How ABLE are you today to start your first small business? If you are not able now, then what do you need to get there? Starting your first small business requires that you be able to afford the investment of time, money and personal energy.
This is the third of a series of episodes on the topic of what it takes to be ready, willing and able to start your first small business. In this series of episodes, Henry Lopez shares his thoughts, tips and experiences related to being ready to start your first business and becoming your own boss.
The first episode in this series was episode 292, which focused on being READY. Are you mentally and emotionally ready to start your first small business? This is mostly about overcoming the fear of failure. Most importantly, the fear of the embarrassment of failure.
The second episode, episode 296 of The How of Business podcast, focused on the WILLING part of ready, willing and able. Are you willing to put in the time and effort it takes to start your first small business? This is all about the sacrifices you are willing to make.
This episode is the third in the series, focused on the ABLE part of Ready, Willing and Able. The question to ask yourself here is, are you able to invest the time, money and energy required to start your first small business and become your own boss?
Since starting his first business back in 1991, Henry Lopez has experienced many significant failures and setbacks, but fortunately, he has also been involved in some successful small business ventures. Henry has been the host of The How of Business podcast for over 4 years now, with over 300 episodes released, and over 1,000,000 lifetime downloads! Thank to all of our listeners for your support over the years.
Henry Lopez has been helping other people start, run and growing their small businesses for many years, and he has found that there are some common challenges most people face on their way to starting their first business. For many people, it’s not the idea that’s the hard part, it’s their mindset, their personal finances, and their willingness to sacrifice. That’s often what separates those who just talk about it from the few who actually move forward and launch their first business and realize their dreams.
Do you dream of owning your own small business? Is it no longer acceptable to you to continue depending on someone else, or some large corporation, to take care of you or look out for you? You may likely have one or more great ideas, but you just can’t seem to get any of them off the ground?
In Henry’s experience, what you likely need is an honest assessment of what is really holding you back. You can summarize it this way: You need to determine how Ready, Willing and Able you are to start you first small business.
Are you Able to afford the investment of Time, Money and Energy?
Are you able to invest the TIME:
- Starting and managing a business requires a significant investment of time, money and energy. As I explained in the previous episode, you must be able to sacrifice the time you currently spend on other activities and interests. But beyond what you are willing to sacrifice, it’s critical that you objectively assess what time you have available. Will you be keeping your full-time or part-time job? Are there other commitments of your time that you simply can’t get out of right now? You need to honestly add up the time you will really be able to dedicated to your business now.
- If you don’t have enough time now, then what do you need to start doing today to free up that time? Can you plan to leave your job after saving some money? Can your spouse or partner continue working while you focus on starting the business? Can you start smaller, and therefore have the time you need to manage your new small business? Or perhaps you simply need to delay your plans for launching.
- Time is our most precious resource. Managing and allocating your time will be critical to your success. You may have to keep your current job while you build your business on the side. If you have a family, then you definitely have responsibilities you must continue to make time for.
- You must consider everything that requires your attention currently, and then honestly assess what you are willing and able to sacrifice. In my personal experience, starting a new business requires considerably more time than you might expect or plan for.
- Henry Lopez is always working on his Time Management skills. If you are the type of person that always finds yourself without enough time in the day to get anything done, you are always rushing from one thing to the next, you rarely accomplish or finish a project, then you may need to focus on developing and improving your time management skills. You will need these skills to successfully launch and grow your business.
Are you able to invest the MONEY:
- A lack of capital is perhaps the most common reason people say has kept them from starting their first small business. It’s also the number one reason small businesses fail – they run out of money!
- As you create your plan for your business, and in particular your financial projections or pro-forma, it’s critical that you calculate the financial investment requirement as accurately as possible – and add an additional contingency amount, or working capital. You always need more money that you planned for.
- You must be ready to invest your own money, and also need to be ready and able to guarantee any amount you borrow. If you don’t have the financial wherewithal now, then perhaps scaling down or delaying your plans may be the best approach.
- Adjusting your idea may mean starting out smaller than you initially envisioned, and then growing methodically through bootstrapping (reinvesting your profits). Bootstrapping is the most common method of starting and growing a small business in the United States.
- It may also mean keeping your day job until you can move into business ownership full time.
- It often also means adjusting your spending habits and reducing your debt.
- Are you currently in a position financially where you could go for 6 months or more without your current income? Would you be able to pay your household expenses – your personal bills – from your savings or your spouse’s or partner’s income?
- What is your credit score? Do you have a plan to improve that score over the next six to twelve months, or longer?
- You can certainly start a small business with minimal cash investment, but the reality is that you do need to have some financial stability to help ensure the success of your business. Otherwise, from the start, you are placing a financial pressure on your business that very often leads to failure.
Are you able to invest the ENERGY:
- It requires tremendous energy to start and build a small business. The initial excitement will provide you with a big boost, but the longer-term business building journey will require significant energy and stamina.
- Your personal health will largely dictate your ability to persevere.
- How is your health now, and can you really take on the physical and mental challenges of starting and running a small business? Should you focus on getting healthier first, and then start your business?
- Will you be able to focus on your business for extended periods of time?
- It’s also important to remember to stay healthy when you start launching and running your small business.
Henry Lopez is the host of the The How of Business podcast. The How of Business podcast is focused on helping you start, run and grow your small business. Henry is a serial entrepreneur and business coach with over 34 years of diverse business experience, including successful careers in information technology, sales, sales training, real estate, and business ownership.
Books mentioned in this episode:
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- Rich Dad Poor Dad: What the Rich Teach Their Kids About Money That the Poor and Middle Class Do Not! by Robert T. Kiyosaki
The How of Business podcast is focused on helping you start, run a grow your small business. You can find all previous episodes of The How of Business podcast on the Archives page.