Being Your Own Boss: Is running your own business right for you?

Do you have what it takes to run your own business?

Hey, let’s not kid ourselves here. Yes, there are many benefits and rewards to starting-up and running your own business – that’s for sure. But there are also risks and stresses.

On the plus side of the equation, there’s the freedom of having more control over your working hours. There’s the attraction of making more of your own decisions and in some ways, feeling that you’re more in control of your destiny. And when you’re running a business that you’re passionate about- well, it doesn't even seem like “work”. You’ll be paid for doing more of what you love.

BUT it can be a rough and rocky road that you travel with many pitfalls, especially during the first year or two. Some studies suggest that more than 40% of small businesses fail within three years - however those business owners who had prepared a well-researched business plan were more likely to succeed.

But will you simply end up another statistic? …… Quite apart from your business idea - you've got to ask yourself if you've got the "right stuff". Here’s a sample of essential qualities that are needed if you’re going to make a go of it as an entrepreneur ……

1.      A vision that you’re passionate about - a dream that lights a "fire in the belly", that excites and energises you. You need to have a picture in your own mind of what your business would look like in 3 years; including the types of customers that you would be doing business with

2.      You’ve got to be a self-starter ……. If you are someone who needs to be told what to do, then becoming self-employed is not for you! …… Nor is there going to be anyone to motivate you – this is again something that will have to come from within. However as long as your vision is something that arouses excitement within you, then keeping this “in line of sight” should keep you energised. But you’ll need and determination to get out and actually turn ideas into plans and actions. You can’t be someone who will wait for opportunity to come knocking at your door – you’ve got to get out and create opportunities by knocking on plenty of doors.

3.      The successful entrepreneur in small business is one who is not only inspired – but can inspire others with their enthusiasm and conviction. In the early start-up days of your business, you won’t yet have a proven track record in your industry or a portfolio of clients to showcase that will give you authority. Instead it will be more about your ability to sell and persuade others to give you the chance to prove to them that you can deliver what you promise …… Whether these other people are potential investors or potential customers – can you sell your ideas?

4.      A willingness to keep on learning is essential. Quite often the person setting up a business will have particular technical expertise ….For example, you might be a highly capable mechanic, or hairdresser or website designer or plumber or software engineer. However there will be other aspects to running a business that you have to be prepared to learn. Whether it’s financial management and record keeping – or maybe  it’s sales and marketing – or perhaps it’s software that enables the planning and scheduling of work operations ……. There will be additional skills and knowledge that must be acquired along the way. There will hopefully come a time in the future where your small business has achieved a level of success and revenue that will then enable you to choose whether to outsource some aspects of the business operations. But in the first year or two, typically the imperative is to minimise your operating expenses – so you will need to be willing to wear many different "hats".

Let me add that I have been running my own business for some 20+ years - so it has been a long time since I have reported to another “boss”. Truth be told, I’ve become so used to being my own boss and being in control of my business destiny (well, apart from factors like the GFC that sometimes will throw a grenade in even the best of business plans) that I would find it very difficult to return to working in a corporate role.

My customers are my bosses in a sense – but I do have the added luxury of choosing to refuse to do business with a customer if I find them unreasonable or unethical.

I’ve no regrets about starting up my own business. Of course there are things that I wish I’d have done differently – one of them being that I should have found an experienced business mentor much earlier than what I eventually did ….. Another lesson was continuing to do business with a customer for far too long, despite not being paid. Yes, you can extend your credit terms with them – but not indefinitely. There comes a time when if they’re not paying their bill, then you’ve got to “switch the power off”. Hoping they will eventually do the right thing will not pay your bills.

So if you’re still wondering whether small business is right for you, check inside yourself to determine whether you’ve got the necessary passion, the drive and the desire to learn. But just as importantly is that you confirm your idea possesses the required commercial viability

However, maybe you're feeling anxious about the prospect of losing some job security if you were to become self-employed - so I would say this to you …….. Consider in 20 years’ time, how deeply would you regret not taking the risk? Would you possibly look back and feel disappointed that you didn't have more faith in yourself?

This does not mean that you ignore any of the risks – but that you weigh them up against what you stand to gain. And consider whether some of the risk factors can be mitigated and managed through more careful business planning. Whatever you decide to do, I wish you happiness and fulfilment.  And in the words of David Gemmell ....
“May all your dreams but one come true – for what is life without a dream”

More tips and resources can be found at small business management  f

And finally, one last short video on the theme of Lean Start-Ups - which is based on the principle of getting your product to market as soon as it is "workable" rather than being obsessive and waiting for "perfection". ... Technically minded entrepreneurs often want to keep adding extra features to their initial product design - which create further delays to market release. The idea of a lean start-up is that you can incorporate customer feedback as an iterative and ongoing process of product improvement, after release. 

About the author
Brian Carroll is the founder of Performance Development, a training business in Melbourne, Australia.  He is an experienced management coach with a passion for helping people achieve their goals in life and business. You can find out more about Brian at his Google + profile

Small business tips for planning your start-up



How will you be different?

Are you in the process of planning to start-up a new small business? .... No doubt you've come across the idea of what marketers and advertisers term your "unique selling proposition".

In other words, in a crowded marketplace, what makes your service or product stand-out from the rest. Why should a customer choose you instead of other suppliers that are out there.

In the eyes of your customer, what will be the points of difference between yourself and your competition? ..... Will it be price factors, quality of materials,  free delivery, timeliness of supply, length of warranty, support and training, your affiliation with the local community?

