How do you know when the right time is to become an entrepreneur? Will it ever be the right time? And how will I ever know if I can afford to do it?
Every entrepreneur has wrestled with these questions (and countless others.)
But the biggest one that gets people to freeze in their tracks is the one about affordability.
Even though starting a company is invariably less costly than you think, if you take a series of extremely tiny steps toward your goal, people are always concerned about the downside, the potential loss.
With that in mind, answering the following three questions could help you determine if you are ready.
1. What's your "affordable loss"?
Yes, of course, you may be more successful than Apple, eBay, and Google combined, but just in case ask yourself these two questions:
- How much can I afford to lose?
- How much am I willing to lose?
If a realistic projection of what the first couple of years could look like puts the loss higher than you are comfortable with, now might not be the time to get underway.
2. Have you considered all aspects of that loss?
There are five factors to ponder when you are thinking about potential loss.
A. Money, of course. This is where everyone's mind always goes. But there are also:
B. Time. Like money, this is also a finite resource.
C. Loss of Professional Reputation. There one is small, but you may be one of the people who worry about it. These days, there is little harm in starting a company that does not work out. There is nothing wrong with an honest failure. You had what you thought was a good idea. You gave it your best shot. It didn't work out. These things happen and people understand. But if you are seen as someone who doesn't anticipate obvious problems, or who can't conserve resources and use them properly, that failure can seriously hurt you in whatever you try to do next.
D. Personal Reputation. This is like your professional reputation, but hits much closer to home. You could be worried about what a business failure does to the way people you care about see.
E. Opportunity Cost. If you are working on A, you cannot be working on B at exactly the same time, and B could have much more upside.
3. The Definition of Affordable Loss Can Change
You might be wiling to risk more when you are young, because you have fewer obligations and more time to recover. Less when you have kids to put through school and a mortgage to pay. And more when you are older and those expenses are behind you.
If the fear of loss is stopping from taking the plunge, think about these three points. If you realize the downside is not so great, and for most people it is not, then congratulations. You are ready to be an entrepreneur.