You have probably heard about many
success stories of other entrepreneurs. Maybe you even know a successful
entrepreneur personally. The media loves success stories because people view
them as something inspirational.
However, according to the Small
Business Administration, four years after the start-up,
only half of all small businesses with employees remain open. The risks involved
in starting and growing a new business can be very high, and the prospects of
success uncertain.
Before you evaluate all the pros
and cons of starting a business, ask yourself why you want to become an
entrepreneur.
Here are some reasons that may
apply to you:
-You want to take control of your life
In times of mergers and
acquisitions, corporate downsizing,
reengineering, restructuring, outsourcing, and other competitive trends in
most industry sectors, many people rightfully feel they have no control over
their lives. Today, you may be considered the most respected and valued
employee in your organization. Tomorrow, you may find yourself downsized or transferred to another part
of the country.
Radical life changes can be very
frustrating for you and your family. Some people spend a significant part of
their lives relocating from place to place, never having a chance to develop
roots.
Starting your own business puts
you in charge of the decision where you live and work. You decide how long your
commute will be and what time schedule you will maintain. Typically,
entrepreneurs work longer hours than those working for someone else. However,
entrepreneurs use their time the way it suits them while their overhead
(commute time, sitting in meetings, etc.) is usually very low. Although many
organizations allow flexible hours and telecommuting for their employees, this still
cannot compare with the freedom of being your own boss. An entrepreneur does
not worry that his/her job will be in jeopardy because of too many
telecommuting days or because he/she has to leave the office due to a child-care
issue.
-You want to take control of your career
Closely related to taking control
of your overall life is taking control of your career. Instead of letting an
employer decide what career path you will pursue, you take control of it
yourself. For a number of years, your career may have been developing the way
you wanted - from junior assignments to more challenging and attractive
leadership positions. But your employer could be acquired by another company,
or it downsizes and you are laid off or given a dead-end job position.
You may decide to make a radical
shift in your career by changing the function within the same organization
(hoping that this new function won't be downsized or outsourced later). Or you
may decide to become an entrepreneur and continue to develop your career within
the industry you love.
It is interesting that so many
people feel safer working in a large organization, with benefits package and
other corporate perks, than working for themselves. A couple of decades ago,
this might have been a reasonable choice, knowing a job with a large
organization most likely meant a lifetime career and a nice retirement package.
But the modern workplace of the '90s and early 2000s has become much more
volatile. The time of employer-employee loyalty and golden watches is gone.
Typically, employees stay with one employer between three and five years,
continuously monitoring the job market and switching
employers as soon as a better job opportunity shows up. Retirement with a
single employer has become the exception when it once was the rule.
-You want to do what you love
If entrepreneurs have one thing in
common, it is the genuine love for what they do. They work with passion,
motivation, and dedication. Rather than an employer telling you which projects
to work on, you make all the decisions yourself. By controlling these
decisions, you create a workplace that fulfills you professionally and keeps
the focus on projects that match your interests and enthusiasm. Most often the
result is high achievement and success.
-You want to pursue a unique business opportunity
Maybe you've identified the market
need for a certain kind of product or service. You have an idea how to satisfy
the need, and you want to develop the idea into a product or service and sell
it.
Some people never dreamed of being
entrepreneurs, but when they realized a business opportunity, they couldn't
resist. For example, Mark had been a senior product manager with a large satellite
communications equipment manufacturer for many years. He had a nice employment,
including an above-average salary, benefits, professional growth opportunities,
promotions, etc.He had no thoughts of
looking for another job and certainly no thoughts to start his own business.
But over a year period, several
major clients asked him if his company intended to offer certain software
upgrades that would enable them to integrate their own customized equipment
into the satellite communication system. Mark brought the request several times
before his senior management team and the response was always no. The satellite manufacturer did not
consider the development of the software upgrades a priority and preferred to
stay focused on its own core competences. The software upgrades catered to too
small a market for the large satellite manufacturer. However, the opportunity
was not too small for Mark.
He researched the market
potential, estimated the development costs, and put a business plan together. And Mark was not the
only one to see the profit potential. His clients offered to finance some of
the development efforts, and his current employer (the satellite manufacturer)
even provided some financing, with expectation that the new software upgrades
would be integrated into its satellite system solutions. With all the pieces in
place, Mark decided to leave his full-time job with the satellite manufacturer
and start a software engineering business focused on satellite communications
applications. He never looked back.
-You want to fulfill your long-time dream
Your independent nature has always
driven you to be an entrepreneur, have your own business, and make your own
decisions. Maybe a friend or someone in the family is an entrepreneur, someone
you've always admired. As in so many other aspects of life, a positive role model
can make all the difference in new business.
