Becoming Your Own Boss
Many people start a small business in order to enjoy the perceived rewards of freedom and independence. This is understandable because owning your own business can offer you the opportunity to experience:
- The freedom to use your own ideas
- The freedom to be the boss
- The freedom to not be fired
- The freedom to earn as much as you want
The reality of small-business ownership can be quite different. Many small business owners will tell you that they work more hours than when they worked for someone else. A large number of those hours are the result of the demands of others.
Some of the more demanding aspects of small business ownership can be:
- Regulations imposed by provincial and federal governments. Some of the other regulations that must be adhered to are federal and provincial licensing, local safety and health regulations, environmental protection rules, employee deductions and labour standards.
- The customer - you must satisfy your customers. They are the people who ultimately decide whether or not your business will succeed. You will be successful only if you can provide them with the goods and/or services that they want or need.
- Financial concerns include the people who provided you with funds to get your business started. They might be relatives, friends, bankers, etc. no matter who they are, they will have a vested interest in how well you run your business.
- Even your competition will become more significant as the way they do business does affect the way you run your business - the hours you work, prices, profits and more.
- Most importantly, you alone will take full credit when errors in business decisions are made. A poor decision can result in losses not only to yourself but to your employees, creditors and customers as well.
- Money is the bottom line. Your success depends upon your ability as an owner to make sure your business is making more money than it spends.
Why You Will Succeed
At this point, the idea of running a small business may not seem very attractive. Don't get discouraged. Running your own business can provide you with a tremendous source of self-satisfaction and pride.
Most small business experts urge prospective business owners to carefully and completely analyze their potential to succeed and assess their strengths and weaknesses. Typically, you will begin by analyzing yourself as a future entrepreneur. What kind of person are you? What technical or special knowledge do you have?
Self-confidence and drive, innovative thinking, goal-orientation and business and technical knowledge are necessary for success. These traits must also be tempered with realism. Knowing the limits of your own abilities and not being afraid to ask for help is imperative.
Successful business people know what they want to achieve. They determine where they are going by setting goals, paying attention to details and motivating others around them. It is wise to understand and follow the lead of those successful people around you.
What Kind of Business?
The type of business that you enter should complement your experience, interest and/or technical knowledge. It is fine for you to dream about becoming your own boss someday, but before you put too much work into your business, make sure that the area you choose is the right one for you.
When deciding what business to start, you may want to consider what hobbies and/or interests you have as well as your experience and background. If you are interested in an area in which you have little experience, you may want to seek some training before you begin. Arranging a job in the area of interest or acquiring a mentor are two ways that may help you gain the knowledge and experience that you need.
Other factors that need to be considered and are equally as important as the above mentioned are:
- Is there a need for the goods and/or services you are going to offer?
- Are you equipped to fill the need?
- Will there be a market for your product in the future?
Fads, technology, and innovations all affect the opportunity for any business to be and remain successful.
The Odds of Success
Starting your own business is risky. Of all companies started, just about a third fail within one year, and 80 percent will fail within three to five years, but after five years the rate of discontinuation drops rapidly.
Lack of management experience accounts for nearly all small business failures. This does not mean that all small business managers have poor management skills. More accurately it refers to the person's ability to deal with the "unknown" that is likely to occur.
Desire and persistence along with innovative thinking improve the odds. In tough times, a small business can quickly change direction by introducing new ideas and creating better methods to help move its product and sustain an adequate income.
After you have decided that you want to be in business, you face the problem of money. How much money will it take to start your new business? How much operating capital will you need?
There are business plan guidelines available to help you put together a very good estimate of your start-up and continuing capital requirements. A business plan will provide information on your proposed venture to lenders, investors, and suppliers to demonstrate how you plan to use their money and to establish a basis for the credibility of your project.
It is recommended that you become well acquainted with your local bank, as it will probably be the main outside source of capital.
All the above information should be helpful to you as you think about establishing your new business. Remember, it never hurts to gain more knowledge in your business area. Few businesses have gone broke because the owner knew too much about his/her business.