Before U Start

Being your own boss can be very rewarding, but it's not for everyone. Before you take the first step, take some time to find out if you have what it takes to be an entrepreneur, to understand the benefits of entrepreneurship, and to learn about your chances of success.

Before going into business, you must take stock of your financial resources. You must estimate:

•     the amount of money you are willing to put at risk
•     the minimum income needed to meet your current obligations and continue to live comfortably

Estimate the income needed to meet your living expenses

Your minimum monthly draw from the business must allow you to cover your living expenses.

Include expense items such as:

•     monthly payments on loans and credit cards
•     Rent or mortgage payments
•     food and clothing
•     automobile expenses
•     taxes

Subtracted from:

•     Income from other sources

Estimate your capital assets

Your next step will be to determine the capital (money, property and effort) you are willing to invest in your business.

You may need to sell some of your personal assets to obtain the cash needed to start your business. In undertaking this assessment, you must determine your net assets – what you own less what you owe.

What you own:

•     cash
•     investments
•     real estate
•     automobiles and equipment
•     life insurance

Less what you owe:

•     loans
•     charge accounts
•     mortgages

How to recognise the risks

Various factors may cause the failure of a business. It is therefore important to recognize the risks, including:

•     lack of experience
•     wrong product
•     poor timing
•     lack of money
•     improper pricing (too high/too low)
•     inventory mismanagement
•     spending too much on buildings and equipment
•     poor credit granting practices
•     excessive withdrawals by owners
•     unplanned expansion
•     wrong attitude
•     wrong location
•     family pressures

Strategies for reducing risk

•     Your first challenge is to decide on the level of risk you are willing to assume and understand the consequences of that choice.
•     Talk to people. Meet with potential clients to discuss your idea and what they, as customers, want.
•     Identify the leaders in your field or other fields and see what factors contribute to their success. Feel free to copy good ideas.
•     Consider a pilot test or a survey on the needs of your customers.
•     It may be possible to play it safer by developing your idea on a small scale.
•     Make sure you have the skills to run your business. If necessary, follow extra courses on bookkeeping, marketing, personnel management, etc.
•     All businesses today are affected by some form of government regulation: taxes, fire, safety, transportation and so on. Make sure you are up-to-date with any regulations that may affect you.
•     Work with businesses similar to the one you want to start.
•     Think of first starting a home-based business on a part-time or full-time basis.