Ask SmallBiz: Skills to start a business
Q. It’s always been my dream to start my own business, but I don’t know if I have what it takes. What kinds of questions should I be asking myself now to make sure I have the right skills to own/manage a small business? - Christine Hamada, student, University of Hawaii
A. The very first question to ask yourself might be: “Is this the right time to start a new business?” Under ordinary circumstances, this might not be the first question to ask, but these are not ordinary circumstances. In times of economic decline, the little guy is often the hardest hit. The safest course of action right now is to go to work for a big, solid company in a similar line of work and pay very close attention. “Always try to learn on somebody else’s dime,” is something my father (a successful entrepreneur) often told me.
Of course, I usually ignored my father’s advice. It was a source of pride with me. So I started a Mainland business in the depths of the 1981 recession. Why did I defy conventional wisdom?
That brings us to question No. 2: “Why am I starting this business?” In my case, it was a passion for entrepreneurship. It was in my blood. But, for most people, there are a hundred other reasons for starting a business — and most of them are inappropriate. For instance: You have been unsuccessfully looking for a job and decide to chuck it and just start your own company. This is a one-way ticket to failure.
Another example is that you have recently attended a seminar and heard others talk about a way to make a lot of money very quickly. This is a spectacularly misguided reason to begin a small business. The very worst reason of all is that you are sick of the long hours and drudgery of working for someone else and want to be free to make your own hours and work at your own speed. I promise that you will never work harder or put in longer hours than when you are your own boss.
The final question to ask yourself is, “Can I afford to be in business for myself?” Exact national statistics for the rate of failure among startups are hotly debated, but conventional wisdom usually states that the majority of new businesses fail within two to four years and the No. 1 reason for their demise is insufficient funding.
Most successful new businesses require a lengthy period of investment and sacrifice before they can begin to reap the rewards. Careful planning can increase your odds of success, but that’s a topic for another article. In the meantime, try not to build your financial plan around a loan. We’ve all seen how well that’s working out for the country!