Do you have what it takes to own a business? Your first answer might be that it depends on the market, but that’s only part of the story. So is thinking it depends on your product. The bottom line is it depends on you.
We tend to hear more about business successes than failures. Although this year, given the pandemic and its economic impacts, we’ve seen plenty of failures, most people still believe that if they want to be a successful business owner, they can. But if you don’t focus on your own drive, abilities, and tolerance for stress and uncertainty, you’re missing a key part of the equation. And if you start a business without really finding out if you should, you’re making a grave mistake.
Say you’ve got a great idea. You’ve got a niche service. You’ve done the research, and there’s space for you to grow a company. Before you start looking for a storefront, look in the mirror by asking yourself these eight simple but vital questions.
1. Can I listen?
Business owners must process a vast amount of verbal communication. They need to be good at listening, adept at assimilating and filtering, and doing it fast — so all communication, from employees to customers to your advisers, needs to result in a positive outcome for your business.
2. Can I lead?
Unless you’re planning on opening a shoeshine stand or a one-person consultancy, you need to be able to lead and motivate people. You’ll get the most value from your employees if they know you value them — and you may need to occasionally swap hopes and aspirations over coffee with your employees to really understand their needs. Once you understand their needs, you can better motivate them, which will in turn help you achieve your own dream. It’s an excellent trade-off.
3. Can I sell?
This question often hits a nerve. Very few products sell themselves. Generally, a business must convince a customer that have a need, and more importantly, that this product meets their need — and delivers the best possible value. If that’s actually true, it’s simply a matter of being interesting enough that the customer is willing to continue a conversation long enough for you to establish these three truths. That’s about being persuasive. If you have any doubt about your ability to persuade, ask your partner what they think. It’s likely you did some sort of sales job on him or her at some very critical juncture. Were you successful?
4. Am I competitive?
To be a good business owner, you must enjoy doing whatever it takes to overcome all your business supremacy challenges. You must be motivated by a burning desire to do these things better than your competition — and realize that few products or services are so unique that your customer can’t get something comparable elsewhere. You must have the need to not only please your customer, but to do it so well you’re beating your competition senseless. How do you know? Check your financial statements — they’re your scoreboard in this game. If you see profits, be ready to reinvest them right back into the business, or you won’t continue winning. That’s what most successful entrepreneurs I’ve dealt with do. They don’t necessarily make money so they can spend it.
5. Am I a hard worker?
Owning your own business is entering into a highly consumptive relationship, so be honest with yourself. Don’t start a business to support your golf habit. You can do that a lot easier with a high-paying job. Business ownership is the wrong avenue if your quest is simply more personal resources. Your own business must be more than just a means to an end. It’s everything — and must be a passion.
6. Am I a risk-taker?
This isn’t a matter of leaving your umbrella at home when there’s rain in the forecast. All growth comes from taking risks and executing at the highest possible level. You’ve also got to be willing to wildcat; dry holes are necessary to find the gusher. If the thought of zero return on your time and money over what could be protracted intervals is too daunting, stay put.
7. Do I have a skill that adds significant value to this market?
Successful business owners are either the best player at a critical position or the second-best player at several positions. You need to have outstanding technical skills if you’re considering a technical business; impeccable sales skills — and the desire to use them consistently and frequently — if you’re considering a sales-driven business. It’s very difficult to drive a business with only strong administrative skills. The only exception may be a franchise, which has an extremely process-driven approach. In my experience, “right-sized” former executives of process-driven public companies are often successful franchisees. In essence, a franchisor turns the operation of a business into a job with clearly defined dos and don’ts included in its recipe for success.
8. Do I have a clear goal for my business?
This last question may be the most critical: the point of your business must be much more than to escape from your current job. To create a business with real value, you need to set out to create and operate a real value business. For a business to be a true asset, it must consistently turn a significant profit after paying you a fair salary. Otherwise, it’s little more than what I call “an incorporated job.” And moving a business from the status of an incorporated job to an asset requires a series of very purposeful, difficult, and risky acts. An uncommitted owner will inevitably fail to execute these acts if they don’t make asset creation a business goal from the start.
I’ve had tough conversations with clients who were dead set on starting their own businesses, just because they had an affinity for a certain product or service. However, if they know deep down they don’t want to engage in the complicated process of value creation, then starting a business means they will endure significant pain, take on outsized risks, and work harder than any employee without achieving a commensurate reward. But if you are willing to work harder and smarter than ever before towards that goal of value creation, that is certainly laudable.