Starting a Business? How Well do you KNow Yourself?


By John Riley

Starting a business can be an exhilarating experience. It’s your vision, your company and your bountiful legacy for the sons or daughters who follow you. But there’s another unintended course that your efforts might take and that’s the one you want to avoid. So the purpose here is to try and minimize the chance your energies and assets might follow the latter path.

 Before you spend a lot of time and money on pursuing your dream, some self examination is in order. If you can objectively evaluate four areas of your personal standing, the answers will give you a strong indication if you have a realistic shot at starting a company successfully.

 Business Skills:  Most likely, the business you have in mind is going to be a reflection of your experience and training over the past few years while you have worked for someone else.   Pre-existing contacts in the industry are an important result of that association.  Your business and market knowledge, and/or that of your associates, help establish your credentials.  Now you will need to assess how well you qualify in this category.

 Business Plan    A business plan is essential to your success for two reasons. First, it forces you to think about all aspects of your vision and the strategy you will employ to achieve that vision. Second, the plan will be a necessary requirement to get the attention of an Angel investor or venture capitalist. At this stage you probably have not written a business plan so you need to obtain a recommended outline of one from the many internet, academic or professional organizations that offer them free. With an outline in hand you can take each heading and ask yourself how you would deal with that subject.

 Financial Resources   In general, an entrepreneur should have enough funds to survive for six months to a year without personal income. It takes time to develop accounts and convert them to customers so you need to be prepared to operate for a few months without income. If you are selling a technology product or an engineered product, the time elapsed before you receive an order will be longer because of all the up-front specification and prototyping work that has to be done prior to a sale.

 Commitment    The brutal fact is that an entrepreneur who does not believe in his product or service will not have the fortitude to withstand those bad business cycles or customer indifference.  Some will think they are committed and can deal with adversity, but when the first difficult moments arrive, they bail out.  If you don’t feel the passion for what you want to do, then you should reconsider what you are about to do.

 When talking to a prospective entrepreneur, these are the four measures I use to assess if or not he or she has a realistic shot at starting a business successfully.  If nothing else, the entrepreneur will be much better prepared to meet the venture capitalist.

 

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