Traits
While you don’t need every trait listed below to be a good business owner, having at least a few will make it easier:
Mull over these traits. Ask close family and friends if they see these traits in your personality. If they say you don’t have them, that doesn’t mean you shouldn’t start a business. But, you should proceed cautiously. Start small with your business so you can slowly pick up and adapt to key business traits.
Why Do You Want to Start a Business?
Reflect on what’s motivating you to start a business. Is it something you want? Or what someone else wants? You’ll likely have a few of these reasons why people start a business:
- Call the shots
- Learn new skills
- Make more money
- Work from home
- Solve more problems
- Desire a flexible schedule
- Have true job security
- Build a family business
- Create jobs for your community
- Improve your personal brand
- Manage and track finances
- Live with more risk and uncertainty
Once you know your reasons, you can choose a business that fits your desires. For example, if it’s important for you to operate a business that provides jobs to your community, you won’t want to be a freelancer. Or, if you’re starting small as a freelancer, you have a plan to transition to a more significant business.
How Much Money Do You Want To Make?
You may be wondering if starting a business is worth it financially? Not always. You must plan out and understand the best, average, and worst financial result of being a business owner. You cannot predict what will happen with the economy, your industry, or personal matters. You must prepare for anything.
As a business consultant, I once met with someone who had been co-owner of a business for five years. She was lamenting that while being a business owner has its perks, she wasn’t financially secure.
After five years in business, she was still doing twice the work of her previous corporate job and making a third of the pay. She ended up leaving the business and partnership within the year.
Thoroughly understanding why you’re starting a business may help you get through the potential decrease to your salary. Is it more important to you to “call the shots” than make more money? Is it more important to create a business to pass on to your children instead of contributing to your 401(k)?
What Do Business Owners Do?
Before diving headfirst into becoming an owner of a business, you should know what that day-to-day life is like. How will it differ from your current life? Also, know what tasks the average business owner does on a daily, weekly, and monthly basis.
Life of a Business Owner
Ultimately, a business owner is a role of authority. The buck stops with you. If you encounter a problem, you are the person who must come up with a solution. You can’t pass off a problem to the boss—you’re the boss.
You need to love problem-solving. A business owner is a problem-solving expert. As a new business owner, you will solve many problems and make many decisions. As your business grows, you’ll make fewer decisions, but solve more significant problems. Amazon founder and CEO Jeff Bezos is well-known for saying he only tries to make three good decisions a day.
If problems stress you out, I won’t say you can’t be a business owner. What you need to do is change your mindset. Look at problems as opportunities, not frustrations. Changing your mind frame from “I have to solve this problem” to “I get to solve this problem” will help you grow.
Tasks of a Business Owner
The repeating tasks in business depend on the type of business and its size. For example, the tasks to operate a small tutoring business are different from that of a complex restaurant with employees. However, some tasks tend to apply to many businesses.
Consider what your life will be like frequently managing these tasks:
- Daily operations
- Sales calls and meetings
- Customer service
- Marketing strategy
- Manage technology
- Creating systems
- Implementing software
- Tracking income and expenses
- Local networking
When first starting a business, you may need to do everything, which can make it overwhelming! That’s why it’s essential to start small and slowly learn and grow. Starting a business won’t be enjoyable if you have 100 new tasks to implement.
Remember, you won’t have to do those tasks forever. As your business makes money and you hire employees, you can delegate tasks. The daily operations will become less time-consuming.
Entrepreneur, Small Business Owner, or Something Else?
What Is an Entrepreneur?
An entrepreneur may start as a small business owner, but they don’t stay one for long. Entrepreneurs tend to create businesses that grow fast. They are more willing to take on risks than small business owners, and take on investments like venture capital. Entrepreneurs also create businesses that grow nationally or worldwide.
If this sounds like something that excites you, then you’ll want to choose a business to start that you can grow. For example, you may want to start a McDonald’s franchise instead of a Chick-fil-A franchise. McDonald’s allows its owners to open multiple locations, whereas Chick-fil-A limits ownership to only one location.
It’s important to know if you are an entrepreneur because if you start a business that limits your large vision, you could get bored quickly and become unsatisfied with running the business.
What Is a Small Business Owner?
All small business owners have entrepreneurial traits, but they shouldn’t be considered entrepreneurs. Some people like the idea of owning one business, working reasonably regular hours, and working directly with customers. If this interests you, you may be destined to be a small business owner.
It’s important to know if you are a small business owner type because you may feel stressed with the pressure to grow a big business and succeed like the entrepreneurs on the covers of magazines. However, small business owners run most businesses, not entrepreneurs. You do not need to feel this stress and pressure. Grow your business at your own pace.
What About Something Else?
Highly creative individuals tend to be entrepreneurial. Now, keep in mind that being highly creative doesn’t guarantee you’ll succeed as an entrepreneur. If you’re too creative and move from one product or idea to the next, you may lack the focus necessary to succeed. If you only have creativity, you still need to build your business acumen.
Side note: many highly creative individuals with entrepreneurial traits tend to create high-growth startups. These founders tend to see the world in ways others do not and think of uniquely new ideas. Think of Apple, Facebook, Airbnb, and Uber.
You Don’t Have to Choose
When first starting out, you don’t have to choose if you want to be an entrepreneur or a business owner. Most franchises start with a small business owner who becomes more entrepreneurial, so they start to franchise the business.
For example, it took the owner of the sandwich business Jimmy John’s 11 years to create the branding and business systems before he began franchising. Think big, start small!
Learn by Starting Small
One of my favorite entrepreneurship quotes is “Think big, start small.” As a first-time business owner, you may want to start a big business right away. That’s not exactly realistic; it’s tough to get funding as a startup.
For example, I once met with two clients who wanted to start a video gaming business that served food with a full liquor bar. They already had written their business plan and chosen a location. Their only problem? They needed a $600,000 loan. Unless they found a wealthy individual willing to invest that sum of money, the business was never going to open because banks don’t typically lend to startups.
Ultimately, I recommended that they start as small as possible with a more affordable location that could be opened for a fraction of the cost. To get a loan from a bank or attention from an investor, they first needed to build up a loyal customer base with a proven business model.
With your own business, dream big. Dream as big as you possibly can. Go for it. But start small. Amazon started by selling books online. Facebook began on a college campus. It may sound counterintuitive, but starting your business small will give you the best opportunity to one day go big.
If you’re still unsure if you should start a business, that’s OK. Ultimately, to determine if you can make it as a business owner, you’ll simply have to try. If you don’t try, you’ll always wonder, “what if?” Remember, don’t gamble all your finances on your business idea. Start small, test, experiment, learn, and grow. Your business may or may not work out—but know that it takes the average entrepreneur 3.8 tries before finding prolonged success. Either way, you will grow in skill and experience by trying.
Your next step in your starting a business journey is to choose a business to start.