Albert Einstein was once quoted as saying, “The only source of knowledge is experience.†And the same certainly holds true for entrepreneurs. But for many, the allure of becoming an entrepreneur causes them to take the plunge before they learn to swim.
According to Carol Roth, author of The Entrepreneur Equation, too few entrepreneurs stack the odds in their favor with experience.
“Being able to manage employees and vendors is the type of entrepreneurial skill you’ll need to acquire before starting your own business,” she points out. You’ll also need to know your industry inside and out, including aspects you may not be familiar with or may not even like, including marketing, accounting, and more.”
Roth also recommends the following:
Know Your Goals. Ask yourself tough questions about why you really want to start a business. If you love the idea of running an entity, if you like creating systems and procedures, adore servicing customers, and if you thrive on wearing many different hats and balancing responsibilities, then entrepreneurship could be the perfect path for you.
Be Financially Prepared. It may not seem like it will take a lot of money to start certain businesses, such as service businesses or online business; however, this is only part of the story. Businesses often take a few years to gain a solid foundation, so you need to have enough money to start the business, plus operate it while it stabilizes and have enough money to live on for at least a year and a half.
Network. Business sometimes comes down to not what you know, but whom you know. Strong connections can provide valuable business advice and provide introductions to get you more favorable financing, prices, terms, and conditions from business suppliers and professional services. Moreover, connections are your best source of marketing and customer referrals, which is critical for a new business.
Be Honest about Whether Your Personality is Suited for Entrepreneurship. Do you prefer the “status quo” and like to avoid the unexpected? Can you handle a life of highs and lows – including financial highs and lows? If you are a person who likes stability and control, or if you prefer when things go as planned, the roller-coaster ride of a new business may not be right for you.
Know Your Legal Exposure. If you are going to go into a business that competes (directly or even indirectly) with your current employer or if you plan to call on prior customers or contacts, you may find yourself in a legal bind, depending on the paperwork you have signed with you current (or previous) employer. Check with your lawyer to make sure you are in the clear or to find out what you need to do to avoid any sticky legal situations.
Vet Your Idea. The most successful businesses rely on automation and delegation. Will other employees be able to do your work? If not, can you teach others what to do in an easy-to-follow format? If your business relies on your skills – and your skills alone – you might have a successful job, but it may not be that business you are looking for.