Becoming Your Own Boss

Many people start a small business in order to enjoy the perceived rewards of freedom and independence. This is understandable because owning your own business can offer you the opportunity to experience freedom:

• The freedom to use your own ideas;

• The freedom to be the boss;

• The freedom to not be fired; and

• The freedom to earn as much as you want.

The reality of small-business ownership can be quite different. Many small business owners will tell you that they work more hours than when they worked for someone else. A large number of those hours are the result of demands of others. Some of the more demanding others can be the regulations imposed by provincial and federal governments. Some of the other regulations that must be adhered to are: federal and provincial licensing; local safety and health regulations; environmental protection rules; employee deductions and labour standards.

Then there are the significant others, who impact the bottom line -- the customer. You must satisfy your customers, for these are the people who will ultimately decide whether or not your business will succeed. You will be successful only if you can provide them with the goods and/or services that they want or need badly enough to pay for. Then there are your financial others -- the people who provided you with funds to get your business started. They might be relatives, friends, bankers, etc. No matter who they are, they will have a vested interest in how well you run your business.

Even your competitive others will become more significant as their policies and competition will affect the way you run your business, the hours you work, prices, profits and more. As the most important other, you alone will take full credit when errors in business decisions are made. A poor decision that can result in losses not only to yourself, but to your employees, creditors and customers as well. It is money, after all, that is the bottom line. Your success depends upon your ability as a boss to make sure your business is making more money than it spends.

Why Will "You" Succeed?

At this point, the idea of running a small business may not seem very attractive. Don't let the negatives get you down. Running your own business can provide you with a tremendous source of self-satisfaction and pride. In order to succeed, most small-business experts urge prospective business owners to carefully and completely analyze their potential venture.

Typically, you will begin by analysing yourself as a future entrepreneur.

• What kind of person are you?

• What technical or special knowledge do you have?

Self-confidence and drive, innovative thinking, goal-orientation, and business and technical knowledge are necessary to succeed. These traits must also be tempered with realism. Knowing the limits of your own abilities and not being afraid to ask for help is imperative. Successful people as well as business owners know what they want to achieve in life. They determine where they are going by setting goals, paying attention to details and motivating others around them. It is wise to understand and follow the lead of those successful people around you.

What Kind of Business

The type of business that you enter should complement your experience, interest and/or technical knowledge. It is fine for you to dream about becoming your own boss some day, however, before you put too much work into your business, make sure that the area you choose is the right one for you. When deciding what business to start, you may want to consider what hobbies and/or interests you have as well as your experience and background. If you are interested in an area in which you have little experience, you may want to seek some training before you begin. Arranging a job in the area of interest or acquiring a mentor are two ways that may help you gain the knowledge and experience that you need.

Two other factors that are equally as important as the above mentioned are:

• Is there a need for the goods and/or services you are going to offer?

• Will there be a market for your product in the future?

Fads, technology, and innovations all affect the opportunity for any business to be and remain successful.

The Odds of Success

Starting your own business is risky. Of all firms started, just about a third fail within one year, and 80% fail within three to five years. However, after five years, the rate of discontinuation drops rapidly. Lack of management experience accounts for nearly all of all small business failures. This does not mean that all small business managers have poor management skills. More accurately, it refers to the person's ability to deal with the unexpected occurrences in business.

A recent example is the poor national and world economic situation. In tough times, some small businesses are surviving it, others are not. Desire and persistence along with innovative thinking improve the odds. In tough times, smaller business may be able to change direction by introducing new ideas and creating better methods to help move its product and sustain an adequate income.

Start-up Money

After you have decided that you want to be in business, you face the problem of money.

• How much money will it take to start your new business?

• How much operating capital will you need?

There are forms available that will help you put together a very good estimate of your business start-up and on-going capital requirements. It is recommended that you become well acquainted with your local bank, as it will probably be the main outside source of capital. All the above information should be helpful to you as you think about establishing your new business. Remember, it never hurts to gain more knowledge in your business area. Few businesses have gone broke because the owner knew too much about his/her business.

This publication is a checklist for the owner-manager of a small business enterprise or for one contemplating going into business for the first time. The questions concentrate on areas you must seriously consider to determine if your idea represents a real business opportunity and if you really know what you are getting into. You can use the checklist to evaluate a completely new venture proposal or an apparent opportunity in your existing business.

