8 signs you're not ready to start your own business
- Not everyone is suited to owning a business - and that's OK.
- Some people don't have an entrepreneurial mindset, and there are clear signs that you're not ready to start a company, according to Uptima Business Bootcamp cofounder Rani Langer-Croager.
- There are also some practical matters you should have in order, particularly your finances.
There's no shame if you are happier as an employee, as some people don't have an entrepreneurial mindset. Though you can develop entrepreneurial traits, your business would need to be something "that you can't not do," according to Langer-Croager.
From issues of risk appetite to matters of personal finance, Langer-Croager shared eight signs you might want to keep your day job, at least for now.
1. You have a low appetite for risk
Here's the harsh reality of starting a business: around 70% of startups are no longer in business by year 10, according to Fundera.
Even if your product or service is fantastic, there are a host of snags you can hit, from running out of money to running out of steam. To deal with this risk, "every entrepreneur should go into this with their own timeline" for when they expect the business to turn a profit - and pay its founder a salary.
This timeline should be "tied to their own financial wellbeing," Langer-Croager said. In other words, figure out how long you can afford to allow your business to grow without getting something back from it, knowing that there's a chance your startup might never turn a profit. She said that doing so "makes managing that risk a little easier."
2. You have a "scarcity mindset"
"People who are in a scarcity mindset think there aren't enough opportunities or resources for them," Langer-Croager said. This can result in a sense of desperation that can lead you to pursue avenues that hurt your business, rather than holding out for better opportunities. This is a pitfall even for seasoned business owners during down times, she said.
"Working on your own relationship with money and knowing that relationship might be deep-rooted" may be necessary to remove this obstacle to becoming your own boss, according to Langer-Croager.
3. You need a quick profit
Small Business Trends reported only 40% of startups actually turn a profit and 82% of small business failures are tied to cash-flow problems.
It can take years for your business to become profitable enough to pay yourself a living wage, Langer-Croager noted. "If you're trying to make cash quickly, you're going to put a lot of pressure on the business that's not going to allow it to grow the way it needs to grow," she said.
4. You don't understand your business numbers
It's crucial for an entrepreneur to understand his or her business finances, Langer-Croager said. If you're not keeping tabs on your financials, you could miss important clues that you need to adjust your plan based on actual rather than projected performance.
"When you're not doing that back-end financial work," she said, "it can lead to making emotional decisions as opposed to informed decisions." And that could spell disaster for your startup.
5. You don't have a business plan
Research from the University of Michigan's Panel Study of Entrepreneurial Dynamics II supports the argument that a good business plan will increase your startup's chances of staying alive.
"I encourage you, if you're starting a business, that you market test and then create a plan," Langer-Croager said. Even if you've already started your business, it's not too late to create a plan that will give you a roadmap for how to achieve your goals and stick with your mission, she said.
6. You haven't market-tested your business idea
A CB Insights survey of "startup failure post-mortems" found that the top reason for closure was a product with no market.
"You can spend a lot of time and effort and money creating something that is not going to be adopted in the market," Langer-Croager said, so make sure you have done your market research before you commit to your business idea.
This could mean anything from market surveys to test-marketing a few prototypes, to getting help from a SCORE mentor with experience in your industry.
7. You're not willing to go out and market your idea
If you know anyone who runs their own business, you've probably heard them complain about marketing - one of many business owners' least favourite tasks.
"This business is personal, so you're really putting yourself out there" when you have to market yourself, Langer-Croager said. You can't overcome your fear of being seen and become an advocate for your business, entrepreneurship is probably not your thing.
8. You bootstraps are too short
"There's comes a point where, in order to grow the business, you really need to hire people, so you can delegate activities that are no longer a good use of your time," Langer-Croager said.
Too much bootstrapping (founding and running a company from limited personal capital) can stunt your business growth by denying it resources at a critical time, when you may need to hire employees. But a business loan could put you on the hook for debt you will repay for years if the business fails.
The question comes back to this: how much risk are you comfortable with?
Receive a single WhatsApp every morning with all our latest news: click here.
Also from Business Insider South Africa:
- Oops Woolworse, you did it again!
- This is what R300,000 a year buys you at SA’s most expensive high school – which just saw a fee increase of a whopping R22,000
- A student refused to pay for his date's meal after she ordered lobster and a R1,200 bottle of wine, and she wasn't happy about it
- Woolworths staff have been banned from handling your bank card – here's why
- These are the top 10 academic schools in South Africa right now - with fees starting from R30,000 a year
- FNB clients can save up to R1,500 by getting a 2-for-1 food and entertainment app for free. Here’s how.
- What to do if you find out your coworker makes way more than you