Sponsored by the U. S. Small Business Administration
While an employee may lose a job as a result of a reorganization, a business owner can lose his or her life savings if their business fails. You want to protect your investment, if you own a business. The best protection for your business is to be prepared for entrepreneurship. There are five ways in which you can prepare for business ownership, before you actually take the plunge and open your own company. While there are several other things that will have to be accomplished, the following five pre-business preparation assignments will help you decide if you are ready to start your own business and further, if you have the skills necessary.
You need to look at your work and its effect on your personal life based upon the next 10 year span. Most small businesses are considered startups or growth firms through their first five years in operation. The company only begins to mature after the five-year mark. Does this requirement for investment of your time suit your goals? What do you want out of life? Most entrepreneurs will tell you they now work harder than ever, usually 50-70 hours a week. Can you make that commitment?
As you begin to answer these fundamental questions, you are mapping out the course, profitability and role you want a small business to have in your life. One of the reasons often cited as why a small business fails is the lack of management experience. Do you have management experience? If yes, guess what else do you need to know. If no, are you willing to learn about business management before going into business?
Preparation helps protect your investment both in time and money. Since most entrepreneurs need some capital financing to start a business, preparation is necessary to develop the business plan and loan application package required in order to secure a bank loan. Along with that preparation, a lender will expect you to have capital or assets to invest in the business. Whether or not you receive a loan will depend upon your credit history, your ability to repay debt and the soundness of your business idea and business plan.
If you make it this far in the process, you are serious about entrepreneurship. Next step then is to test market your product or service. Find out if consumers are willing and able to purchase what you want to offer the marketplace. You may find that adjustments to your plan are needed, the idea is right or that there isn't a market after all. This testing phase allows you to invest a small amount of money in order to find out if this business can work in the marketplace. You may gather your results and change the business idea or decide against entrepreneurship.
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