In business, there are no guarantees. There is simply no way to eliminate all the risks associated with starting a business whether small or big, but you can improve your chances of success with good planning, preparation, and insight.
Start by evaluating your strengths and weaknesses as a potential owner and manager of a business. Carefully consider each of the following questions.
Are you a self-starter? It will be entirely up to you to develop projects, organize your time, and follow through on details.
How well do you get along with different personalities?
Business owners need to develop working relationships with a variety of people including customers, vendors, staff, bankers, and professionals such as lawyers, accountants or consultants.
Can you deal with a demanding client, an unreliable vendor, or a bad-tempered receptionist if your business interests demand it?
How good are you at making decisions? Business owners are required to make decisions constantly, often quickly, independently, and under pressure.
Do you have the physical and emotional stamina to run a business? Business ownership can be exciting, but it is also a lot of work.
Can you face six or seven 12-hour work days every week?
How well do you plan and organize? Research indicates that poor planning is responsible for most business failures. Good organization of financials, inventory, schedules, and production can help you avoid many pitfalls.
Is your drive strong enough? Running a business can wear you down emotionally.
Some business owners burn out quickly from having to carry all the responsibility for the success of their business on their own shoulders. Strong motivation will help you survive slowdowns and periods of burnout.
How will the business affect your family?
The first few years of business start-up can be hard on family life. It is important for family members to know what to expect and for you to be able to trust that they will support you during this time.
There also may be financial difficulties until the business becomes profitable, which could take months or years. You may have to adjust to a lower standard of living or put family assets at risk in the short-term.
Do you know why Businesses Fail?
Success in business is never automatic.
It is not strictly based on luck although a little never hurts. It depends primarily on the owner’s foresight and organization.
Even then, of course, there are no guarantees. Some of the reasons why businesses fail are: Lack of experience, insufficient capital (money), Poor location, Poor inventory management, Over-investment in fixed assets, Poor credit arrangements, Personal use of business funds, unexpected growth, Competition, and Low sales.
Starting a business is always risky, as over 50 percent of businesses fail in the first year and 95 percent fail within the first five years.
These figures are not meant to scare you, but to prepare you for the rocky path ahead. Underestimating the difficulty of starting a business is one of the biggest obstacles entrepreneurs face.
However, success can be yours if you are patient, willing to work hard, and take all the necessary steps.
On the Upside
It is true that there are reasons not to start your own business, reasons I would say are insignificant. But for the right person, the advantages of business ownership far outweigh the risks. So I will advise everyone to start their own business.
My reasons for this are not far fetched. You will be your own boss, Hard work and long hours directly benefit you rather than increasing profits for someone else, Earning and growth potential are far greater, A new venture is as exciting as it is risky though, and Running a business provides endless challenge and opportunities for learning.
What type of business should I start?
There are so many different kinds of businesses and so many different kinds of people that it is impossible to give specific advice on the particular type of business you should start.
Only you will be able to answer that question, but to maximize your chances of success, we have treated several topics on this page of the Nigerian Observer newspaper every Thursday to help you determine the right business for you, but in any case the points below are worth taking a look at:
Choose something you enjoy doing. It is much more difficult (and a lot less fun) to make a success of a business that does not interest you. For instance, running an auto parts store when your heart is really in restaurant business.
Choose a business you know intimately. Trying to learn a new industry or skill at the same time you are getting your business up and running will add a lot of unnecessary stress to your new venture and lower your chances of success.
Sure, it might be fun to run a hair salon, but if you have spent the last ten years baking pastries and do not have any experience cutting hair, you might be better off starting a catering business or opening your own bakery. That is not to say that you can not learn a new business.
Choose a business that has a good chance of turning a profit. The best way to determine your business’s potential profitability is to prepare a “break-even analysis,” a financial projection that will estimate how easy or difficult it will be to turn a profit. We have treated this on this page before.
Watch out next week on this page of your darling Nigerian Observer Newspaper as we do everything humanly possible to feed you with more information that will make you financially free and rich.
I am passionately committed to your success.