Five Signs You’re not Yet Ready to Start Your Own Business
Some think they would engage in business if only he or she could think of a good idea, others would dare start their business if they only had money for that. However, considering the possibility to start one’s own business, one should first of all assess one’s competences, determination and ability to take risks, maintains Vaidas Žagūnis, Head of the Retail Banking Division of SEB Bank, and provides five signs that may signal that you are not yet ready to start your own business.
You don’t understand your business numbers
According to the Business Insider data obtained from analysis of reasons for a collapse of 101 start-ups, nearly a third (29%) of the young businesses failed as a result of a shortage of funds, almost every fifth (18%) – due to poor price-formation or problems related to excessively high costs. ‘Even though successful business necessarily requires a strong team, which includes minds excelling at numbers, the business owner, too, must have a very good understanding of his or her company’s finances. Understanding numbers helps to avoid emotion-based decisions, to be flexible and prompt in responding to changes, which are always present in business environment’, V. Žagūnis says. He maintains that this is the main reason why it is not enough to have a good business plan – it must be continuously adjusted, depending on the existing circumstances.
You have a low appetite for risk
Business Insider data show that statistically nine start-ups out of ten fail. There are various reasons for this, for instance, a low demand, lack of financial resources, inappropriate team, lost battle for competitiveness, poor marketing, etc. V. Žagūnis says belief in one’s own business idea is perfect, however, one must also be prepared for any new developments. ‘Many things may be envisaged in a business plan in advance, however, each future businessman must ask himself about his ability to face risks and unexpected situations and how he or she should prepare oneself for them’, maintains the representative of SEB.
The population survey carried out by SEB Bank more than a year ago has shown that fear to take a risk or to fail is an obstacle for every fourth individual in the implementation of a business idea.
You expect a quick profit
Each beginner in business must also think about how long he expects it will take him to gain profit from his business, how much time he may afford to develop business without gaining anything from it and without disrupting his own or his family’s financial welfare. ‘In business development one may encounter numerous challenges. It is well worth to bear in mind that a start-up may not necessarily become profitable. Therefore, you must plan and allow time how long you could develop your business without gaining any financial return. Practice shows that most often profit is earned not earlier than after one or two years since inception of the business’, maintains the Head of the Retail Banking Division of SEB Bank. Also, he says that seeking rapid profit may cause tension and result in hasty decisions that pose a risk for the business.
You haven’t market-tested your business idea
Absence of demand in the market is the most frequent reason for a collapse of a start-up: it was namely the reason of failure to survive for 42% of young businesses analysed by Business Insider. ‘We recommend not only to undertake an in-depth market analysis, but also to test your product or service prototypes. The people you know may facilitate in this, too. If there are people who would already now be willing to buy your goods or services, it would help to sense that you are necessary in the market’, V. Žagūnis advices. He says that factors which would be highly helpful in assessing the demand include various mentors, participation in business accelerator programmes, in other events that are relevant to your company as well as pro-active presence in social networks in which it is simple to present one’s business, to demonstrate its unique features, to arrange demonstration of ads only to whom it may be of relevance.
Also, before setting up one’s business it is also useful to test oneself, i. e. whether you are indeed willing every single day of a month to engage in production, calculations, customer search, etc. Experienced businessmen say clear understanding that you indeed like the business you have started is the main source of strength that helps you to overcome anxiety, fear, doubt, the load of responsibility and the emerging challenging situations.
You’re not fond of communicating and not fast in delegating the responsibility
“If you expect that the sellers you hire will be the ones to sell your products, you are wrong – first of all, you yourself have to present your business idea to investors, partners, customers, potential team members in a convincing way. In business there are a lot of personal aspects, therefore, what is of particular importance for your success as a businessman is your ability to communicate, interact, to negotiate. You must become the main ambassador of your business’, V. Žagūnis says.
Also, a frequent mistake of a general manager that impedes business growth is unwillingness to delegate responsibilities. ‘As soon as you feel that you can devote your time for something more useful, delegate routine responsibilities to others’, SEB expert advises.
According to said survey of SEB Bank, every third Lithuanian would like to have his or her own business. Private individuals with their own business or the ones who have had the intention to become an entrepreneur admitted that it was the idea of independence from employer and a possibility to earn more (as maintained by 47 and 44 per cent, respectively) that seemed the most attractive to them. At that time, people mainly considered doing business in such areas as commerce, accommodation and catering, art, entertainment and recreation.