12 things to consider before starting a startup

by Startacus Admin

So much is written about how people should go about starting a startup business, but little is said about whether someone should start one! These are the question we should be asking, suggests Adrian Enache, CEO of Angels Den...

Tell a friend or colleague you are planning on starting your own business and the response tends to fall into two categories – either dire warnings about how hard it will be and how many businesses fail in their first few years – or overwhelming support which suggests your plan to make sliced bread is .. well, the best thing since sliced bread.

We all welcome the entrepreneurial spirit in friends and colleagues and want to support them but often the advice we offer does not ask the truly important questions.

So much is written about how people should go about starting a business startup, but little is said about whether someone should start one – and if starting and running a business is suited to them.

These are the question we should be asking:

1) Why do you want to start your own business? Is the reason justified? If your reason is simply you don’t want to work for anyone else and don’t want to be bossed around again then remember – no man is an island and even if you run your own business and never take on staff you will always be answerable to someone. Maybe you will have to justify things to customers or report back to investors but if you think being in charge means never having to answerable to anyone then think again.

2) Are you a self-motivated hard worker? No one likes to think of themselves as lazy but before you set out solo make sure you honestly know yourself and what you are like. People often argue the reason they have long lunches, hang around chatting in the tearoom or are clock watching waiting for the end of the day in their employed role is due to boredom. But it is vital you are honest about what you are like. If you do the absolute minimum whilst working for someone else do you honestly think you will put in all the hours needed working for yourself? Ask people who know you well and are confident enough with your relationship to be honest about your work ethic and listen to what they say even if you don’t like it.

3) Can you imagine yourself living on no money? Launching an unsuccessful business idea is a reality for many entrepreneurs. Over half of new businesses fail within the first five years of opening – and even paying yourself a salary may be impossible in the first year or so.

It’s a good idea to plan for the worst-case situation. You might have to temporarily live with your parents. You might have to go without your comforts and your lifestyle could significantly change. You need to plan for how to survive until the business makes money and prepare yourself for all the situations that could happen if your business idea doesn’t work out.

4) Are you determined enough to carrying on in your current job while you make it happen? If you want to start a small business, in most situations I would say, don't quit your day job – yet. Launching a successful start-up is a process. Build your business in stages and gradually transition from employee to entrepreneur. Keep your nine-to-five and work on the business during free hours during those tough, first stages. Once you have a healthy cashflow, you can tackle business ownership full time

5) Are you comfortable blowing your own trumpet and being your own salesperson? Few of us are naïve enough to think businesses work as easily as it does in the 90s classis film ‘Field of Dreams’ – where he is told, ‘If you build in they will come’. The reality is if you build it you have to shout about it, market it, put up the signs, advertise it and market it some more and maybe then they will come. While you can dream about sales teams and a marketing department, in the early stages you will have to do it all yourself so if you are someone who finds selling themselves hard, self-employment may not be for you.

6) Do you know your competition and know them well? Most would-be entrepreneurs will have researched the market and competition but have not thought about what they plan to do different or why theirs will be better. Just because another business has succeeded it does not mean yours would and even being cheaper or faster is no guarantee for success, you need to know what will set yours apart.

7) Would you give up the dream if you were offered a high paid job? Most entrepreneurs argue starting a business is about so many different things and say they never want to work for anyone else again. But when asked if their current salary were to increase dramatically, their determination wavers and they start thinking about financial security, paid leave and all the other perks of being employed. Not everyone is suited to running a business and the economy needs workers so don’t feel pressured if on balance it is not for you.

8) What does success like to you? I often hear from people who want to start and run a successful business but in truth they don’t even know what that would look like for them. Is your goal a certain level of turnover, a percentage of market share or do you just want to make enough to live on and have happy customers? Without a goal in mind it is hard to plan.

9) Are you prepared for the non-financial costs of running your own business? Starting a new business may put a strain on relationships and family life and while lots of people think if will give them flexibility there are always costs usually in terms of long hours and the strain on knowing in the early stages you have to do everything yourself. Even being sick can be an issue as the business must run regardless.

10) Can you keep it simple but legal? So many businesses fail because founders get so caught up overcomplicating things and needing all the best tech and bells and whistles, they don’t devote enough attention or money to the legal side of things. Legal requirements for business vary hugely in different sectors and while some may only need to address issues such as insurance others will have a whole host of regulations to meet. Start simple, ensure you meet your legal obligations and you can improve things like tech as you grow.

11) Are you ready to step down for the greater good? Not every start-up leader will be best person to take the company to the next level so are you prepared to step aside or change role should the time come? If at some point in future an experienced CEO is needed to accelerate the company, then it can be a very different role for the founder and not everyone can cope with that.

12) Are you patient enough? Lots of start-ups fail when founders get carried away with success and try to grow them too quickly. Sometimes, a constant but slow growth is better for the long run and the rate of growth should be looked at very carefully.

Adrian Enache is the CEO of Angels Den. Angels Den Funding is an online investment platform that makes it simple for investors to own shares in early-stage companies with great potential.

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Published on: 22nd June 2019