Welcome to 2023! This time of year, people use the calendar to evaluate and set priorities for the next twelve months. What are our priorities, things we want and don’t want in their lives, goals, and new endeavors we want to start? For some people, this includes pursuing their dream business. Whether you are looking for a career change or are taking your hobby business to the next level, self-reflection and a healthy sense of self-awareness are important for your success and happiness.
Key Questions to ask Yourself
Before you jump headfirst into your new venture, hit pause and ask yourself the following:
Why do I want to start this business?
Your motivations for starting a business will determine how much energy you have to sustain yourself as the business grows. If you want to start simply because you do not like the management at your current job, you’re likely to run out of steam fast. Likewise, if you’re starting to leave a legacy business for your children to take over, you may end up disappointed if they don’t show the same passion that you do for your industry. Ideally, you should want to start the business for three reasons: because you are passionate about it, because you know there are customers out there who need what you’re going to offer, and you can do it better, cheaper or faster than anyone currently in the market.
What do I want to gain from this business?
Some people start businesses simply for supplemental income – to pay off debt, build their savings faster, or for ‘fun money’. Others intend to build a business that will net them major cash in the long haul or to be able to sell the concept once it’s up and running. Another set of entrepreneurs want to provide a great work environment for their employees and contribute in a positive way to the community at large. Understanding what you want out of your business will help drive decisions on how your business is formed, how quickly (if at all) you scale, and more.
How will I support myself while this business launches?
If you are planning a side business to supplement your income, you’re going to need support from your loved ones in terms of time for other life tasks. If you’re starting a full income replacement business, you’ll need a deep understanding of how much money you need to meet your basic needs until the business is profitable. It’s likely that your business won’t be profitable in the short run and will take more cash than anticipated to get off the ground, so plan accordingly. One of the top reasons businesses fail is due to undercapitalization, and while you can’t plan for every twist and turn in the road, having healthy cash reserves and support for other areas of your life will help.
What are the red flags that I need to be aware of, so I understand when to exit this business?
Starting with the end in mind may seem counterintuitive, but it’s a good practice. Your business is going to affect every area of your life – how much time you have for friends and family, whether you get to go on a vacation this year, your physical and mental health, as well as your finances. Have you considered what your stopping point will be with your business if it does not yield the results that you’re planning for? Setting realistic expectations for business performance is important but understand what your exit point must be so that you don’t permanently damage other areas of your life. Is it a dollar amount invested? A certain time frame to meet sales goals? This goes hand in hand with self-reflection and understanding about who you are and what you need in your life in order to be happy.
Setting Up for Success
If you can step back and look at these questions, and still feel good about pursuing your venture, that’s great! We’re excited for you and here to help. Maybe it’s time to register for consulting and start digging into a business plan to formally lay out your idea and set defined goals with a consultant.
If after looking at these questions there’s doubt in your heart and head about “Well, maybe I should, maybe I shouldn’t,” that’s great too! One of the things our consultants can do is provide you with a neutral sounding board to test your idea. Maybe there’s just a piece of the puzzle you can’t see, and someone outside your normal circles can help fill in that gap.
However, if you look at these questions and say, “I didn’t really consider THAT…” Maybe business ownership isn’t for you, right now at least. That’s great too, it means you didn’t travel down an unproductive path for yourself and gives you the opportunity to focus on other things – like career and skills growth, personal health goals, or redirect your happiness to other areas of your life.
Whatever path 2023 takes you on, we hope the LBDC and our team of amazing consultants can continue to be a source of inspiration, resource for your development, and asset to your community going forward!