Nothing is more rewarding than starting a successful business. On the other hand, nothing is more frustrating than watching your startup fail.
According to CB Insights, which conducted a post-mortem study of 287 failed companies, 70 percent of tech startups fail. Of the businesses studied, 42 percent named a lack of product-market fit as the reason for their failure.
Too many founders and would-be founders believe their big idea will change the world. What they fail to realize is that a great idea rarely makes a company successful. Practical factors such as measured audience interest, dependable cash flow, and a talented team are far more important than big dreams.
Before you quit your day job, ask yourself these questions to decide whether you're ready to turn your big idea into a sustainable business.
1. "Am I ready to take responsibility for everything?"
When you start a company, you don't become the king of the world. You become the chief strategist, product designer, salesperson, marketer, and custodian. Even if you start out with a team of others, you are responsible for far more as a founder than you would ever be as an employee.
Eric Rozenberg, an expert entrepreneur and founder of Event Business Formula, a coaching and consulting firm for companies in the event business, has seen many new founders struggle to adapt to their expanded roles.
"They get so fired up about certain parts of the business, they forget about how much time the less exciting parts demand," he says. "Even if you aren't a bookkeeper by nature when you become an entrepreneur, you either need to learn enough to get by or work with someone who knows what you don't."
2. "Who is my audience?"
Before you declare that your business will target Millennials, consider that there are more than 70 million Millennials in the U.S. alone. For your new company to succeed, you need to know exactly who will buy your product or services.
Get as specific as possible about your target niche, then start some conversations. Go to places online where your prospects hang out. If you want to sell woodworking tools, for instance, check out woodworking website forums and social media pages dedicated to woodworking enthusiasts. Talk to people about what you want to offer and gauge their reactions.
If your target audience pushes back hard, don't be stubborn. Listen to the feedback and think about whether you can use that information to improve your offering.
3. "How will I respond to adversity?"
No entrepreneur has ever started a successful company without overcoming a few major obstacles. Whether your cash flow dries up, your partner quits, or part of your product does not work like it should, something will go wrong. When that happens, be ready to meet the challenge.
Ben Lerer, CEO of Thrillist Media Group, says founders should move quickly to stop small problems from growing larger. "My approach is always to admit as early as possible that the approach is failing and work to resolve the situation without letting it drag on," he says. "I think the best companies are those that can recognize when something isn't going right and fix it instead of just turning a blind eye because it's easier."
4. "Why do I want to be an entrepreneur?"
Some people start companies because they can't imagine working for anyone else. Others set out on their own because they are committed to a specific vision. Whatever your reason, be sure that you are fully committed -- you'll need conviction to keep your company on track.
"People think focus means saying yes to the thing you've got to focus on," said Steve Jobs. "But that's not what it means at all. It means saying no to the hundred other good ideas that there are."
Your company will not succeed if you cannot commit to the pursuit of your goal. Before you quit your job and declare your startup open for business, take some time to make sure that you know what you want to do. You can pivot your company if it makes sense in the future, but it's easier to get it right the first time.
Are you ready to work for yourself, create jobs for others, and disrupt your industry like only an entrepreneur can? If you're on the fence about taking the plunge, ask yourself these questions and think hard on the answers you give. In the end, the only person who knows whether you're ready to become an entrepreneur is you.