Many people dream of starting their own business. For a variety of reasons, people often struggle to take the steps required to turn the idea in their head into a reality. Whether you are tired of your current job or you just feel like you're ready to start living your dream, it is important to ask yourself the right questions before you quit your current job to jump fully into pursuing your entrepreneurial dream. Gabriel Patterson, founder of Bethmann Lombard Bancorp in Toronto, shares four important questions, from personal experience, that he believes entrepreneurs should ask themselves.
Do I Want to Go in 100 Percent Right Now?
If you want to make your entrepreneurial dream a reality, you will likely have to eventually go in 100%. Unless you've saved up a lot of money or your spouse has a good job that he or she plans to keep, the reality is that you may not be able to jump in fully at first. You may need to run your business after work or on your days off. This will likely mean long hours and little time to rest. If possible, one solution could be to slowly cut back on your hours at your current job. You may also need to pull in friends and family members to help you make your dream a reality.
How Much Time and Money Am I Willing to Invest?
Unless you are independently wealthy, you will likely have to set a limit on how much money you can invest in starting your business. Even with bank loans or investments from family and friends, you may need to start your business with less money than you'd like. It is a good idea to evaluate if you really have enough money to start your business. At times, you may need to continue saving before you are ready to start your business.
It is also important to determine early on how much money you can afford to invest in starting and continuing your business. You don't want to end up bankrupt if things do not turn out as you planned.
Your time is not unlimited, and you must determine how much time you can logically dedicate to your business. For some people, that might mean limiting their efforts to a specific number of hours per day, week, or month. For others, that might mean saying that they are going to go all in for six months, a year, two years, or a specific amount of time. Then, if a certain thing hasn't happened by that point, you may need to reevaluate your business plan.
What's My Backup Plan?
This is perhaps the hardest question to ask yourself. No one wants to admit that their business may fail, but the reality is that about 20% of small businesses do not survive their first year, and by their fifth year, about half of small businesses have failed. While this does not mean that you should avoid making your dream company into a reality, it does mean that you should have some sort of backup plan. Will you be able to go back to your old job if things don't work out? Have you saved up enough money that if your business does not take off right away, you'll still be able to meet your family's basic needs? Are you willing to keep trying to keep your business alive even after it starts to fail, or are you going to cut your losses and move on when things aren't going so well?
What Am I Going to Do to Prevent My Company from Failing?
While you should have a backup plan, the goal is really to keep your company in business. The best way to do this is to anticipate the things that are most likely to cause it to fail. Some of the top reasons that businesses fail include a lack of need for the company's products or services, running out of cash, and not having the right team running the business. Ensuring that your product or service is needed, using your money wisely, and making sure that you have the right team on your side may help to prevent your business from failing. Before starting your business and in the early days of it, it's a good idea to make a list of the top reasons you feel like your business could struggle. Figure out how you are going to address those issues and make the appropriate adjustments to help your company succeed.
Good luck on your entrepreneurial journey. Owning your own business can be an exciting and fun endeavor. Just be sure that you are ready for this adventure before starting something that you are not ready to undertake.
About: Gabriel Patterson, of Winnipeg, is the creator and principal of Bethmann Lombard Bancorp and has directed the firm since 2005. As a masterful investment banker, Mr. Patterson has become an expert in securities, real estate, offshore tax planning, and Islamic finance. He serves clients on a global scale and has done business in Asia, Europe, and Latin America.