About half of all small businesses fail within the first five years, and that statistic alone may give you second thoughts about whether you're cut out to be a small business owner. The good news is that you don't have to be born with all the traits of successful business owners. But you do need at least some of them, and a willingness to work on developing the rest.
Answer these seven questions to see if you might have the personality and skills to successfully start and run your own business.
1. Are you truly enthusiastic?
Running a small business can be demanding, forcing you to sacrifice evenings, weekends, and other interests—especially in the early days. You'll need to sell your business idea to potential customers, clients, investors, and even your own family. It's hard to pull this off if you aren't genuinely enthusiastic about what you are doing. Make sure your business idea is something you truly want to invest your heart and soul in, not just a business that you could start.
2. Are you persistent?
Chester Carlson pitched his idea for a copying machine to 20 companies between 1939 and 1944—and they all rejected it. If he hadn't been persistent, we'd still be using carbon paper, and Xerox wouldn't be a multibillion-dollar company. Even an ordinary small business can easily take three years or more to turn a profit. If you are the kind of person who tends to lose interest in projects or has trouble sticking with one thing, you may not have the persistence to make your business work.
3. Are you comfortable making decisions?
If you are the sole owner of your business, you are the final authority on everything that happens in your company. This means you must be able to evaluate your options, make decisions, and implement them. Some people are naturals at this, while others are far more comfortable being told what to do. If you have a hard time making decisions, you may need to work on this skill before launching into business ownership.
4. Can you handle risk without getting panic attacks?
Owning a small business brings with it a set of risks that you don't have when you're an employee who collects a regular paycheck. Your income can be inconsistent, and many small business owners lie awake at night worrying about cash flow and whether they can make payroll. Owning a business can bring you freedom and flexibility, but if you can't also live with unpredictability and uncertainty, you may find entrepreneurship difficult.
5. Are you willing to adapt and change?
When you start your business, you don't really know if it's going to work. To be successful, you may have to experiment with different products, services, and marketing messages. You may need to change your business model in response to new technology, customer demands, or things your competitors are doing. A flexible attitude and a willingness to stay on top of trends can be critical to your long-term success.
6. Can you delegate?
When you first start your business, you may have to wear many hats. But, as your business grows, doing everything yourself becomes a recipe for burnout. Delegating frees you from time-consuming, repetitive tasks, like payroll, and gives you time to focus on the strategic side of your business. Delegating can give you the benefit of insights from real experts on specialized issues, like data security, search engine optimization, or human resources. If you're the kind of person who needs to micromanage and control everything, you may struggle as a business owner.
7. Are your personal finances in good shape?
As a small business owner, you'll have to manage money. If you're the type who runs through your paycheck without ever knowing where it went, owes a heap of credit card debt, or has a rock-bottom credit score, you may not be ready to run a business. You'll likely benefit from learning more about money management and cleaning up your own personal habits before you find yourself responsible for an entire enterprise.
Deciding to launch and run your own small business will affect you, your family, and any employees you may have. Before you take the plunge, consider these seven questions to help determine how well suited you are to owning your own business.
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