Top 10 questions to find out if you are business ready

The lure of running your own business is strong. The opportunity to do the stuff you love, with people you like, working as much or as little as you see fit, and doing things the way you think they should be done is an idea that is hard to resist. Being the Boss. Despite the inherent promises, most of us know that you only reap these rewards after long, hard work, many fail. It's no news that building a business is hard. Success, and the degree to which you achieve your goals, is dependent on many factors, several of which will determine how much of an uphill climb it will be.

Statistics consistently bear out this caution. Research from the U.S. Bureau of Labor Statistics tracking businesses started in 2016 found that while roughly 80% made it to their first anniversary, only 54.3% survived to 4 years [1]. Furthermore, SBA data confirms that while small firms generate 65% of net new jobs, only about half of all establishments survive at least 5 years [2].

1. Am I business savvy?

   You need to master many skills, including managing finances, sales, production, human resources and basic accounting. Most of us have to learn them as we go. You don't have to be an expert at everything, but it helps to know enough to tell whether someone else is doing their job correctly.
   Being business savvy is a bit like knowing how to play chess. You need to be able to spot a gap you can exploit, set achievable goals, and know when to compromise or sacrifice aspects of your game to achieve a key objective. You must consider all aspects of the challenge to ensure that when something goes wrong, you get another roll of the dice to stay in the game.

2. Am I life ready?

   Building a business is all-consuming. Where are you in your life? Your family will play a key role. You are going to need their support. You don't want to find yourself constantly reassuring them that things are going to be all right, that this is the right thing to do, and that the risks are worth taking. They have to understand why they are not getting your uninterrupted attention and time. Similarly, you need the support of your friends, ready with comfort, understanding, and handy advice, even when you have missed a host of birthdays, reunions, and get-togethers.

3. Do you have a strong support network?

   Building a business can be lonely, and a support network can make all the difference. There are many kinds of support. Your peers can give you advice on how to deal with new or challenging situations or serve as mentors. Even after 21 years, I find my network invaluable. I spend time connecting with them regularly; some I connect with only a few times a year, others almost daily. My network allows me to reach out, ask questions, get recommendations, and find good resources.
   Networks are a good way to access work; they need to be sufficiently robust and extensive to allow for regular visits, especially in the early days. Networks can give you valuable feedback on how your new organisation is seen from the outside. You're going to need help, even if it's only someone to give you some tough talk.

4. Do you have a buffer?

   Your buffer equates to the amount of time you have before the money runs out. You can get away with a lot less than you might think. You can find certain services for free, or free for a time, but eventually, when you can't do it yourself, you will have to pay something. Being on top of your business finances can make all the difference between success and failure. Businesses rarely earn any income on Day 1. In fact, they often go several months before seeing any money. Make sure you know how much you will need to survive long enough to cash your first pay check, and ensure you have those funds -- a minimum of 6 months.
   The ‘buffer’ is essentially your runway. A lack of capital is often cited as a primary failure mode, but deeper analysis shows that ‘no market need’ (42%) and running out of cash (29%) top the list of reasons startups fail [1]. Your buffer is not just about survival; it is about giving you time to pivot if that initial market need isn't as strong as anticipated.

5. Am I good at something?

   To build a successful business, you have to do something for others that they can't, won't, or don't like doing for themselves. To do that, you must have a special insight or talent for delivering that 'thing'. The good news is that we're all good at something, and we don't have to be world-class experts; we just have to be seento be good at it. The challenge is turning your expertise into a business proposition. Recognise that you're bringing something special to the table. When you truly believe that you're really good at something, chances are you will be able to build a business around it. It is often the frustration with your previous experience of how things have been done that drives people into business for themselves.

6. Do I have (sustainable) passion for my idea?

   My passion is taking part in the process of drug development, contributing to the various steps, helping new treatments come to market faster. That passion gets me out of bed every morning ready to meet the day's challenges. It keeps me going when the mountain of work ahead seems overwhelming or when things don't go to plan. You're going to give up too easily if you're not passionate about what you're doing. You won't be able to provide the level or quality of service or product that underpins success.

7. Can I learn?

   You are going to have to learn to do new things. You're going to have to learn how to market, negotiate, sell, and keep your accounts. The good news is that you have the capacity to learn; the challenge is that you must be willing to learn (and make the time to do it). For example, standing up in front of people and talking is an overwhelming fear for many of us, yet it is an essential skill in selling. You will have to learn how to do it and endure rejection when a pitch is unsuccessful (which it often is).

8. Am I resilient?

   You already know that building a business is tough, both physically and mentally, but you also need to be resilient. Resilience is all about getting up after you've been knocked down. It's also about being able to focus even when there are worries in the back of your mind. People will say "no" more times than they say "yes." You're going to have to learn the skill of selling and how to deal with rejection, and still keep going, starting the next sales pitch with the same bright smile, enthusiasm, and grit.

9. Do I make stuff happen?

   One of the great things about having a job is that you are only responsible for those things detailed in your job description. Mostly, you're okay ensuring that the tasks you are responsible for get done. Everything else is someone else's problem. When you're the business owner (and often the only employee), you have to make everything happen. The buck stops (and starts) with you, quite literally. There's no one else available when everyone goes home at the end of the day. This is where many would-be entrepreneurs struggle and fail. We can all criticise the way a boss does things, but when you are the boss, you better have the answers.

10. Can I manage a lifestyle change?

    Even if you answer points 1 through 9 positively, it is likely that you will need to change certain aspects of your life. For example, how you take care of your personal finances is a good indicator of how good you will be at caring for your business finances. If you are continuously spending more than you earn, or habitually making late payments, those habits will likely show up in your business. You will need to change.
    Most new business owners balance the books by minimising their own burden on the business, often taking no salary. You will need to be able to downsize your personal overheads. Can you manage without a car, central heating, or an exotic holiday?

Conclusion

While my list focuses heavily on the psychology of the potential ‘founder’ (resilience, passion, learning) and operational basics (finance, networking), the most common external reason for failure is not covered: Is there a market need? [1]. You can be resilient, life-ready, and have a massive buffer, but if you build a product no one wants, you will fail. Perhaps I should have included the question "Have I validated that someone will actually pay for this?"

Starting a business involves risk. You can manipulate the odds in your favour by working as hard as you can, having a great product, and investing in the best advice available, but the risk remains. When the urge eventually overwhelms you, remember to take it slow and be cautious, calculating the various risks and keeping them as small as possible. Stay flexible. Set your sensors to full and be ready to adopt the perfect persona for each situation.

The conversation I had with myself before starting my own company went something like this:

• Is staying in the same regular corporate job an easy option? – Yes!
• Is there anything wrong with that? – No.
• Will your soul suffer in staying? – Probably.
• Do I have an option? – No.
• Do I have enough funds? – No.

If you ask me whether, after 21 years of running my own business, I would do it again, even though I have little more to show beyond grey hair and infinite patience, the answer is yes.

References

1. Cook, M. The Biggest Misconception on Why Startups Fail
2. Office of Advocacy. Popular Small Business Data Publications from the Office of Advocacy Updated for 2019