9 questions you must answer ‘Yes’ to before starting a business
Think you’re ready to quit the day job and start your own business? If you instinctively answer ‘No’ to the questions below, think very carefully
What do introverts, extroverts, team players, lone wolves and detail-obsessed boffins have in common? Well, you'll find all these personality types (and many more besides) at the helm of successful businesses.
The truth is that businesses are started and run by people from myriad backgrounds. There is no one-size-fits-all profile of the successful business leader.
But there are certain qualities and attributes that are at the very least helpful when starting a new company – for instance, the ability to bounce back after a setback or, more fundamentally, a capacity for hard work.
So before you give up the nine to five and embark on a new venture, it's worth asking yourself some questions, not only about your qualities but also your perception of the business opportunity.
1. Is there something you're passionate about?
You make 10 sales calls before lunch without winning a single order. A supplier calls to say a crucial shipment will be delayed by at least a week. And to cap the morning off, a key employee has just resigned.
So what keeps you going? Very often it will be your genuine passion – or to put it another way ‘enthusiasm' that sees you through. And without passion and a ‘mission’ it can be a hard slog.
But more importantly, your passion and enthusiasm will put fire in the belly of the business. Demonstrable passion motivates employees and can also play a key role in convincing customers that they should spend their money with you. “If you are not passionate about the products or service you are promoting then no one will buy it,” says Darren Leigh, MD of novelty products company Leighmans.com.
It takes many forms. Some business owners are passionate about commerce itself. They love the buzz of selling, building a client base and winning bigger and better orders. Others are passionate about “being the best” in comparison to competitors. Many are passionate about the products they make or sell. Some are focused on building a sustainable ‘family' business for the next generation.
But what if “passion” is not a word that trips easily off your tongue? Well it's certainly possible to run a business on a totally “professional” basis, but it requires a commitment to ensuring that yours is a well-run company with a laser-like focus on product, customer experience and back office efficiency. And to the outsider, that commitment probably looks a bit like passion.
2. Have you spotted a problem or something you can do better?
There are very few truly new and original business ideas. But here's the good news: novelty and originality aren't prerequisites for success. Walk down a high street and you'll see perhaps half a dozen cafés. Go online and you'll find dozens of sites selling similar sorts of products. Some will be doing it highly successfully, others will get by, and some will fail.
And those which are successful may have often identified something that they can do better than their competitors. “If you go into a market that's saturated, the quickest success comes from doing things differently,” says Mac Attram, a coach and consultant at mentoring company Mindspace.
And by doing things differently you develop the USPs (unique selling points) that separate one business from another.
And if you haven't yet spotted something that you can do better, it's worth spending time looking at your competitors. Becoming a mystery shopper may expose your potential rivals’ flaws. What are their strengths? What are their weaknesses? And how can you improve on what they already offer?
3. Do you have knowledge and expertise in the area you want to go into?
Expertise is often the basis to start a business, whether you’re a trained architect, sales director, management consultant for a global group, or a skilled coder. This is all experience that can be transferred over into a new venture.
But very few people have all the skills they need. So map and gap your own skill and experience sets against the requirements of the business. Then take action to acquire the necessary expertise. “You can learn skills but that's long and drawn out,” says Attram. “One way forward is to find a partner who has the skills.”
Alternatively, if the resources are available you take on an employee with the skills or else outsource to a freelancer with the requisite skills via an online marketplace such as Upwork or PeoplePerHour, a specialist agency, or a professional services firm.
4. Do you have a thick skin?
Running a business requires not only determination to succeed but also the capacity to retain your self-belief even in the face of rejection.
Rejection can take many forms. It might be a bank refusing your loan application, an investor criticising your business plan or a potential customer slamming the phone down. Darren Leigh, says it's something you have to learn to cope with. “In my opinion setbacks, rejection, and in general problems have to be experienced and dealt with head-on and I believe that this is the only way in which you can grow.
