Be not afraid of greatness. Some are born great, some achieve greatness, and some have greatness thrust upon them." William Shakespeare, Twelfth Night.
A quote from Shakespeare might seem like a grandiose start to a guide concerning the mundane matter of whether you should start or buy your own business. But while the bard was talking about a rather more idealistic concept of success, his three routes to greatness apply equally well to the potential entrepreneur.
Many people never really aspire to being their own boss, and are happy in employment - until a certain event makes them consider the possibility of running their own company or being self-employed
The lucky few, of course, may have inherited a successful company - whether it be a pizza delivery business or a software firm - from their parents. However, they're unlikely to be reading this.
It's the other two routes which concern us here - those who end up owning a business through their own decisions and plans on one hand, and those who go it alone as a result of changing circumstances in their careers and lives.
They each pose different problems as a start-up business - and pose a number of different questions regarding your suitability to run a business and the likelihood of your future success.
Of course, the vast majority of people don't fit comfortably into either category, but fall somewhere in the middle. But its worth looking at each extreme separately as each illustrates different aspects of the process you should go through when deciding whether you can or should pursue your entrepreneurial aspirations.
Many people never really aspire to being their own boss, and are really quite happy in employment - until a certain event makes them consider the possibility of running their own company or being self-employed. In other words, they could be about to have greatness forced upon them. Preparation for them is even more important.
It could be redundancy, a colleague's own successes running his own ship, or a change of manager. On the other hand, it could simply be boredom and the desire for new challenges - or serious wealth.
However, when you first applied for your current job, you were screened and interviewed by a manager. Now, on your own, you are the one who has to decide your own suitability for the task ahead.
You need to be completely honest about your own abilities - and your weaknesses.
This is not an easy process for most people, so here's a list of questions you should ask yourself:
- Are you persistent and determined? Can you set your objectives and follow your chosen business plan until they are achieved, come hell or high water?
- Can you remain positive in periods of adversity? Can you remain sociable and business-like with clients and suppliers when the business is not going as well as it should?
- Can you cope with the hours required? On average new business owners work 60 hours a week. Some, of course, work even more than this - that's why it's an average.
- The reverse of this is - can you cope with not having any free time? And having to deal with the priorities of the business at any time, however inconvenient it might be?
- Will your loved ones understand that your business, at least sometimes, has to come first? Will your relationship or marriage survive?
- Can you work on your own for long periods, away from the sociable atmosphere of an office or other workplace?
- Away from hierarchy and rigid work arrangements, can you be self-disciplined? Are you self-reliant, and can you inspire and enthuse yourself?
- You probably feel confident in your abilities in your existing role. But can you go back, mentally, to square one and be prepared to learn as much as possible?
- You may be thinking that running your own business will lead to freedom. But you will be in the grip of your creditors - the bank, usually - until you have repaid any loan. Can you deal with this?
- You may be used to receiving a weekly or monthly pay cheque of a fixed or minimum value. Will you be driven mad if you cannot completely predict your financial fortunes from one day to another?
- All of the above, together, mean only one thing: stress. Well, hopefully two things - stress and money. The money, though, will come later. The stress will have to be dealt with now. Do you thrive or suffer under pressure?
You are either inhuman or lying if you have answered yes to all of the above without any qualms whatsoever. Everyone will have their doubts if they read through the above list.
The point is to recognise that you will have these pressures and weakness and to identify whether you have the strength within you to live with or mitigate them. Eventually - if the business is successful - these pressures will subside.
And, of course, they will vary from job to job. A first-time freelance journalist or accountant will, by the nature of their work, be far less prone to some of these issues than someone starting up a restaurant.
Nevertheless, if you read through the list and see it as a challenge, you're undoubtedly a born entrepreneur - you'll be motivated by the idea of achieving something in the face of all those pressures.
On the other hand, some people have aimed at that sort of achievement from an early age. For one in five British schoolchildren, running their own business is already a dream. Many will go into a career, or pursue a university degree, with the sole aim of one day being in charge of their own affairs.
They will probably, from day one, be acquiring the skills and knowledge, whether they're in the field of motor mechanics or accountancy, so that the dream can one day become reality.
However, only one in 10 actually end up as business owners. Why? Because there are a lot of barriers - related to both money and skills - to finally going it alone and setting up or buying a business.
Let's look at those barriers and ask ourselves whether they apply to us.
- Do you have sufficientfunds to buy your own business?
- Are you sure you have sufficient funds? Have you drawn up a conservative business plan allowing for (almost) every eventuality? Have you thought about your own living costs, bills and mortgage payments as well as the needs of the business?
- Will you be able to borrow enough money to cover (almost) every eventuality, in that case?
- Can you buy a business which will earn you enough to repay that loan - and eventually make you some as well? Have you looked at where you can get business advice? Have you researched the costs of employing an accountant or book-keeper?
- (And this is psychological too) - Will you be able to cope with the uncertainty of not having a guaranteed regular income?
- Do you have sufficient skills in your chosen area? Are you good enough to gain the trust of clients and never lose it? Do you have the proper accreditations, whether they're necessary or not?
- Do you know exactly what materials and equipment you need to carry out your job completely and properly? Have you put them all into your business plan?
- Do you understand, however roughly, how to read a balance sheet? Do you understand concepts such as depreciation and interest, the difference between fixed and current assets and what separates capital expenditure from operational expenditure?
- Do you have basic computer skills in applications such as word processors, spreadsheets and presentation packages?
- If you do not have either of the skills mentioned above, are you prepared to take classes, or at least read relevant books on the subjects?
- Do you know where to go for advice if your training or knowledge doesn't cover a particular area?
- Are you able to manage other people effectively? Do you have some appreciation of employment law? (But having said this, remember that 66% of new start-ups only employ one person - the owner).
- Can you communicate and socialise with clients and/or suppliers in a professional manner? Have you ever had to chase creditors?
If you can answer yes to the vast majority of these questions - or at least work out how you might eventually be able to answer yes - then there are very few practical reasons why you cannot be your own boss.
Running your own business is not always going to be fun. If you believe that you can effortlessly cruise to record-breaking profits you are either unusually lucky or unusually self-deluding. It's probably the latter - which is why processes such as those outlined above are vital.