The three biggest barriers between you and launching your own business are money, confidence, and time. Getting past these hurdles is not as overwhelming as you think and there are steps you can take today to move closer towards self-employment and business ownership.
I often entertain new business ideas. The appeal is clear to me: make your own hours, enjoy the profits of your enterprise directly, do what you love, and many others. Simple, right?
Not so fast. The Small Business Association (SBA) gives us a reality check by way of their failed start-up statistics. Only 1/3 of new businesses will ever turn a profit, and less than 1/2 will survive beyond 4 years.
Real Risk
The high attrition rate is widely known and a real factor in side-stepping your small business dreams. The good news is that closing a business does not equal failure. It may not cost you any money personally, you may not be driven into poverty, and there is no shame in trying something new. The experience will be invaluable and may lead to subsequent innovations that could prove to be very successful.
Here are some strategies I’m implementing to grow my online business that reduce the risk of catastrophic failure, misery, shame, and embarrassment that the SBA statistics portray.
Money
Will I make enough to replace my current income? Maybe, but if in doubt then consider starting your business while you keep your day-job. Take extended leave if you need to, or try moonlighting until you are satisfied with the cash-flow. Hedging this way can help avoid the all-or-nothing mistakes that could leave you flat on your face.
Will I lose my investment? Yes, if the business fails. Try limiting your investment to a portion of your net-worth. Risking everything is, well, risky. Explore possibilities of starting on a shoe-string, a small-scale, and building with your success.
I need more money to fund my start-up! If you need more than you have saved and want to invest yourself, consider using other people’s money. Kickstarter is a capital raising initiative that allows you to source funds for your small business idea. They specialize in music, film, art, technology, design, food, publishing projects and may be able to give you the boost to take it to the next level. All you have to do is ask.
Confidence
No matter how spectacular our business plan, there will always be little voices telling us why it will fail. I think it’s important to listen to these and confront them rationally, if possible.
Education is the key to overcoming much of this negative chatter. Gaps in our technical knowledge can be filled by seeking out relevant material and doing the reading.
Find support in others by engaging your peers and sharing your journey. Community is a critical element to being successful, and so much more fun than going it alone.
Time
Do it on your own time. If you have truly found your passion you will find the time effortlessly. Like money, invest the time you can afford while keeping balance in your life with family, health, friends, and your day-job. Develop systems that let you use your time more efficiently. Automate your processes and make even more time for yourself to grow your business.
Overcoming the perceived obstacles to our small business dreams can be as simple as thinking a little differently. The single most helpful success factor for me is surrounding myself with a community of online business people. The support for each other only makes us all stronger and more successful. Reaching out has truly inspired me.
What business are you in?
Taking a risk is key to success, in fact it’s the very first step. Unfortunately I so far am reluctant to take risks. Unless I overcome fear I can’t make it big.
Risk of losing money? Why not start by using other peoples money, or start on a shoe-string budget?
I love the idea of starting on a shoe string buget when possible. I’d much rather put in tons of time than tons of money. It still stinks not to get a return, but at least I didnt’ dip into my savings.
Me too. It’s reasonable to expect business investments to have a long incubation period. You can sink a lot of time before you see any financial return.
I used to own income property, restaurant, studio catering and consulting. It kept me pretty busy. I loved many aspects, but hated others. I sold all my businesses to slowly drift into retirement. I enjoyed my time, but no longer have the energy nor the will to do so much. I no longer need the income because my children are grown. I am in semi retirement teaching for th e last 10 years.
From your answer it seems like you enjoyed the rewards of business ownership but it required a lot of energy input. I feel like I have the energy to invest, and the desire to make things work. I appreciate your perspective KC.
Those are definitely some good things to keep in mind. Thanks for sharing your strategies for avoiding failure.
Thanks Jen, hopefully they’re ideas for success as much as they’re for avoiding failure
I am reluctant to take risks as well that is why I went with an online business first. My initial goal for the blog is to get back the $100 I invested within the first year. I gave myself a deadline to make $x or I had an exit/back up plan. Looking back I think that was a good idea. People might think I am not confident enough with myself to plan for failures, but personally for me it boosted my confidence to have an exit plan.
Online businesses are well suited to minimizing financial investments. For almost zero up-front, you can establish a shop-front for goods and services with a global reach. Very powerful.
I think it’s smart to have an exit plan, even better if it is a confidence booster.
I feel like not wanting to spend the initial start up costs is what kept me from starting my Etsy shop for so long, that and probably a lack of confidence and a little bit of risk of failure. But I moved past that and I enjoy a nice and steady side income from my work with that. It’s not enough to retire off of but it helps out every month.
I think that a sizeable initial investment can be a positive motivator to commit to a business venture. Zero investment is easy to come up with and easy to let go too. Congratulations on your Etsy side business.
I am dreaming of entrepreneurship. I started Odd Cents as a personal finance blog, but I have realised that it can be so much more. I find it difficult to spread the word and get people interested. I’m working full-time, studying for an MBA and a Diploma, so I can not devote as much time as I would like to it. Hopefully the diploma will be over in December and I will have one less thing to worry about.
Hi Elle, sounds like you have a massive work-load. I have been there, studying for a masters while running a household. Not easy, and even more challenging if you have a job. I think it would be difficult to find a breakthrough to run a business with such a full schedule. Although, Pat Flynn has some great ideas to set up passive income streams.
I am very anti-risk which limits my ability to grow, but that is alright with me right now…I am growing a few businesses that don’t really have capital risk.
Sounds like a winning strategy to me Evan.
Starting a business seems harder from the outside than it really is. I think people get intimidated by the official sound of ‘starting a business’. Just start! You can figure out the details as you go along.
Love this attitude Ashley. We can all learn from Nike, Just Do It!
There are so many low-cost ways to start a business now that there’s almost no reason not to. Forget spending 5 or 6 figures to get a brick-and-mortar business going. You can start a ton of online-based businesses now for under $1k.
Yes, completely agree. The old brick & mortar shop-fronts easily put you at a disadvantage in business today. Too many overheads.
Personally I like to start small, test the waters before deciding to go full time. As you point out, there are a lot of online resources to help you out along the way. Kickstarter is just awesome!
Kickstarter provides a great service to the arts and humanities start-ups. The best part is that investors give their money, and don’t expect it back. This helps owners maintain control and realise the full benefits of their creativity.
[...] Kickstart Your Own Business Today by Financially Consumed [...]