“Are You Really Ready to Start a Small Business?” is a question that the majority of us will almost automatically respond to with a yes. It may not be a resounding or too confident a yes, but it will be a yes.
And this is perfectly understandable. We live in a Western society that has traditionally been geared towards self-reliance and self-made success and there is no rawer or more straightforward first step than starting a small business.
Nowadays when everyone can be an online business expert, starting your own small business has also become almost proof that you are worthy. They make it seem like only suckers work for other people and if you have any self-respect, you start a business of your own.
As it often turns out, things are not that simple. There is a reason not every person in the world is a small business owner.
Starting and growing a small business is hard, excruciating work, no matter what country you live in. So, before you go all Kevin Spacey from American Beauty on your boss (warning explicit language) and jump in the deep side of the entrepreneurial pool, make sure you have thought it through and understand what this entails.
It’s a ton of responsibility
We all deal with a certain amount of responsibility in our lives. For one, we are responsible for ourselves and the effect we have on the people and the world around us. Those of us with families also have additional responsibilities towards our closest and most beloved.
Still, these responsibilities are personal, you might even say biological.
When you run a small business, you are responsible not only for yourself, but all of the people who depend on your company for their livelihoods. You are responsible for your employees and their families. You are responsible for the customers who purchase your products or services. You are responsible for the money you got from your investors or as part of loans.
This is not the same as when you work for a company and you let your team down. If you let down people as a business owner, you disrupt their lives on an entirely different level.
If you are not comfortable with too much responsibility, you have to know this. Starting and running a business is immense responsibility.
It takes more than an idea
The notion that “all it takes is an idea” for a successful business is an easily understandable one. It is a romantic misconception which tells every one of us that we are all just one great idea away from riches. All it takes is a particularly creative burst of neuron activity and, in a matter of weeks; we are sitting on a yacht somewhere in the Caribbean, sipping on coconut water and expensive rum.
It is a soothing and optimistic misconception.
In reality, however, Edison’s popular quote is actually closer to the truth,
Genius is one percent inspiration and 99 percent perspiration.
While it is a good thing to start off with an interesting idea, an innovation or a particularly savvy move in an already competition-heavy industry, the fact is that an idea is just the start.
Take a look at various studies of why startups fail so commonly and you will often find that it’s the tedious, business-ey stuff that sinks startups. They do not bother too much with the business model or the management of assets and they soon discover that they cannot ride the idea for too long.
Before you start a business, it is essential that you understand this. Just because an idea you had as you were drifting to sleep one night, this does not mean that you are bound to make a fortune. It takes time and effort to work out a business plan based on such an idea.
You need a business strategy.
Equally as important is to know when to give up on an idea that simply does not work. It is definitely better to realize it before you sink your life savings into it.
Paperwork is maddening
Starting a small business is often a time of great excitement and exuberance at the prospect of arriving at the freshly rented office space one morning, turning the key and entering into one’s company’s new premises.
Unfortunately, the actual real road towards this morning is paved with so much paperwork that it soon starts to feel like quicksand than a road.
Even in countries like the United States that are supposed to be business-friendly, there are so many legal and regulatory hoops to jump that it can easily feel overwhelming to a person who has never had to deal with such an amount of paperwork.
Registering a company, taking out all kinds of licenses and handling all kinds of fees will put a dent in even the most pronounced business-starting excitement. Then, there are the surety bonds, just take a look at the required surety bonds in California, for example. This is California, a supposed haven for entrepreneurs. Moreover, this is not everything. When you start hiring people, dealing with suppliers and renting out office space, you will be dealing with even more paperwork and expenses.
Keep in mind that this is the United States, eight in the World Bank’s Ease of Doing Business rankings (56th in Starting a Business rankings, though).
Now, no one expects to avoid paperwork when they start thinking about founding a company. However, it is impossible to be prepared to what actually awaits you. You need to be aware of this.
Competition is stiff
Unless you live in a town where there is absolutely no competition in your industry, you will face quite a bit of challenge carving out a space for your company. You will be entering a market where there are already established players who know the rules of the game and who have a head start compared to you.
You may think that your industry is not really that competitive and that emotions do not get high in your particular field, but we are talking competition here and as everyone knows, all competition gets heated sooner or later.
This is not saying that you should expect someone from a competing company to release a bag of rats in your office one day, but you can rest assured that they will notice you and start moving against you before you even get the broadband internet to work.
They will offer deals, they will reach out to their existing customers with loyalty programs and perks, they will beef up their marketing efforts, and so on. Keep an eye on what they are doing. Be aware that they will be doing stuff.
In today’s business environment, you also need to think about the major players. Let’s say you run a small store where you sell tools and building material. You are not only competing with local business like yours; you are competing with nation-wide or even international chains that can undercut you with their prices on their bad days.
No matter the industry, there is competition; do not be fooled. Be prepared. Think long and hard about how you will eke out an existence on the market.
Do not rush into it only to find out that there are already a dozen businesses doing the same thing you hoped to do and that there is no room for you.
Your personal life becomes nonexistent
This one is simple. When you start a small business, you say goodbye to your personal life for at least a year and a half.
There is no two ways about it.
That’s the way things are.
Closing Word
The goal of this article is not to discourage anyone from starting their own small business. It is only meant to provide a counterbalance to the innumerable articles out there that might make you rush into something without actually being anywhere near ready for it.
Starting a small business is exciting and for many people it is the best thing ever.
You do need to remember one thing though – it is hard, hard work and it takes more than just a can-do attitude.
featured image credit: unsplash.com
James D. Burbank has spent more than 15 years in marketing, working with small businesses in some of world’s most exotic markets. He is currently spending time between Europe and Australia, blogging about business.
