Things Aspiring Entrepreneurs Should Learn Before Quitting Their 9-5 was originally published on Vault.
It seems like everyone wants to own their own business or work for themselves these days. Business ownership may sound appealing, with control over your own schedule and job duties, especially since it’s become more accessible in the past decade.
The main reasons for this are:
- The internet has made information about regulations and requirements for businesses more accessible than ever before.
- Printing technology and free/affordable graphic design software makes it easy to create promotional materials and product packaging in your own home at a relatively low cost.
- The U.S. federal government provides free resources to small business owners at both the national level (sba.gov) and the local level (local sba representatives).
- More people want to support local and independent businesses and are doing so with their wallets.
- It’s easier than ever to interact with and market to people all around the world.
But owning a business is never going to be a walk in the park. A large percentage of new businesses still fail within their first year. Making the jump from traditional employment to self-employment requires a perspective change and a lot of preparation. If you’re an aspiring entrepreneur, here are some things you should explore before making the jump from employee to business owner.
Before you start a business, you need to figure out who your target market is, what they need, what they value, what they can afford. This will allow you to build a product or service line that specifically targets them. Finding time to research all of this can seem daunting, especially if you currently work a full-time job, but you can glean a lot of this information in your normal networking ventures. Set aside time every day, even if it’s half an hour, to focus on market research and making plans. Lunch breaks and commutes are great times for brainstorming. For more hands-on research, do this first thing in the morning or right when you get home, before you’re too relaxed to want to work on anything.
Regulations are often seen as the bane of the business world, but they’re what keep consumers safe. Even when regulations fail to keep all con-artists out of a field, they do provide consumers with ways to distinguish legitimate businesses from low-quality hacks. So you’ll want to look at what regulations your local area has for businesses in general, as well as businesses in your specific field. You’ll need to find out:
- If you need a license or certification to offer the products/services you want to provide
- If you need building permits (even if you’re operating out of your home)
- What is tax deductible and what is not
- What areas of liability you might be responsible for
- What titles you are legally required to claim (some job titles have legal definitions, including many trade jobs and many in the real estate industry)
Figure Out the Local Market
Once you have an idea (or several) for what kind of business you’d like to start, you’ll want to see what similar businesses exist in your area. Even if you’re looking to start an internet-based business, evaluating your local market is a good start. Your local SBA representative can give you market data about successful and failed businesses in a certain field. They can also show you resources that reveal demographics and can help you narrow your target audience.
The best way to learn about any topic is to talk with someone who has experienced it firsthand. Talk to other business owners in your area and ask them about the challenges they’ve faced. Find out what surprised them most about entrepreneurship and the realities of running a business. The more people you talk to, the more insight you’ll have, but you’ll also want to be on the lookout for someone with the traits of a professional mentor.
Define Your Long-term Needs
Even if you desperately want to escape your current work environment, you need to plan long-term and make sure you’re not jumping into a worse situation than the one you’re already in. This means looking at where you want your business to be 5, 10, and 20 years down the line, and whether current market trends look favorable toward that end. You’ll also need to make contingency plans for sustainability. What will happen in slow months? Are you prepared to deal with cash flow issues? What will happen in boom months? Even if you’re starting a self-employment track, you need to consider whether you’ll have to hire people down the line in order to stay on top of everything. If it’s even a possibility, do some reading on current hiring strategies, and look at all the responsibilities involved in having employees. This includes workplace safety, benefits, payroll, and more.
Do you plan on keeping your business local, or do you foresee expanding to other markets? Operating in multiple states or countries involves paperwork and knowledge of legal requirements in different areas. If you plan on hiring employees from abroad, you’ll have a whole different set of requirements to follow. Having a cursory knowledge of these issues before you start your business will help you lay out plans to be prepared in various situations. The more you know, the less likely you’ll have to close because of completely unexpected events.
Owning a business is more than a full-time job. Making preparations will help you get used to working more than 40 hours a week and help you avoid the unexpected mistakes that doom so many new and small businesses. The important thing is to know when you’re ready and set reasonable goals for yourself and your business. If you wait until everything’s perfect, you’ll never get off the ground. Find the balance, and start your market research!