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[Editor's note: Are you contemplating starting a business as a re-careering strategy? If so, stay right here. This week, the Reinvent Yourself series shares start-up advice from experts and women who've figured out what it takes. Happy ventures. -- Michelle V. Rafter]
As a women's career, executive and leadership coach and researcher professional women's issues, I help hundreds of women each year achieve their highest visions and goals.
Through this process, I've identified five core questions that are essential to consider before plunging into entrepreneurial life.
Entrepreneurs at the BlogHer Business, Entrepreneurism, Technology Conference 2011
To become a successful entrepreneur, a confluence of factors must work together effectively. Unfortunately, knowledge, passion and commitment are not enough.
Before you jump into starting a business, ask yourself these questions:
1. Can I thrive in risk-oriented situations or the unknown?
Startups require a certain degree of risk-taking and walking into something that is not a sure thing. The small business failure rate is alarmingly high and you should indeed proceed with caution. To overcome obstacles, you need to not just endure chaos and change, but thrive in it, embracing uncertainty, risk and stretching way out of your comfort zone on a continual basis. If you are wedded to the need to be right, feel stable, secure and comfortable, be in control, and generate a predictable income (and can't imagine living with some debt), think again about an entrepreneurial life.
2. Do I know what I really want from this business?
Many women start businesses for the wrong reasons. They want more work-life balance, for instance, or are fed up with not advancing to a leadership position in their corporate job, so they bail. But these aren't sufficient enough reasons to start your own business. First, small business owners often work far longer and harder than they ever did in the corporate roles. In fact, their work lives and personal lives become so seamlessly intertwined it's no longer a matter of balance, but of effective integration. Second, not advancing in corporate America doesn't necessarily point to being a success in starting a business. You must determine what you really want (the essence of what you want in your professional identity and life), then figure out the best form for that to take.
3. Do I have an empowered relationship with money?
Many female entrepreneurs start a company with no prior business or financial planning experience. Further, they have a disempowered relationship with money, and lack the internal authority and knowledge to command and manage it effectively. The first step in starting a business is gaining complete control of your finances –- personally, then professionally –- and planning how to fund and grow a business. Get outside help in the form of a financial consultant and accountant. Many entrepreneurs fail to grasp or plan for how long it takes to build a business to profitability. In general, you will need two to three years of cash reserves to cover costs while launching a business, as you likely won't see profits until after that period of time.
4. Do I know what's involved in running a business?
Michael Gerber's terrific bookThe E-Myth Revisited looks at why so many small businesses fail, and explores three essential roles necessary to create a successful business – the technician, manager and visionary. Often women start their own businesses because they love the technical skill involved, such as baking, career coaching, software design, etc. They make the fatal assumption that understanding the technical aspect of the business is the same as knowing how to run the business. However, those are completely different skill sets.
