Whether or not you should start your own business depends on if you have the right motivations, capabilities, and personality required to build a company. Starting a business can be challenging, and it’s important to ask yourself three specific questions before taking the leap.
The three questions to answer when wondering should I start my own business include:
Do You Have the Right Motivations?
There are often two misconceptions around small business ownership: you’ll get rich and you’ll be your own boss. There is some truth to both, but mostly these are misjudgments for new small business owners. However, if these are your two motivating factors, it’ll be hard to start and run a successful business in perpetuity.
For example, while it may seem like entrepreneurship comes with glitz and glamour, according to the U.S. Treasury’s Office of Tax Analysis, 75% of small business owners make less than $200,000 per year. According to PayScale, small business owners make between $34,000 and $106,000 per year. If getting rich is your main motivation, you may be in for a shock.
When it comes to being your own boss, you can certainly choose the company direction, set your hours, decide on how to run the business, and more. However, small business owners find that they end up getting a different kind of boss: their business. As you hire people, get customers, wrestle with the finances and operations of your business, the demands of running a business actually mean you have less control over your schedule and life.
When you’re looking for motivation, make sure it goes beyond money and time. You have to have a real passion for the product/service you’re selling and the customers you’re serving. Building a business isn’t about you, and if you have selfish motivations, you won’t be able to sustain your energy for the time it takes to become successful.
Do You Have the Right Capabilities?
According to a Harvard Business School study, most entrepreneurial leaders display common capabilities, including the ability to identify opportunities, learn quickly, and manage risk, among others. Make sure that you cultivate these capabilities as you grow your business.
If you’re starting a business, a key capability is the ability to have a vision and identify a need in the marketplace. Successful entrepreneurs can assess the market, spot a consumer pain point, and solve that pain with a product or service.
“The first step that everyone should go through is to ask the question, Is the market real? In order to do so, the first thing you want to do is conduct what we call a customer analysis. You can do that perhaps in a very technical way, by conducting surveys. Or perhaps, in a less technical way, you can attempt to answer the question, Who is my customer? What does the customer want to buy? When does the customer want to buy? What price is the customer willing to pay? So, asking the ‘W questions’—who, where, what, when—is the first step.” – Raffi Amit, Professor of Management, Wharton School of Business
Learning What You Don’t Know
Starting your own business means you’re going to have to do a lot of things that you may not be familiar with. It could be running a team, networking, managing business finances, sales, etc. For this reason, a key capability is the ability to teach yourself how to master new skills.
“I’d be like, alright, I don’t know anything about sales. So I would search for sales on Amazon, get the three top-rated books and just go at it. I did that for marketing, finance, product, engineering. If there was one thing that was really important for me, that was it.” – Drew Houston, Founder, Dropbox
Source: First Round
“Constantly seek criticism. A well-thought-out critique of what you’re doing is worth gold.” – Elon Musk, CEO, Tesla, SpaceX
“We spent a ton of time getting advice and mentorship from people who had either started a business before, or who had expertise in a specific area—like optometry, fashion, design, or e-commerce.” – Dave Gilboa (left), Co-founder and Co-CEO, Warby Parker
Source: The Atlantic
Accepting and Managing Risk
Starting a business is one of the riskiest things you can do, but the important part is not to just accept risk, but to be able to manage it. Risks can take a lot of forms: financial, product/market fit, the economy, competition, etc. A strong business founder is going to systematically reduce risk where she can. It could mean having multiple go-to market plans, laying off financial risk to investors or banks, hiring experienced personnel, etc. The key is not to just accept—but reduce—risk.
“We make a big deal about saying ‘these people are risk-takers.’ It’s more basic than that. It’s not about being defiant. It’s about the ability to calculate and mitigate.” – Rob McGovern, Founder, CareerBuilder
Source: Fast Company
Do You Have the Right Personality?
Everyone knows that starting a business is hard work and a low success rate. In order to start a successful business, you’re going to need to be tough as nails and have a bias for action.
“You also need resilience and no fear, because for every ‘yes,’ you’re going to get a hundred ‘no’s.’ ” – Avi Savar, former Managing Partner and CEO of business accelerator Dreamit
“The best piece of advice I can give is to just get started. If I realized how much I would need to know before I started, I probably would have been too terrified to get going. But I’m a big believer of just-in-time learning, and we’ve learned a lot as Canva grew, and we’ll continue to keep learning as we grow.” – Melanie Perkins, Co-founder and CEO of Canva
“It takes time for people to remember you, it takes time for customers to become aware of you, it takes time for you to convince people to join what you’re doing. It’s a war of attrition, it really is. Most entrepreneurs in most industries just give up. So the question is—How long can you last? How long can you survive?” – Derek Andersen, Founder and CEO of Startup Grind
Bottom Line: Should I Start My Own Business
When asking should I start my own business, make sure you have the right motivations. You’ll then need the right capabilities, such as finding the right opportunity, picking up new skills on your own, and managing risk. Then, you’ll also need the right personality, including persistence and a bias towards getting things done.