Congratulations! You're starting a business. You have a great idea for a product or service, and after careful consideration, you've decided that now is the right time to give up the corporate life and start working for yourself.
If you've never run a business before, you might be in for a bit of a shock. Entrepreneurship is unlike any job you've ever held in the past. Like any career, it requires a strong desire to succeed — but it demands a lot more of your time, energy and creativity. When you start a business, you're signing up for a commitment to stick it through until the end.
Before you dive head first into your business, you need to step back and make sure you're thoroughly prepared for the challenges ahead. Eric Tyson, a personal finance author, lecturer and adviser, shared 10 questions from his book, "Investing for Dummies" (Ed. 7, Wiley, 2014) that all potential business owners should ask themselves to test their entrepreneurial IQ. [6 Business Plan Templates to Start Your Business]
- Are you a self-starter who likes challenges and is willing to do research to solve problems?
- Do you value independence and self-control?
- Can you commit to an idea, product or principle?
- Are you willing to make financial sacrifices and live a reduced lifestyle before and during your early entrepreneurial years?
- Do you recognize that when you run your own business, you must still report to others?
- Can you withstand rejection and negative feedback?
- Are you able to identify your shortcomings and hire or align yourself with people and organizations that complement your skills and expertise?
- Do you believe in yourself and your business?
- Do you understand why you started the business or organization and how you personally define success?
- Can you accept a lack of success in the early years of building your business?
If you answered "yes" to these questions, then you've got a solid idea of what it takes to successfully run a business. But even if you have a good grasp on what you're getting yourself into, you may still face some unexpected challenges along the way.
"Starting a small business can be stressful financially and emotionally," Tyson told Business News Daily. "You'll want to take some steps to minimize that stress."
Since much of the emotional stress of entrepreneurship relates to your financial state, it's absolutely essential to have your personal finances organized, especially in the early stages of your business, noted Tyson. Many new entrepreneurs think they're prepared for the financial challenges of starting a business, but are blindsided once they're actually in the middle of it.
"A lot of people overlook and underestimate the reality [of the] early months and years of their business," Tyson said. "You're going to be spending more money and probably won't have a lot of revenue. You need to understand how the business is going to affect your cash flow, especially if you're going from a job with a regular paycheck."
Tyson's best advice to entrepreneurs is to have comprehensive business and financial plans in place well before leaving their jobs to start a company.
"It's one thing to dream about running and starting a business, but it's another thing to actually do it," Tyson said. "Put together a good business plan. Know what it's going to cost you, and get your personal finances in order."
Originally published on Business News Daily