I've yet to meet someone who launched a business and then failed because they didn't have the expertise in their field or product required to make them successful. Typically, the stories are the opposite: They were often at the top of their game working for someone else and came to the realization that if they could put that knowledge and talent to work in their own business, they would be rewarded with new customers and the ability to call their own shots.
I've yet to meet a plumber who went out of business because he couldn't install a faucet, a landscaper who couldn't green a lawn or a web developer who couldn't build a beautiful business site. Instead, it's the failure to fully understand whether you're really up for the back office challenges of running a business, whether you have defined an approach unique enough to allow you stand out from the competition and how you'll make enough money to make it worth quitting your day job.
Following are three key questions to ask yourself to help ensure that you're ready to tackle these key challenges so you can focus the bulk of your attention on delivering on your expertise.
Why you and why now? Are you ready for trade offs that come with business ownership?
If your answer is that you want to start a business so you can work less or immediately start living "the good life" -- you should probably re-evaluate. I've met with hundreds of small business owners and among their stories are some few that can tell of owning profitable ventures that practically run themselves, funneling profit into their bank accounts while the absentee owners cruise around the world. It does happen, but not often enough to be a valid reason for starting your own business.
What's more prevalent is that starting a business brings a lot of hard work, some share of mistakes and setbacks, and a fairly long learning curve.
According to a 2018 survey of more than 2,600 current and aspiring business owners conducted by LendingClub and Guidant Financial, the top two reasons owners gave (they were allowed to choose multiple reasons) for starting their businesses were to "become their own boss" (49 percent) and to "pursue their passion" (45 percent). If these are your reasons as well, and if you're fully invested in them, they are likely to sustain your enthusiasm during the bumps and bruises of getting a business up and running.
Do you have a complete and intimate understanding of the key issues or problems you will be solving for your customers?
The more narrowly and specifically you define the problem you plan to solve, the better. Knowing you want to run your own plumbing repair business is a decent first step, but even better is being able specify that you'll focus on emergency repairs, or providing a five-year warranty on all work, or being a low-cost leader in your region. It's not enough to just plan to solve a general problem -- in this case the need to repair or install plumbing fixtures.
Narrow that focus to address customers who need a repair within 24 hours (like when a water heater breaks and everyone is taking cold showers) or who are afraid of being nickeled and dimed on a project (which may prompt you to promote different pricing programs and a warranty). This doesn't preclude you from offering other services when asked, but it's usually easier to start narrow and expand broadly as you grow, rather than vice versa.
The same trend holds for ecommerce. Over 20 years of supporting online sellers using Yahoo Merchant Solutions, we've seen an interesting pattern where a merchant opens a niche store, in this case we'll say they are selling unique dog collars.
A couple years into it, their sales are growing and customers start asking if they sell collars for cats as well. But instead of expanding their product line, they open a second online store focused just on cat collars.
Two years later, a third store selling collars and leashes for ferrets opens. It's not exactly marketing genius, but it's a successful pattern we've seen repeated for everything from sporting goods to apparel, electronics to pet supplies.
Do you know down to the penny what it will cost to deliver your product or service?
If all you want to do is be the cost leader for scented candles selling on eBay, all you have to do is find a cheap source for overseas candles, eliminate all profit and pay yourself nothing for your time, and you'll be in business - at least until your savings run out.
On the other hand, if your goal is to eventually pay yourself a wage worthy of your labors and dedication, you need to account for not only the wholesale cost of the candles, but also how many will end up being delivered damaged and unsellable. Estimate the cost of storing your items onsite, listing or hosting fees for your online store, shipping and packaging costs, credit card processing fees, marketing costs, and even the cost of returns and fraud.
In the online space, many successful businesses work hard to keep 15 cents of every dollar in sales. A lot operate on even lower margins -- which is just fine if you're addressing a large enough market and generating a huge amount of sales.
Keep in mind that it will be that 15 cents that pays for the time you put into your business. I know a number of small business owners who have profitable businesses and tell me that when they calculate all the time they spend working, they are making a faction of the hourly wage that they did in their last job. But they usually have a smile on their face when they think through the trade offs they've made.
And that goes back to how they (and you) chose to answer the first question. If your reasons included becoming your own boss, pursuing a passion, or even just being able to escape from corporate rigor and decide where to focus your time, it's unlikely you'll worry about long hours. You'll already be living the good life.