And then you have to ask questions. Is there a need for the type of business you're proposing? Are you suited to running such a business? Does it involve a product? If so, how will you produce it? Where and how will you distribute this product? Are there competitors making a similar product? Do you have financing to produce the product?
Do you have people/staff to help you? And most important, do you have the managerial skills and market savvy to make your product a success? Do you have access to professionals like a financial adviser, legal counsel, and marketing expert to whom you can go for counsel before you make decisions that may adversely affect your business?
As a would-be entrepreneur, you have to ask yourself hard and specific questions. For example, "What do I know about the business I'm going into? Have I had similar experience?" Similar experience makes it easier to launch a successful enterprise. Will I have enough cash flow to sustain me in a start up operation? Can I get financing if I need it? Most important, am I willing to put in the long hours and hard work necessary to succeed?
The Start of a Business Journey
If your answer to these questions is yes, the next step is to develop a detailed written plan, including the goals you want to achieve. You must also have the right kind of business ownership-sole proprietorship, owned by one individual-is the most common. Then you need the necessary licenses and permits that may be required from city, county, and state agencies. A lawyer versed in business law will help you with the legal requirements. The key to success is to be prepared. But as in love, war, and business there are no guarantees for success.
An Expert's Advice
Joseph R. Mancuso, president of the Center for Entrepreneurial Management in New York City, looks on an entrepreneurial venture as the beginning of a journey. And he offers three rules that must adhered to if would-be entrepreneurs expect to be successful.
- Rule 1. "Write a business plan," says Mancuso. "Put it on paper. It's like taking a trip. You get on the highway and follow road signs. It's better to look at a map, plot your trip, and save yourself a lot of trouble." After you've written your business plan, says Mancuso, show it to friends and business acquaintances. The purpose: to have them critique it, to make it better, to look for short cuts, to update and improve it. Work on the plan until you are satisfied with it and then follow your own directions.
- Rule 2. Don't go it alone. You may be the smartest per son in the world, says Mancuso, but you need someone who is experienced, who knows the ropes, like an accountant, a banker, or a lawyer who knows the entrepreneurial pitfalls to avoid.
- Rule 3. Keep your customer in mind throughout the process. Mancuso says entrepreneurs are too often wrapped up in office procedures, their bank accounts, and literature, and they forget about the customer.
Another pitfall is running out of money too fast. This is a common problem, says Mancuso, and it provides the acid test. Those who run out of money but manage to keep their businesses going are successful; those who don't, fail. Being an entrepreneur is not a casual activity, says Mancuso. If you treat it that way, you are not going to succeed.
Bill Bygrave, academic coordinator for entrepreneurship at Babson College, offers another warning to the typical over-50 entrepreneur, who has worked 20 or 30 years with a major corporation, and who enjoys a nice income with stock options, fringe benefits, health insurance, pension plan, and four-weeks' vacation. "That person," says Bygrave, "suddenly goes haywire, gets fed up, wants to make a fortune, and reads all the right magazines for the wrong reasons. We tend to overemphasize the ones who make it, and not tell enough about those that failed and why."
Look Before You Leap. "Weigh carefully giving up a job with good wages and benefits," advises Bygrave. "New entrepreneurs always face slim years and positive cash flow usually doesn't occur for three or four years. Unprepared entrepreneurs risk their savings, their homes, and even their marriages when they tread into the dangerous and difficult shoals of business."
Are entrepreneurs a different breed? Do they have different characteristics that set them apart from other people? Boston University's Dr. David McClelland advises aspiring entrepreneurs to do a self-assessment. "Do you have the right personality?" he asks. "If not, don't."
Dr. McClelland says he found back in 1953 that people high in achievement motivation, people essentially interested in doing things better than they have been done before, people motivated to do things more efficiently and to find new ways of doing things well, make the best entrepreneurs. An entrepreneur is a different type of personality than a manager, and many managers make lousy entrepreneurs, he says.
If you have in the past been successful in selling, tried new and faster ways to get things done, are an observer of what goes on around you, and want to do something well as long as you are in control, you have the makings of an entrepreneur, according to Dr. McCelland.
