You have an idea. You think this is a great time to start a business based on that idea. Should you start your new business now? Should you be an entrepreneur? Notice that I didn’t ask “can you be an entrepreneur?”
I’m making the distinction because I recently finished reading Carol Roth’s book, The Entrepreneur Equation (Benbella Books, March 2011), and as she puts it, the question is not “Can I be an entrepreneur?” but “Should I be an entrepreneur, given my personal circumstances, goals and opportunities?”.
This book spoke to me because I meet lots of wanna-be entrepreneurs (dreamers) who really should not be trying to start the businesses they want to start. Also, I covered the issue of understanding how your intended business will allow you to fulfill your personal goals in a previous blog post – So You Want to Start a Business? Why??
In most cases these “dreamers” have a severe case of what I posted in response to the LinkedIn discussion “What is the biggest challenge start-up businesses face?”; they have unrealistic expectations.
Unrealistic expectations about the value of their idea. Just because you have a good idea does not mean that your business will succeed. An idea is just that, an idea – it has no intrinsic value. Good business ideas fail all the time, while so-so (or sometimes, bad) ideas succeed. The difference between success and failure is having a workable business model (one that makes enough money) and having the right team to effectively execute on good plans, thereby turning the idea into reality.
Unrealistic expectations about the applicability of their own skills. Just because you are good at creating or producing something, or you have some technical skill, doesn’t mean that you have the skills to run the business. If you want to spend most of your time exercising those creative, etc. talents then you may want to consider getting a job with a company where you can do that for the majority of your time; or accepting that you will be creating a job for yourself (in SBA terms, a non-employer business) and that you will not be building a business that creates equity. Of course there is nothing intrinsically wrong with creating a non-employer business – a “job-business”, as Carol Roth terms it; after all, there are over 20 million non-employer businesses (according to the SBA). But you probably want to look at The Entrepreneur Equation’s exercise of comparing a job with a job-business before pulling the trigger.
Unrealistic expectations about what it means to be a business owner. You, or a co-founder, need to have experience in the business/industry in which you are starting the business. You, or a co-founder, must be able to understand and manage the financial position of the business. You don’t necessarily need to be able to do the bookkeeping or build financial spreadsheets, but you should be able to read an income statement, a cash-flow statement, and a balance sheet – and understand what they say about your business. It helps to understand something about planning – strategic and tactical – and people and task management. If you or one of your co-founders doesn’t have these skills, they are all things that you can learn about before starting your business. To be successful in your business you have to be good at running a business – because that is what you will be doing.
So, if you still are wondering “should I be an entrepreneur, given my personal circumstances, goals and opportunities?” then I suggest you read The Entrepreneur Equation, which the author says “serves as an initial screening process for you as an aspiring entrepreneur” – and, of course, continue to read my blog.