With around 28 million small-scale businesses within the U.S. and thousands more opening every day, it’s safe to bet that, if you’re yet in business, the thought of expanding your business might have been on your mind in the past. This is a good thing since small-scale businesses are the engines of the economy, providing nearly all of America’s net new jobs and employing around half of the nation’s workforce. My job is to assist people in starting or expanding their small businesses, and I’m compensated by the state legislature for doing it. Although I’d want to see my work succeed, I’m going to give a few words of warning to those contemplating going for it.
In my many years working with potential entrepreneurs, I’ve heard various reasons or motivational factors which seem reasonable in the initial stages of creating a small business, but, as they say, “the devil is in the details.”
Here’s my opinion on the seven most wrong motives for launching into the business world. These are the statements I’ve heard from my experience:
1. “I’m tired of working for someone else. I’m going to quit my job and go out on my own.”
It’s not as easy. There’s a chance that you won’t have your current boss when you begin a new business, but you’ll end up having not one but a plethora of “bosses,” maybe hundreds-they’re your customers, and they’ll be able to be a source of criticism as nobody else would. Making sure everyone is happy, which includes shareholders or a board of directors, is not an easy task.
2. “I don’t need a business plan. I have it all in my head.”
Lacking a written strategy detailing what you’re looking to accomplish, for whom the location you’re heading to, and the best way to get there may end in costing you more than you could ever imagine. Don’t forget that hope isn’t an option.
3. “I know there’s a government grant out there for me. I just have to find it.”
They are available, but generally, they’re not meant for a profit-making company. They may be offered to an industry-specific company or high-risk technology company or an expanding non-profit program, or a municipality that is seeking to revitalize. The process of saving enough money for the start-up of your idea will require less time than locating grants or making an application and getting it.
4. “I’ve been unemployed for a while, so I guess it’s time for me to start my own business.”
While for some, beginning a business after being you’re unemployed could be an option but for the vast majority, it’s essential to find a source of income when you get your business up and running. Beginning a business is expensive, and it can take an entire year before you can see the first results of your venture.
5. “All I need is an investor. Surely they’ll want 10 percent of my profits. That’s more than they’ll make in the stock market.”
If you’re not in a high-growth technology company and have an exit plan of five and seven years, it might be challenging to find an investor. Consider the amount of control over your company you’re willing to let go of.
6. “I have a great deal on a location-six months’ free rent! I need to jump on this right away.”
Allowing a location to drive you to begin a business before you’re ready to do so is one of the most effective methods to be a victim. Create a business plan first, then choose the best location for it. When vacancy rates are as they are and the property owner’s willing to negotiate, you’ll find a property owner that is willing to bargain for reasonable prices. Beware of being lured into an apartment with the promise of rent for free. Remember, there might be an underlying reason behind why the property has been vacant for a long time up to the point of an offer of free rent.
7. “Because I’m successful at (you can fill in the blank about the skills), I’ll be successful as a business owner doing this.”
Passion is a good thing. However, you must remember that being a skilled cook will not necessarily mean that you’ll be an excellent restaurant owner, as a good footballer isn’t always an excellent coach. Achieving success at one point isn’t necessarily a guarantee of success at the following level. With all the passion and talent, however, you must be aware of the business aspect.
The decision to start a business is the best choice you’ll ever make or the worst. Whatever the reason you’re considering going to a business, the main thing to keep in mind is that there are plenty of free resources that are available both locally and nationally that can assist you. Make use of these resources!
Barbara Hall is director of the Small Business Center at Rowan-Cabarrus Community College in North Carolina, where she counsels entrepreneurs and potential entrepreneurs and develops small-business educational programs. She is also studying for the master’s degree in Entrepreneurship Degree program located at Western Carolina University. Webmasters and other publishers of articles are granted reproduction permission so long as this article is complete, including author’s details, and links are maintained—copyright 2013 by Barbara Hall.