Planning to be an entrepreneur? Ask yourself these 5 questions first
Starting a small business is on the minds of so many people these days. Not necessarily the kind that would fire the imagination of a venture capitalist and get listed at an eye popping premium.
We are talking about enterprises that are being set up by people who want to be their own bosses; who are tired of the office routine; who see business ideas around; who want to earn more and enjoy the process. So what are the questions to think about, before you turn into an entrepreneur?
First, ask yourself why you want to start a business and be sure you have a clear and honest answer. There are three primary motivations:
One, you see yourself as very good at something and want to do more of it.
Two: You see a problem, and you believe you can solve it ingeniously and enjoy working at it for the long term.
Three: You see an opportunity and want to make money out of it. There is no judging which is better, but these are the broad motivations. How you will set up and work depends on what drives you.
If you harbour romantic notions that setting up a business means less work, more flexible timings, greater work-life balance, freedom from a mean boss, and great joy in pursuing a dream, you have to meet a few real entrepreneurs and talk to them.
Typically, running a business means work never really ends, seeps into all your waking time, tests your ability to stay positive, and replaces the boss with demanding colleagues, associates, service providers and clients. You should have the patience for bouts of
exhilaration and exhaustion. Do not choose entrepreneurship to escape from work travails. A long holiday might be a simpler solution.
Second, answer the critical financial question: Who will buy what you intend to sell? Why and what determines their ability to pay? For example, the highest earning educational enterprises are those that coach for competitive exams. As long as eager parents are willing to mortgage their assets to give their reluctant kids a shot at entering the IIT or IIM or clearing the CA or CS exams, or posting better scores in exams running up from Class 3 in school, these enterprises will rake it in. You may dislike and abhor the model, but it gets the finance question right.
Do not assume that the market is visible and available. There would be so many like you, eyeing the same market and opportunities.There are brave entrepreneurs who will declare that they are not in it for money and would be very happy to do their bit.
When the crunch for working capital hits them and when inefficiencies in the way the run their business becomes obvious, they would beat a loss to figure what they want to trade off and why. The strategic direction for a business has to pass the test for being financially viable. Learn to create a business plan and work on it assiduously, pondering over each number. If you don’t get the revenue you need, the game will soon be over.
Third, achieve some clarity about the structure of your business. If it is going to be dependent on the skills of a single person, who may be a fashion designer, an expert cook, an accomplished yoga teacher, a talented artist, or a skillful teacher, create a structure that keeps the sanity of the core resource intact.
The entire edifice will crumble if the star performer is overworked, pushed to the limits, and gives up in fatigue. Take on a simple support structure at low cost, with fewer resources and work within the creative limits of the core resources. Such skilled entrepreneurs soon develop a network of many others who freelance like them, and can create dynamic teams that come together for projects, while remaining independent otherwise. Think of a wedding planner and the hundreds of allies she works with, serving her clients out of a tightly knit office.
If your business needs varied skills, do not even begin without being sure you have the core team in place. And work with the understanding that the diversity of the team is the source of its productivity as well as the conflicts. Ask yourself if you have the leadership capabilities of holding such a team together and working with the differences and clash of ideas and approaches. Do not assume that working with friends and relatives, or erstwhile colleagues and neighbours would offer a better work environment. Don’t burden yourself with dead weight when you are running a demanding business.
Fourth, be prepared to work hard, work long, and work with focus when things go wrong. A successful business can look back and identify the steps it took to get where it stands today.
That is the benefit of hindsight. At the time when those steps had to be taken, the business would have had other choices; there would have been times when the choices that were exercised were wrong; there would be several examples of things going wrong. A business must find a way to persist, persevere and plod on. That needs a tremendous amount of positive energy, willingness to learn new things, heightened awareness about the micro and macro view of what is going on and persistent ability to rework.
Fifth, make sure you have an enormous capacity for feedback, conversations, ideation, and networking. Your ability to imagine how your business will grow and flourish is limited, even if you began it all. It is the dynamics of the environment filled with clients, colleagues, competitors and unexpected crises that shape a business enterprise. Your business will lean on, collaborate with or fight entities you did not even know existed. There is no telling how these dynamics will work, unless you are alert and alive to its unfolding. There are a million problems waiting to be solved by smart entrepreneurs. Make sure you choose the one that you have the energy, competence, resources, and strategy to solve. And double check that some one will pay you consistently for doing so.