At some point, it happens to many of us. Maybe we finally realize we’re working too hard for someone else. Maybe we’re grabbed by an idea that won’t let go. Whatever the reason, hundreds of thousands of Americans, many of them women, start new businesses every year. In fact, more than 50 percent of the small businesses in the United States will be women-owned by the year 2000, says Carol Dougal, co-director of the Women’s Business Development Center in Chicago. No one knows exactly how many startups succeed, but the odds aren’t great.
“The mortality rate is very high,” says Tom Gillis, an entrepreneur and author of “Guts & Borrowed Money” (Bard Press, $19.95). Still, he and other experts say, going out on your own isn’t as hard–or as easy–as you might think. Some people get hung up on difficulties that are part of the independent work life. Others stumble over obstacles so obvious they never knew to look for them. And although nothing can ensure your success, listening to people who have taken the plunge might increase its likelihood.
It always begins with an idea, but before you run with yours, think again. “I don’t know of anybody whose very first idea was adequate to go into business with,” Gillis says. “It’s OK to let an idea steep for a while.”
In fact, the wrong idea might prove fatal before you’ve even hung out your shingle. “Many times people fail or close a business because they are in the wrong business,” says Kathi Elster, co-author of “Going Indie” (Kaplan, $15). “They chose something that they thought would be profitable, but it wasn’t necessarily something they liked. Or they chose something they really liked, like a hobby, and then it wasn’t profitable enough.”
Elster names five key elements to consider before choosing a business: your talents, your skills, your interests, your lifestyle preference and current trends. “The most important is talent,” she says. “You can always develop new skills. Your interests change. But your talent never changes, and that’s what you want to build your business on.”
Once you’ve got the right idea, throw out everything else. “You can’t afford to be general,” Gillis advises. Immerse yourself in that business before you go into it by getting a job or an internship in the industry. People fail “principally because of lack of experience,” he says.
And they often don’t know if there’s any money to be made in it, either, Elster says. Although it seems too obvious a mistake to make, many startups stop because they were planted in a market that couldn’t support them. Wannabes need to write a business plan to assess markets, competitors and similar factors, even though most successful entrepreneurs swear they never wrote one. “But they’ve got it there in their minds,” Gillis insists.
Once you’re ready to go, consider these tips:
– Save enough money for a personal “kitty” before you start, suggests Pamela Hamilton, founder and president of Collaborative Communications, a 2-year-old public relations firm in Cambridge, Mass., that turned a profit in its first year. “It lets you deal with the real business issues without worrying whether you’re going to have enough money to pay the rent.”
– Learn to live with a lack of business cash. “I have not known a single entrepreneur who did not feel that a lack of money was holding him back,” Gillis says. “It probably is. But it’s a way of life. Get used to it.”
– Sell, sell, sell. “If you don’t have customers, you don’t have a business,” says Gillis. “Most of us are not good salesmen and we find selling very difficult. But the real purpose in your business is to create customers and that requires you to sell a product or a service.”
– Remember that things are going to be very different. “People coming from a large corporate environment want those luxuries. . .,” Elster says. “You had a stocked supply cabinet. You needed a pad, you got one. Now, when you need one you either buy one or use the back of something.”
– Although you may be prepared to work harder than you’ve ever worked before, brace yourself for job obsession. “I worked 80 or 90 hours a week as a corporate attorney,” Hamilton says, “but this is much different. It’s always with you. Once in a while (my husband) kind of looks at me and says, `OK, can we talk about what I did today?’ “
