I've been an entrepreneur for most of my adulthood. I opened a sign repair shop at 22, in fact, and never looked back. One idea led to another, my ambitions grew in scope and size, and today I'm the CEO of an awesome company whose fundamental mission is to help small business owners succeed.
I can attest from personal experience that entrepreneurship is rewarding in ways that transcend the strictly financial and speak to our deepest desires as human beings. Those desires include freedom, creativity, and the kind of human bonding that only occurs when a diverse group of people unite around a common goal.
Now comes the caveat. Running a business is hard. Just look at the statistics provided by the Small Business Administration. It's estimated that 20% of small businesses close their doors within a year, and that a whopping half of them will turn off their lights for good within five years.
If you're now contemplating the dramatic shift from employed to self-employed, I'm here to support and encourage you. I'm also here to draw upon my two decades of experience and offer some basic advice on what should be uppermost in your mind as you prepare for the adventure of a lifetime.
Here are three basic questions you need to ask yourself before taking the plunge:
1. Do I have a business plan?
Generals don't lead their troops into battle without first drawing up an exhaustively detailed plan for victory. The seek to exploit the weaknesses of their enemy while capitalizing on their own strengths. They become intimately acquainted with the battlefield, noting areas that would leave them exposed as well as landmarks that would provide excellent cover.
In other words, they leave as little as possible to chance. A business plan, essentially, is a battle plan. It proposes a blueprint for victory. It outlines company goals along with strategies for achieving them.
Too many would-be entrepreneurs, giddy with excitement at the prospect of spearheading the next big thing, rush into action without thinking. Don't let the idea of a period of rational reflection intimidate or bore you--there are lots of resources, such as business plan software, that can walk you through the process.
Trust me, you'll be grateful you did. And if you do spearhead the next big thing, you'll owe it in part to the seemingly small things you did to prepare for it.
2. Am I prepared to sacrifice almost everything?
It's pretty much common knowledge that titans of industry like Elon Musk and Jeff Bezos are committed workaholics who devote the majority of their waking hours to their respective business ventures. Don't let expensive cars and lavish vacations fool you--such extravagances are a blip on the radar compared to how these men actually spend their days.
I'm not even close to being in that league, yet I still put in 80 hour weeks as a matter of routine. When I got started in my 20s, the lifestyle change was shocking. Are you prepared to be a virtual stranger to friends and family for a while? Are you prepared to essentially quit video games cold turkey or have your binge-watching hours seriously curtailed?
How about sleep? I do remember sleeping once in a while as I got my first business off the ground, but I wouldn't describe it as particularly restful. It was usually dominated by nightmares about not being able to pay my employees or complete a project.
My purpose in relaying these truths isn't to scare you away. Often, those initial sacrifices are balanced by the pleasures inherent in building a dream into reality from the ground up. But make no mistake--you will be called upon to sacrifice, and it will be among the hardest things you've ever done.
3. What's my credit like?
I harp on this one ad nauseum. My company, Nav, is obsessed with educating small business owners about the critical role that personal and business credit will play in their ambitions.
Businesses rely on financing to survive. Whether it's a loan from a bank or an alternative lender, a business credit card, or a credit arrangement from vendors and suppliers, having money when you need is as vital to your enterprise as blood is to the body.
Strong credit scores are your passport to convenient, affordable financing. They tell potential lenders that you're a stable, trustworthy individual who pays their bills early while making money work to your advantage.
Familiarize yourself with your credit scores. If they're less than perfect, don't despair. I didn't even have the luxury of poor credit scores when I opened my sign repair shop; a habit of paying cash for everything meant that I didn't have any scores at all. I had to do a lot of scrambling to catch up, but as soon as I did the difference was like night and day.