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How to know when you are ready to start a business? Well, the truth is, you're never ready because whatever you think it takes, you think it's going to take much more time, or it's going to be much more difficult. So, you're never quite ready to start a business. In fact, I talked about this in another article that the worst time to start a business is when you are desperate. The worst time to start a business is when you need money.
- Introduction
- Sign Number One: You Have A Clear Profit Path
- Sign Number Two: You Have A Very Clear Business Model
- Sign Number Three: You Have An Edge
- Sign Number Four: You Have Some Capital
- Sign Number Five: You Are Okay with Not Making Money for A Long Period of Time
- Conclusion
Introduction
You shouldn't start a business when you need money desperately. If anything, you should start a high-income skill first before you start the business. But let's say that you are ready mentally, emotionally, as well as financially. Now you're ready to take a leap of faith. Well, how do you know that you're actually ready?
So, here are some of the signs that you should pay attention to. If you meet some of these criteria, then maybe you are ready to go out there and build your empire.
Sign Number One: You Have A Clear Profit Path
Meaning that you have a very clear idea of how you're going to make that first sale. How do you make that first profitable sale? Not just, "Hey, I've got a good product, this is my service, this is my widget, let's go out there and hopefully, someone likes it.
No, in your mind, you are very... very clear about how to get this product out there in the marketplace, where those customers are, where are they hanging out, and how are you going to convert those leads into customers. You have a very clear idea of how you're going to make that first sale, not just a first sale, but how you're going to make that sale profitably. Meaning, let's say you're selling a thousand-dollar thing, and your cost is a hundred bucks, and then you're going to spend 100, 200, 300 dollars to acquire that customer profitability versus your thing is a thousand bucks, it cost you a hundred dollars, but it actually cost you a thousand dollars to acquire each customer. That's not a profitable customer, right? So, you're not even breaking even.
Unless you can answer the question, "How could I make that first profitable sale?" That's your profit path. That's sign number one.
Sign Number Two: You Have A Very Clear Business Model
What is a business model? Meaning, how are you going to monetize this? How are you going to make money? So, now you know how to make that first profitable sale, you have a clear profit path, but then what is the overall business model? What is going to make you different from everybody else in the marketplace? Maybe after your first initial product, you're already thinking, "Well, I'm going to build a customer base, then I'm going to offer them something else after the first product, and something else after the second product.
That's a business model right there. There's a big difference between selling something, a money-maker, versus building a business. Most people, they have a money-maker. If you don't have a business, you have a product. That's all they have.
This is a product. A business has a business model. So, until you're very clear about your business model, then you're not ready to start a business.
Sign Number Three: You Have An Edge
What is an edge? An unfair advantage that you are bringing to the table, something that allows you to differentiate yourself in the marketplace, to penetrate all the noise that's out there. What do you do? What makes you different? Why should people buy from you and not everybody else? If they're buying from somebody else, why should they switch?
You cannot just say, "Oh, because I'm better." No, what is the edge that you're bringing to the table? Maybe you have a technology, maybe you have certain relationships, maybe you are a superior marketer, or maybe you have a superior process that you have spent years finding. Whatever that might be, something that is very difficult for other people to compete with. In my case, I have a very compelling brand, a very strong personal brand as an edge.
If I go into some other industry and verticals, I can bring that to the table. That is an edge, not the only edge I have, but it is one edge. In other scenarios, maybe it is a technology that I'm bringing to the marketplace, but maybe it is something other things I'm bringing to the marketplace. Whatever it is, I need to have an edge. If you want to win, you cannot just start a business with an "I can do it" attitude because you're going to get slaughtered.
It's going to cost you a lot of time, a lot of money.
Sign Number Four: You Have Some Capital
You are ready to start your own business when you have some capital. You need some money to get started, to be able to survive and sustain for a period of time. When you have no money to start a business, well, then you're making decisions based on scarcity, based on desperation. It's very, very difficult to make strategic decisions when you don't have any cash coming in.
So, only start a business when you put aside a certain amount of money. I believe a certain amount of money, then you can start knowing that it's going to take some time for this thing to ramp up, and then it's your good chances are most of the time, most people make it. 50% of the businesses fail in the first two years. 90% to 95% fail in the first five years. Your odds are not good.
And every single time I say it, every single time I hear from entrepreneurs, "I am the exception. I am that 5%." They never think that they're going to fail. They are overly optimistic. Sometimes that's the problem with entrepreneurs.
They haven't failed enough, so they are very naive and overly confident, versus thinking more like an investor. "Hey, what is the downside? What could I lose? Can I live with the downside?" That's being smart.
So, you need some capital. How much capital is up to you, depends on the business type, and what you are starting, right? But more, at least you have some capital, as well as you have access to capital, meaning you can borrow from banks and financial institutions, from private investors to fund your adventure. That's sign number four.
Sign Number Five: You Are Okay with Not Making Money for A Long Period of Time
You are ready to start a business when you are okay with not making money for a long period of time. If you are starting a business with pure motivation and intention just to make a quick buck, you're not going to be successful. Now, it doesn't mean you don't want to be profitable. It doesn't mean you don't know profit doesn't come into play. It absolutely does. But if your focus is just to make a quick buck and make money, you're not going to be successful.
Why? Because if you focus on chasing the dollars, chances are you're not solving problems. You should be in business because you want to solve problems in some way, shape, or form. You're fulfilling a need in the marketplace. You'll bring your entrepreneurial skill to the marketplace.
This is not like a typical employee. Every single month, every two weeks, you're going to get a paycheck. As an entrepreneur, we eat last. This is why it's called profit. You don't get a paycheck.
You pay your vendor, you pay your lease, you pay everybody else, you pay your team. You get paid last. And you wait the longest because the first few years, not a few months, the first few years, sometimes the first ten years, you're just working and working and putting your time into the business. And hopefully, it will grow, and you will thrive, and you will have a big payday. But in the beginning, you're just putting in your sweat equity.
That's why most people don't understand anything long. That's not a business. In six months, a year, or I'm going to be on the beach. No, even the ones who are successful, chances are, in some cases, it took them decades to get to a certain stage in terms of business building to a significant business. In some cases, 15, 20 years.
So, are you willing to delay the gratification? Are you willing to wait? If you're not willing to wait, forget about it. You're not ready, and actually, you shouldn't start a business because that's the reality. Everybody tells you a good story.
Conclusion
"Oh, it's great." You see on the cover of the magazine, this entrepreneur makes X amount of dollars. This entrepreneur sold his company for gazillion dollars. Well, you never see the entrepreneurs who died financially, who go bankrupt. You don't see those entrepreneurs on the cover of the magazine.
So, you see the one that makes it. You don't see the hundreds of thousands of guys. So, those are some of the signs and signals that tell you and tell me that you are ready to start a business.
Article source: https://youtu.be/r2nEEdsbceg