One of the fun parts about being a veteran entrepreneur is passing on my hard-won wisdom to the next generation. Today I work with many young business minded people who have questions about entrepreneurship. I encourage them to take an entrepreneurship self-quiz composed of the following six questions:
Why are you starting this business in the first place?
Do you want to be your own boss? Are you convinced you could do a job better than someone else? Do you see a need for a product or service that does not exist or is underrepresented in your area (or the world)?
Starting your own business can be a very “romantic relationship” experience. You fall in love with the idea of doing things your way, seeing your ideas come to life, and living an “adventure.” It is the American dream in many ways. But it’s still a relationship. There will be good times and bad times and, after the honeymoon period is over and you start putting in the work, running your own business can really test your metal.
Why you’re getting into business is important to understand upfront, for the same reason that understanding the motivations that cause you to elope with someone you’ve only just met. It’s easy to understand the emotions that entice you into the relationship, but it’s the deeper, persisting reasons that will make you stick and make the relationship a success.
What does your business exist to accomplish, and who does it serve?
If you can’t answer that question in one sentence—Houston, we have a problem.
A great place to start is a mission statement, and a great mission statement is simple, obvious, and easy to remember. For example, at my company, our business mission is “to make accounting and payroll fast, simple, and affordable for American small businesses.” I could easily have stretched that into “Make accounting and payroll fast, simple, and affordable by allowing my customers continuous remote access to a 100% cloud payroll software tool they can interface with through a web browser.” That statement is also true for our product, but it’s a mouthful. No, the better option is the first version because it’s simple and speaks to the heart of what I want to do: make payroll and accounting simple, easy, and affordable. If I talk about how I’m going to accomplish our mission, with all the specifics, what happens when we discover a faster or more convenient method?
A good mission statement is flexible without being generic; purposeful without being restricting. Finally, writing a mission statement is a great exercise since it helps you do two very fundamental things: clarify what your business will do, and the need for it to be done.
What do you hope to get out of this business?
Success means different things to different people. If you don’t know what it means to you, maybe you should take a moment to define it before you buy those business cards.
For some entrepreneurs, there are just the two ends of the business success spectrum: “unrelenting world domination” or “it’s not about the money, it’s about doing what I love.” These two concepts sound great, and you can absolutely have both, but they are just concepts, not actual definitions of success.
You can start a business that pays your bills and gives you more free time. Or, you can start a business that raises obscene amounts of capital and takes on multinational corporations. You can also start something anywhere in between, but once you start this business, how will you know it’s successful? How will you know that you’ve gotten what you wanted?
Think about the lifestyle that will satisfy you, or the goals you want to achieve. Break them down into their individual components and speculate on when and where you’ll achieve them during your business journey. The more you know about what elements add up to form your idea of business success, the better you can plan how to achieve them, and you’ll waste fewer resources. When inexperienced entrepreneurs meet with me for rounds of entrepreneurship questions and answers, having the right answer for this question is huge.
What are you willing to sacrifice to make this business work?
I’m sure you know there are going to be sacrifices if and when you decide to start your own business. But there are two types of sacrifices we should talk about. First is the kind of sacrifices that everyone has to make when they decide to do their own business. Things like giving up free time or turning down fun opportunities. But, the real sacrifices aren’t the ones that everyone makes to run their business. The REAL sacrifices are those the big tradeoffs that will ultimately stay your hand from starting a business, or break your back when you’re up and running.
If common sacrifices like leaving the steady paycheck of your job, and having to figure out how to organize your business finances on your own are scary, then where does selling your house to raise money or realizing that you can’t make payroll rank?
Will you be content “running” this type of business after you start it?
One of my favorite things about being an entrepreneur is coming up with new ways to solve business problems. Some people call me a serial entrepreneur, but the truth is I just love solving problems, inventing solutions, and then finding ways to monetize them.
I wanted my first business to be a success so badly that, once it was, I felt as if something was missing. There is a thrill to starting up a company and seeing if your idea can hold its own as a business. But once it does hold its own, and you start reaping the benefits of a business plan that has come to fruition, there can be a hollow feeling. Can you see yourself running the business you start for the next ten years? Is it something that can keep you happy, or will you get bored with it? If so, how long do you think it will take before boredom sets in?
Many people don’t stay at one job their entire life. Why then would you think you’ll stay at your company your entire life, even if it’s your own business?
When are you going to start?
Inertia is the bane of entrepreneurs. Many people have great business ideas, get all their questions about entrepreneurship answered, make big plans, source the capital to launch a startup … but just never start.
Never underestimate the power of a known routine versus the power of the complete unknown. My advice: set a goal for yourself. A launch date, a fund cap, a target bank statement balance—something. And once you hit that number, take the plunge and go for it. The difference between being an entrepreneur and an ideapreneur is taking action. If you’re unsure of whether it’s the right time, don’t worry, that’s normal—it will never feel like the right time! And there will be plenty of people around to tell you to hold off, to conduct further business market analysis, or in some cases, to not do it at all. Thus, setting goals and limits are a fantastic way to give yourself a little push, and reinforce your confidence.