Starting a business has the general reputation of being scary and risky. Many people will advise against this in most situations because people like the idea of working for themselves, but their personality and/or plan just doesn't fit the bill. However, it's important to be able to recognize when you really are ready to take that leap (and with the biggest chance of success). It is risky and it is scary, but it's the right move for many people.
- You understand (and can afford) taking risks.
First and foremost, you have to understand that there are risks involved in starting your own business. If you're naive to this, then starting a company could end up putting you in serious debt or even bankruptcy, causing your personal life to suffer, leading you to hire and trust poor employees, not meet deadlines, and a variety of other risks that could leave you lost when the company finally crumbles.
It sounds harsh, but being in a position to take these risks and being prepared with a Plan B if things do go wrong is crucial. For example, if you are at a time in your life when things are changing (moving, starting a family, etc.) or you still have a lot of loans to pay off (such as student loans), the risks may just been too steep.
- You have a good work ethic and work well making decisions.
While everyone may think they have a great work ethic, you have to be outstanding if you're going to own your own business. When you really examine your work life, think about whether or not you would be okay working into the night. Many people think "I would have a great work ethic if I was doing something I loved," but remember that business ownership also includes some mundane tasks. Are you willing to compromise other passions of yours to really work hard to make this business a reality? Always think about your past work ethic experience, and ultimately, be honest with yourself.
You should take this same approach when thinking about how you make decisions. Think back to past experiences and see if you enjoyed making major decisions, especially when the answer wasn't clear, and analyze the outcome of those decisions.
- Your idea is either filling a gap in the market or can do it better than the competition.
A great idea isn't always going to be enough. You need to do your market research and see if your audience really needs what you're trying to offer. Part of this is understanding the competition out there and determining what your idea has for customers that those companies are not providing. According an article by Marla Tabaka published last year, you should first try things on a small scale with friends and family to get their input and see what they think you need to really stand out. From there you go on to larger control tests where you "identify measurable quantitative results and actionable changes you might make in your product offering." In other words, you'll be able to see what the market really needs and what you need to measure to keep up with your data.
- This is something you've thought about for at least one year.
The timeline on this question differs from expert to expert, but one year is a pretty good average to keep in mind. Rushing into opening your own business can leave you unorganized and cause sloppy work, but furthermore you want to make sure that in one year you are still up for opening your own business and the idea wasn't just a phase because you were unhappy in your current job. If the market demands that you start a business immediately that is a different story and you may need to make a quick decision, but if you can wait one year to think it over, make sure you do.
- You have an idea you believe in and one that fuels your passions.
Plain and simple, you have to be passionate about your idea. Passion is what will fuel you to succeed at all of the things listed above--having a strong work ethic, spending time on a business plan, analyzing risks--and you're going to need as much motivation as you can get. If you really believe in your idea, you're more likely to be ready to take the next step.
- You have a solid support network.
It's important that you have someone in your corner who understands your passion when starting your own business. It can get overwhelming at times, so it's important that you have at least one person, preferably several people, who can help keep you motivated and who will believe in you even when you're having troubles. It's natural to want to give up at certain points when starting a company, so whether it's your family, a friend, a co-worker or your business partner, a support system is a very underrated aspect that can help.
So how do you know if you're not ready? If you are lacking any of the above tips or you seem to have a cool idea without a plan or without an audience, it may not be a good time for you to start a business. Going through major life changes is also not usually the best time to start a business, so it's just as important to be able to recognize these signs as it is to recognize the signs mentioned above.