I have never met a professional who hasn’t thought about starting his or her own business. Most ambitious professionals I’ve spoken with think about doing so at least several times every week! Being able to skip that commute in rush hour traffic, getting to spend more time with the kids, being able to ditch a coat and tie most days, controlling your own earnings potential — all excellent reasons!
Then why don’t more people actually follow through? As a matter of fact, quite a large number of Asians do follow through. We Asian Americans are twice as likely to be our own bosses as the American population at large. As of 1997 913,000 Asian Americans were running our own businesses, according to the latest available Census Bureau statistics. By the end of 2005 that figure grew to 1,105,000 or about 14% of the Asian American adult working population! That makes entrepreneurship a more popular career choice than any other single trade or profession among Asian Americans.
But before you get all starry eyed, it’s important to face the realities. Most entrepreneurs aren’t likely to be sitting in a big office managing droves of underlings. In fact, only 32% have any paid employees at all. Only 2.3% employ 100 or more employees.
And of course, the biggest downside is the possibility of failure. 56% of new businesses go out of business within four years. The two most important reasons are lack of experience and lack of sufficient capital. Regardless of what brings it about, a business failure can be a devastating setback that takes many years if not decades from which to recover, financially, socially and emotionally. That’s why would-be entrepreneur are wise to do their best to minimize the chances of failure before leaving that secure job. Here are six steps that should go into your planning to start your own business.
1. Assess the Value of Your Experience.
Every business involves critical dimensions that aren’t apparent to the casual observer or even to someone with a little experience. Businesses that seem to turn on shmoozing and cultivating flashy images (publishing, filmmaking, fashion, for example) in fact live or die by the relentlessness with which penny-pinching is incorporated into every operation. Businesses that seem to be all about technical skill (software, financial services, engineering) live or die by a boss’s knack for reading the political landscape and managing egoes.
Why and how this is the case is only apparent to those who have made or seen enough mistakes to learn how to avoid them. How do you know if you have enough experience? Ask yourself how difficult it would be for your boss to replace you. If you must answer, “Not very,” you don’t have enough experience to start your own business. On the other hand, if you know that you could talk your boss into hiring you on as a contractor to do the same work you are doing as an employee, you definitely do have enough experience to start your own business.
2. Are You Properly Capitalized?
This is really a trick question. There isn’t enough capital in the universe to protect an unqualified entrepreneur from business failure. If you can’t get your business promptly on track toward profitability, you will run out of capital sooner or later. So being well capitalized is more than simply having saved up a lot of money; it is also having a sound business plan for becoming profitable within a definite amount of time, and more importantly, having the experience, knowledge, skills and most importantly, the discipline and determination, to implement that plan. Next
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