But differentiation is only one of the essential factors to consider when planning your business start-up. And by the way, your point of difference will be something you need to regularly re-assess because once you succeed in establishing your business, chances are that it won't be long before one of your competitors identifies you as a threat and "copies" what you've been doing. So you need to stay agile and be ready to adapt to this over time.

For your business plan

Ian Harris is a partner  in B + I Lockwood Accountants, a business services firm in Melbourne, Australia. He's highly experienced in guiding small businesses through the start-up stage, so I asked Ian for some of his thoughts.

One of the resources that his firm favours to help entrepreneurs clarify their thinking when developing their business plan is "Business Model Canvas" ...... If your start-up business requires any type of funding or lending from a bank or investor, having a business plan is essential. And it also provides you with a basis for making decisions when you are faced with different options, as you navigate your way through the start-up stage. Here's a short video clip that explains their business plan template. Keep in mind there are many other business plan templates available that you can download ....... But a key thing is that it should be a simple document that remains "live and fresh", providing you with direction and is updated if market conditions or your aspirations change. Here's a short video that explains how to prepare the business plan on one page

Here's what Ian had to say in response to some questions about starting-up a business ......

1. As an accountant you’ve advised and observed many, many small businesses over the years. What are the qualities that tend to characterise the small business owner who succeeds? ....... And do you think there are people who are simply unsuited to being self-employed?

There is usually a particular sparkle in the eye of those who are successful. Those who succeed are driven, passionate and energetic. They literally don’t accept defeat. And they usually are very knowledgeable about the industry they are going into. They have done their market research - and typically have planned wisely and thoroughly.

There are definitely people who are unsuited to starting their own business and being self-employed. These people tend to have come out of jobs where they have been used to working structured 9.00 -5.00 hours and being told what to do. They have difficulty applying the intensity required to succeed. I would advise a person who is contemplating going into their own business to carefully evaluate their ability to motivate themselves and to work independently, without direction from others.

2. From your experience, why is it that many entrepreneurs when they start-up their business quite often under-estimate operating costs – and over estimate expected revenue?

Yes, this can happen - and it is quite often a causal factor in the high failure rate of start-ups. They have often under-estimated the time required to get the business to market and achieve traction. This creates the need to stretch their material and financial resources further than what they'd anticipated. They over –estimate expected revenue because their optimism and excitement about getting traction has not been tempered with sufficient depth in their market research. So I would advise budding entrepreneurs to err on the side of conservatism when preparing their sales and profit projections in their business plan.

3. What are the signs you look for in a business that indicate that it could be ready to grow and expand – and what are some keys to ensuring this is done in a sustainable way?

Strong cash flows. Sales are increasing. They are struggling to keep up with demand. There is stress associated with not being able to keep up.

The critical thing is to understand where the immediate constraining factor is and address it , and then the next one etc. Some people just employ more staff without having done a proper analysis of what the real constraint is. In other words, a more cost-effective solution might not necessarily always be hiring another employee but instead a change in some aspect of your process or systems or work scheduling that improves efficiency.

4. Cash flow problems can be a source of stress for small business owners – what advice can you offer around ideally preventing, but if necessary handling, cash flow difficulties?

Do cash flow projections for at least the next 6 months on a continual basis. Understand what you have to bill and collect each week to keep the doors open AND make sure efforts go into meeting this requirement. This awareness will provoke refinements and help to ensure that you focus your energy on the most critical things within your business.
Also, over time you should be able to recognise cycles or seasonal trends in your business  in terms of particular times when sales are weak and other periods when they are strong. So you need to think ahead, and ensure that you've "squirreled" away enough money from the "good" times to get your business through those relatively leaner periods, with sufficient reserves that will cover your operating expenses.

5. Ian, what should someone running a small business be looking for when selecting an accountant? ...... It can be a pretty important relationship, can’t it?

It can be critical. Most importantly the accountant needs to have some appreciation of what your business entails and what you are wanting to achieve in the long run. Too many accountants just focus on solving tax problems rather than understanding the business and ensuring that their client is focussing on the right issues. A good accountant becomes a trusted business advisor.

6. Any final pieces of advice that you can offer to the budding entrepreneur?

Make sure you understand your business model (we use the Business Model Canvas to help entrepreneurs define their business model). Make sure you understand what your "backs to the wall budget" is. ....That is they need to understand what sales you need to break-even and then to make a profit. You need to be very carefully monitoring the reality of your business each week (revenue against costs) when you start ..... and sweating when you fall behind. There's no point simply "hoping" that your business will improve.

Having an awareness of your real situation will provoke thought and if necessary, change. Whether such change requires making tough decisions around reducing your operating costs or adjusting your marketing and advertising strategies - the key is to take action when things aren't working. There's the old saying "If you don't change, nothing changes" There's no point putting your head in the sand when there are problems in the business - because they usually don't just go away themselves.

Thanks to Ian, for sharing his thoughts.

In the following video clip, some similar advice is offered - be careful when managing your cash flow when you first start-up, know your points of difference and keep on learning as a small business owner.

And one more short video with some tips  for planning your start-up

Related articles -
How to run a business;  Avoiding small business failure ; Why small businesses fail to grow

About the author
Brian Carroll is the founder of Performance Development, a training business in Melbourne, Australia.  He is an experienced management coach with a passion for helping people achieve their goals in life and business. You can find out more about Brian at his Google + profile