-You want to make a difference in the world
You have a noble idea, a belief
that your products or services can enhance the quality of people's lives. You
want to develop these products or services for the benefit of humanity.
Lila had been in wireless telecom
for many years. She had always wanted to apply her expertise in the world of
health care, especially helping people in emergency situations far away from
any medical facility. She had been familiar with death statistics related to
heart attacks, strokes, and car accidents and realized that many of these lives
could have been saved had treatment started sooner - at the accident site, or on
the way to the hospital. With advances of broadband wireless technology, Lila
realized effective emergency telemedicine was feasible. She created a business
to develop telemedicine systems for ambulance fleets, connecting them
wirelessly to emergency medical centers. She interviewed medical and IT staff
from several emergency centers and created a system based on their needs. She
also secured her first clients and sources of financing. With outstanding
recommendation from her initial clients, a good number of foundations, health
care organizations, and insurance companies wanted to finance her new business.
People recognize a good idea and want to be part of its creation.
-You want to prove you can do it
You like a good challenge and are
not afraid of the risks involved. You're not afraid of
the failure and see it only as a valuable learning experience on your path to
success. You are willing to make attempt after attempt to start your new
businesses until you finally succeed. According to Small Business Administration, approximately 13 percent of
entrepreneurs who filed bankruptcy will start a new business within eighteen
months from the filing. Meanwhile 11 percent are already in planning stages to
start another business. Refuse to fail.
-You want to prove yourself to investors who support you
Most entrepreneurs struggle to raise sufficient
capital to support the growth of their businesses, so consider yourself very
lucky if you have access to capital through wealthy relatives, friends, or
financial institutions. Most entrepreneurs spend enormous amount of time
looking for capital, giving presentations to potential investors, explaining how they intend to
generate profit, and most often their efforts go unrewarded.
Venture capitalists are swamped
with business plans from start-ups soliciting investment. Typically, VCs invest in one or two start-ups a
year out of the several thousand proposals received. Add to that the dot-com disaster where many venture
capitalists got burned, and no wonder they are much more cautious now with
their investment decisions.
Already having someone willing to
invest in your business is the ultimate stroke of luck. It will save you a lot
of time and energy (usually called the cost of financing). Remember, each
business hour spent on anything else but developing your product is overhead
for you. The more time you spend on overhead, the more delayed your product launch to the market will be.
First of all, your revenues will
be delayed and potentially reduced if the competition comes to the market with the
similar product before yours. Second, your costs will be higher as a result of
all the overhead activities that don't advance the development of your product.
The lower the revenues and the higher the costs, the lower profits you will
make - if you ever complete the product development. Many entrepreneurs never finish
the development phase because they simply run out of money.
So if someone you trust wants to
support your business financially, don't pass on the opportunity. However,
don't underestimate your personal responsibility because the investor probably
only gave the money because he/she trusts you and believes you can succeed with
your venture. Just imagine how you would face
this investor (who may be a friend or family member) and admit you have spent
all his/her money and failed.
-You have a strong network of business advisors
It is very difficult to start a
business alone, without anyone's advice, help, or referrals. Most successful
entrepreneurs have wide, reliable networks of friends, business
acquaintances, and colleagues. These relationships are typically developed over
a long time, through various professional and personal situations.
Even if you start your business
alone (without cofounders), you will often need a support network for
recommendation of reliable suppliers, new employees, or financing sources. A support
network may connect you with new clients, venture capitalists, or strategic
partners.
In the long run, you may consider
offering certain individuals from your support network a seat on your company's
board of directors. Be very careful about this
decision. The board should include seasoned, well-intentioned individuals who
will provide a substantial value added to your business through their contacts,
expertise, experience, advices, image, and genuine support.
-You want to get rich
Who
doesn't? However, starting a business just to get rich may lead you to an
unsatisfying end. The last thing you want to do is to own a boring, unfulfilling
business - just for the money. You may end up being a wealthy, but bored, dull
and unhappy person. At the end, you are the one who knows best what your
priorities and values are. If it's money alone, OK. However, most people value
their families, friends, professional growth, and general intellectual and
spiritual growth more than just money. If you spend the majority of your time
focusing on getting rich while doing a job that doesn't fulfill you, over time
your world will narrow.
So while deciding what business
opportunities to pursue, use the balance sheet, but don't forget where your "heart and soul" are. Creating a new business should be an exciting,
challenging, and motivating experience that enriches you in all possible
aspects - intellectually, emotionally, and financially.
Copyright 2008 Dr. Jelena Vucetic. All Rights Reserved.