Perhaps the most crucial problem you will face after expressing an interest in starting a new business or capitalizing on an apparent opportunity in your existing business will be determining the feasibility of your idea. Getting into the right business at the right time is simple advice, but advice that is extremely difficult to implement. The high failure rate of new businesses and products indicates that very few ideas result in successful business ventures, even when introduced by well established firms. Too many entrepreneurs strike out on a business venture so convinced of its merits that they fail to thoroughly evaluate its potential.

This checklist should be useful in evaluating your business idea. It is designed to help you screen out ideas that are likely to fail before you invest extensive time, money and effort in them.

Preliminary Analysis

A feasibility study involves gathering, analysing and evaluating information with the purpose of answering the question: "Should I go into this business?" Answering this question involves a preliminary assessment of both personal and project considerations.

General Personal Considerations

The first seven questions ask you to do a little introspection. Are your personality characteristics such that you can both adapt to and enjoy small business ownership/management?

The next series of questions stress the physical, emotional and financial strains of a new business.

Specific Personal Considerations

The next three questions emphasize the point that very few people can claim expertise in all phases of a feasibility study. You should realize your personal limitations and seek appropriate assistance where necessary (i.e. marketing, legal, financial).

General Project Description

Briefly describe the business you want to enter.

List the products and/or services you want to sell.

Describe who will use your products/services.

Why would someone buy your product/service?

What kind of location do you need in terms of type of neighbourhood, traffic count, nearby firms, etc.

List your products/services suppliers.

List your major competitors - those who sell or provide similar products/services.

List the labour and staff you require to provide your products/services.

Requirements for Success

To determine whether your idea meets the basic requirements for a successful new project, you must be able to answer at least one of the following questions with a "yes."

Major Flaws

A "Yes" response to questions such as the following would indicate that the idea has little chance for success.

Desired Income

The following questions should remind you that you must seek both a return on your investment in your own business as well as a reasonable salary for the time you spend in operating that business.

How much income do you desire?

Are you prepared to earn less income in the 1^st - 3^rd years?

What minimum income do you require?

What financial investment will be required for your business?

How much could you earn by investing this money? (A)

How much could you earn by working for someone else? (B)

Add the amounts in (A) and (B). If this income is greater than what you can realistically expect from your business, are you prepared to forego this additional income to be your own boss with the prospects of more substantial profit/income in future years?

Supply

Expenses

Miscellaneous

Venture Feasibility

Personal Qualities:

• Patient and persevering. Successful entrepreneurs are normally willing to work long, hard hours and willing to weather the highs and lows of business

• Love a challenge and are driven by a need to challenge one's self

• High tolerance for ambiguous, unstructured situations

• Possess a desire for change and constant improvement. Entrepreneurs frequently monitor social trends and adopt new technologies

• Action-oriented

• Think positively and quickly get over their failures

• Learn quickly, enjoy feedback, and are able to learn from mistakes

• Both listen and communicate well

• Independent and extroverted

• Self-confident and determined to succeed. Entrepreneurs should be comfortable with having all of the decisions rest upon them

• Creative, innovative, and open-minded

Physical and Psychological Qualities:

• Ample health and energy

• Emotional stability

• Money-enough to start the business, as well as to support yourself during the risky start-up period

• Time-A business requires a lot of time and attention, especially during its launch

• Influence from entrepreneurial role models

• Personal intelligence

Business and Managerial Skills:

• Able to set realistic attainable goals

• Love to take risks, but ensure that these risks are calculated, not foolish

• Able to exert influence and inspiration on others without a need to impose status or power

• Able to get along with and adapt to all types of people

• Able to trust others and give out responsibility

• Possess good communication skills (the ability to put your ideas into writing, as well as to persuasively present your ideas to a group of people)

• Possess general financing, production, administration, human resources, sales, and marketing skills

Lifestyle Considerations:

• Other commitments and obligations-your decision will not only affect you; get the opinions and input from others

• Family-there are many added responsibilities associated with having a family. You must not only provide food, clothing, and shelter, but also adequate love, attention, and security. Therefore, you should guarantee that your new venture does not put others at risk

• Your own happiness and whether you are passionate enough about your business idea to ensure that you will enjoy it daily. Considering your natural talents, skills, and sources of enjoyment may lead you to the best business idea

All of these characteristics, combined with know-how, personal contacts, and the development of business expertise, generally separate the successful from the unsuccessful in entrepreneurialism. Act wisely by taking a look at yourself-your needs, desires, and capabilities-before taking the plunge into the world of business. Nevertheless, please be aware that entrepreneurial characteristics are somewhat flexible and do have the potential to be developed. If you anticipate any areas of difficulty, it is best to deal with them sooner rather than later.