Optimism among small business owners is near an all-time high, according to the May 2019 Small Business Optimism Index of the National Federal of Independent Business Research Foundation. Small businesses surveyed reported that they plan to increase employment, make capital outlays, expect to see sales increase and that they believe now is a good time to expand. If you’ve been thinking of going into business for yourself, now might be a good time.
There are plenty of questions to ask yourself before you make the final decision about going into business for yourself. Please allow me to throw one more in the mix: Why are you going into business?
This question is prompted by what seems to be a plethora of messages thrown about that seem to say that one reason to open your own business is because it is always what you wanted to do. You should be doing something you are passionate about, not just working at a job.
Television commercials toss these messages at us regularly, showing people leaving their seemingly boring jobs to spend time in the garden, become adventurers, open a winery or go back to school.
Best-selling books reinforce this message of self-achievement and self-bliss. The “seven habits” are not good enough in this knowledge economy. We now need an “eighth habit.” We must find our voice and inspire others to find theirs. And this will be so easy to do because we now know “The Secret,” which is to simply visualize it and it will happen. Can’t you just see yourself there running your own business?
I love this stuff. I am inspired by it. I am into positive imaging and having a positive mental attitude. I cannot stand to be around negative people. I’m a fan of the noted psychologist Dr. Abraham Maslow who said, “A musician must make music, an artist must paint, a poet must write, if he is to be at peace with himself. What a man can be, he must be.” Goal-setting, visioning and self-motivation are important. Many great companies have been built because of people pursuing their dreams.
I’m also a realist. Just because I can dream it does not mean I’m going to achieve it. Although the above philosophy is motivational and inspiring, it is not what will make you a success in business. Take a moment to stop and consider another philosophy. It basically says, “Do the best you can with what you’ve got” and “You play the cards that you are dealt.”
So what will make you a business success? The reality is that the most successful businesses are the ones that are best at providing products and services that the market wants, not what the business owners want.
Some statistics from the National Association of Small Business’s 2017 Economic Report would be useful to consider.
Reason for starting business:
» Ready to be his/her own boss: 26 percent;
» Wanted to pursue his/her passion: 23 percent;
» The opportunity presented itself: 19 percent;
» Dissatisfied with corporate America: 12 percent;
» Laid off or outsourced: 6 percent;
» Not ready to retire: 6 percent;
» Other: 5 percent;
» Life event such as divorce, death, etc.: 3 percent.
Of all small businesses started in 2014:
» 80 percent made it to the second year (2015);
» 70 percent made it to the third year (2016);
» 62 percent made it to the fourth year (2017);
» 56 percent made it to the fifth year (2018).
Top 5 causes of small business failure:
» No market need: 42 percent;
» Ran out of cash: 29 percent;
» Not the right team: 23 percent;
» Got outcompeted: 19 percent;
» Pricing / Cost issues: 18 percent;
Before you make the leap into entrepreneurship I strongly suggest that you develop a thorough business plan. You can find useful templates online at the Mississippi Development Authority and the U.S. Small Business Administration websites. Go to www.mississippi.org, and click on “New Entrepreneur Planning Tool,” and www.sba.gov, and click on “See the Guide.”
Finally, there is a wave of people who have discretionary assets and who are considering retiring or otherwise leaving the workforce to open their own businesses. Some are chasing their dreams and will open businesses for the primary purpose of fulfilling their passion. Others are chasing their dreams and will open their businesses for the primary purpose of fulfilling a need in the marketplace for a product or service at a better price. Then there are those few – those very few – who will be able to combine both. May you be one of those.
» Phil Hardwick is a regular Mississippi Business Journal columnist. His email is phil@philhardwick. com.
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