Every entrepreneur needs to be honest about their strengths and weaknesses, and realistic about their reasons for choosing the startup route. For any entrepreneur, even the best business opportunities, if entered for the wrong reasons, will likely fail. Some of these reasons seem obvious, so forgive me for restating, but I still hear them too often.
Statistics show that at least 50% of new startups fail within five years, and many of the survivors eventually fail. If you don’t want to be part of these statistics, consider all the alternatives to starting your own business, especially if you have one of the following perspectives:
- “I’m tired of working hard and being so stressed all the time.” Starting and growing a business is more work and more stress than any employee role should be. Perhaps you need to look carefully at the reasons for your weariness and stress at work. Health and personal problems don’t go away when you start a business.
- “It’s my hobby anyway, so why not make it my business?” The problem here is that most hobbies cost money rather than make money. Just because you love doing it doesn’t mean anyone will love paying for it.
- “I’m desperate, since I can’t find a job that suits me.” With the current recession, jobs are indeed hard to find. But don’t forget that businesses are failing at a higher rate as well. Desperate people don’t make good entrepreneurs, and probably don’t have the resources or fortitude to start a business.
- “My family has always been in business, so it’s in my genes.” Good entrepreneurs do seem to have certain innate qualities, but it’s not clear that these qualities are automatically passed to offspring. If your passions are elsewhere, don’t try running the family business.
- “I’ve inherited some money and starting a business should be a good investment.” You can’t start a business without capital, but having capital doesn’t mean you can start one. Learning is expensive and risky. It’s less risky to invest your windfall in someone with a proven business record, or put the money in the bank.
- “I have some extra time, and I need a second income.” Being an entrepreneur is not a part-time job. A business startup is actually a second expense more than a second income. For supplementary income, you would be better served to take a part-time job with an existing company.
- “I hate having a boss, and just being an employee.” Don’t start a business for a power trip. When you become a business owner, your customers, suppliers, creditors, partners and a lot of other people will become your new “bosses”. These people may be harder to please than your boss at the office today.
- “All my friends own hot businesses and seem to be doing well.” You shouldn’t believe all the hype, or all the things said in social circles. Definitely don’t jump into trendy businesses you don’t know just to be popular. Even good friends tend to forget talking about the years of hard work and sacrifice, in favor of recent success.
- “I’d like to be rich, so I’ll start a business.” Starting a business with a dream of riches is certain disappointment. There is no evidence that entrepreneurs make more money, on the average, than other professionals. There is much evidence that the risks of failure are higher on the business owner side.
- “My primary goal is to contribute something to society.” This is laudable, but more effectively addressed after you have built a successful company, not before. If changing the world is your main motivation and money is not a concern, then do it, without allowing the building of a company to slow you down.
For anyone with entrepreneurial aspirations, I recommend you start by networking with peer business people and organizations before you commit to a startup of your own. Ask questions and do everything you can to make sure you are tackling the right business for the right reasons. Your entrepreneurial life depends on it.