The Small Business Administration (SBA) estimates that enterprising Americans start over 627,000 new businesses every year. Thanks to these fine entrepreneurial folks, you can grab a coffee and hit the gym while someone else walks your dog, does your taxes, optimizes your webpage, plans your daughter's wedding, and writes up your divorce settlement all on the same morning.
Perhaps you're itching to enter the fray. You have a great idea for a business of your own; you're ready to jump off the 9-to-5 treadmill and hit the open road.
Good for you. I made an identical leap as a naive 22-year-old, and it led to a satisfying and lucrative career. But I would be remiss to cite the amazing numbers in the first paragraph without quoting another SBA statistic--namely that 66 percent of new businesses fail within a decade of opening their doors.
The better your preparation, the better your chances of beating those odds. Here are some signs you're slightly ahead of the pack:
You've created a business plan.
It's one thing to dream about opening a business, and another to roll up your sleeves and build a proper foundation. One of the key ingredients to that groundwork is a business plan.
Your business plan should focus on your business goals and outline steps for reaching them. It should anticipate potential setbacks and offer steps to overcoming them. Ideally, it'll take a bold look at the most important question of all: Is your idea meeting an unfulfilled need or substantially improving on options already available to consumers?
If the answer is yes, your business plan should explore methods for getting your idea off the ground, including specific timetables regarding critical milestones, so you'll have an objective means of keeping track of your progress.
You've sought advice from the right people.
You're contemplating a life-changing step. One sign you're serious is that you look for feedback from folks unafraid to give it to you straight. If you only approach family and friends, you run the risk of hearing what you want to hear: uniformly encouraging feedback.
Look for cynics instead. At this stage of the process, tough love reigns supreme. Preaching to the choir and hearing a chorus of hallelujahs might taste sweet at the moment, but it'll rapidly lose its flavor once reality sets in.
When I left school to start a company, I found naysayers served at least two purposes. One was they forced me to reexamine my strategy for blind spots and weaknesses. The other was they woke up the competitor in me--I became even more ambitious to do a killer job.
You're familiar with your industry.
My first business focused on repairing and manufacturing commercial signs. I was ready for it because I worked for a guy who did the same thing in Utah. Once I showed enough aptitude, he encouraged me to return to my home state of Idaho and open my own place.
I hit the ground running because I was intimately familiar with the tools and terminology of my chosen vertical. It wasn't easy to break in and establish a name for myself--far from it--but it was a hell of a lot simpler than charging forward in a field I knew nothing about.
Prior employment in your industry isn't necessary for success, but exhaustive research is. Talk to entrepreneurs who are already established; pick their brains for insider insights about time-saving techniques and potential pitfalls. Read, read, read. Thorough study will put the wind at your back instead of directly in your face.
You've thought about costs.
Money is the fuel that drives business ideas forward; lack of it leads to abandoned cars at the side of the road. I didn't quit school or my day job until I'd done the math and established that I had enough funding to find a few clients, get the lay of the land, and still buy groceries for my family.
Formal financing, on the other hand--such as a bank loan or generous terms from vendors--was a major blind spot I soon learned to regret. I'd been taught my whole life that debt was an unmitigated evil, and paying cash for everything an unparalleled virtue.
Subsequently, I had zero credit history. I found myself in the awkward position of potential lenders having no method of assessing me for risk. I qualified for one American Express card with a $500 spending limit, but that was it.
Trust me when I say it wasn't a fun spot to inhabit. In fact, words like "nightmarish" spring to mind. Treat this as a cautionary tale, and monitor your credit scores as carefully as someone with high cholesterol monitors their blood pressure. If your scores are pristine, keep them that way; if they're bad or merely OK, aggressively repair them.