Mindspace’s Mac Attram says advice and comments should be listened to and possibly acted upon, but only when the source is someone knowledgeable or trusted. “You might listen to an experienced investor but don't take the opinion of the guy down the pub to heart,” he says.
5. Are you ready to risk your savings?
Depending on the size of your savings pot, this might be the million dollar question.
Most businesses require some investment, even if it’s only a few thousand pounds and one of the first questions you're going to have to ask yourself is “where does that money come from?”
You can go to the bank or perhaps a family member or friend, but in most cases they or an outside investor will want to see you put at least some of your own money into the project too. Put simply, if you are sharing the risk by putting up cash, you have a reason to work hard. More fundamentally, a willingness to invest your own cash suggests that you have real confidence in the venture.
There may of course be good reasons – such as family commitments – why you can't invest and perhaps then there is a case for finding the funds elsewhere. But it's important to consider your own motives. Do you really have confidence in your business plan?
In an ideal world your business idea will be capable of generating revenue almost immediately too, which will ensure you’re able to make repayments on loans and avoid burning too much cash with payments to suppliers.
6. Are the people close to you supportive?
As a business owner you will typically be putting in long hours and end up bringing work home. It will no longer be possible to switch off (employee-style) at the end of the working day. Equally important, you will no longer have a guaranteed income.
All this will be made easier if your immediate family is supportive. This will be more likely if you communicate your plans. “When it comes to your primary relationships – partner, children, friends – make sure they understand what you're doing and why you're doing it,” says Mindspace’s Attram.
That said, no matter how supportive your family and friends are, they may not be able to provide much by way of practical advice when you face difficulties or challenges. So it's also important to network with peers who also run businesses. If you don't know any personally try joining a local networking group or an online forum.
7. Can you make lifestyle sacrifices and still enjoy yourself ?
Maybe as an employee you earn £30,000, £40,000, £50,000 a year or more. You start a business and in the first year your income drops to £15,000 or £20,000. It's a sudden lifestyle change. What's more you're working 14 hour days.
So it's important to believe you can make the type of sacrifice that may be necessary – such as dropping foreign holidays for a while or eating out with friends less often.
If the answer to the question is “no” or “not sure”, take a closer look at your lifestyle. Identify what matters and what can be jettisoned for a while. Make a plan for an enjoyable new life that will have your new business at the centre of it. “Try to keep focused on the end game,” says Darren Leigh.
But remember to plan for the essentials. Louise Downing of homeware and furniture e-commerce business Spotdeco recommends asking: “Do I have enough money to get by for at least three to six months? Do I have enough extra for any unforeseen business problems?”
8. Do you have the stamina and willingness to work long hours?
It's your first day as a business owner. You can't afford to take on employees as yet but there's a hundred and one things to do, ranging from sourcing suppliers, through to meeting designers to discuss your logo and an all-important meeting with a potential client. By eight o'clock in the evening, you managed to get just about everything done, but tomorrow's workload is looking even heavier.
So do you have the stamina and willingness to do this, day after day, month after month for an uncertain reward? That's not an easy question to answer. You can certainly factor in your experience as an employee (are you a hard working self-starter who is always prepared to work late?). But even that isn't a perfect indicator.
If you have real doubts, it is probably better to think again. But if you simply have concerns it's a question of doing a deal with yourself that the work gets done. More practically, think about time management. By managing your workload more efficiently, you can take off much of the strain. And as the business grows, make sure you appoint people who can take charge. “You can create a business that runs itself,” says Attram.
You can also take care not to take on too much unnecessarily. “Be prepared to say ‘No’ more than ‘Yes’. Too much opportunity can be a bad thing,” says Alec Dobbie, founder of performance marketing company, Fanfinders.
9. Are you a glass half full kind of person?
Optimism is hugely important. Not the kind of blind optimism that insists everything is fine, even when things are collapsing around your ears, but a basic belief that “you can do this.” Optimism can carry you a long way.