If so, here are FIVE factors to consider before taking a leap into the unknown. Those factors are:
- The high failure rate;
- The large needed cash buffer;
- Illuminating guidance from a profound Japanese concept;
- Your personal reason for doing so; and
- Your internal capacity for going the distance.
Let’s look at each in turn:
You know starting a business is tough. What you may not know is that a widely quoted statistic asserts that 90% of all new business start-ups fail within five years of inception.
Are you easily discouraged? Are you a so-called ‘snowflake’ or is there tempered steel in your spine?
Don’t lie to yourself.
Only if you possess vast reserves of resilience and optimism should you even set out to start your own business. But if you have those traits, then more power to you: Go for it!
However, enthusiasm and a great idea are not enough. Those who transition from paid employment to running a new self-birthed business often forget it is terrifying to wake up on what used to be payday only to realise an employer is not going to deposit your salary.
Every ringgit you wish to flow into your coffers must now be generated through sales. If you’ve ever looked disdainfully at the process of selling, ditch your poisonous attitude. If you cling to it, you’ll fail.
But even if you’re willing to sell, it usually takes up to a year to generate decent revenue streams fuelled by those sales. So, before you start your business, save – not invest – your money.
You need certainty and liquidity. Therefore, use bank accounts or a pure money market fund to accumulate cash in an Emergency Buffer Fund (EBF) to cover six to 12 months’ expenses.
This process may take years of preparation. During this extended period, stay employed and keep learning and nurturing skills that can help you better start your new business.
There is a Japanese concept called ikigai that can guide us in identifying the profession, career or business which best suits us. The term comes from separate Japanese words meaning life and value or worth.
Ikigai boils down to pursuing an economically viable path based on the sweet spot where your personal answers to four salient questions intersect:
- What do you love doing?
- What does the world need today?
- What can you be paid for today?
- What are you good at?
I suggest you use the long period needed to build your EBF to delve deep into your answers to questions 1 and 4 first. Take months – if necessary, to plum – the depths of your mind, soul, and psyche by thinking creatively on paper.
After you’re happy with what you’ve detected about your inner drives, overlay your list against your answers – based on earnest external research – to questions 2 and 3.
Your goal is to identify an economically viable business you’re passionate about because the process of building your business will be gruelling.
Take time to think about why you wish to start your business in the first place. Your answer will be personal and unique.
Gaining clarity on this ‘why’ will help you navigate the path through inevitable obstacles, disappointments, and detours from where you are now to where you wish to end up.
Assess if you have what it takes to abandon the safer harbour of conventional employment for the uncertainty and volatile income potential of most businesses.
IF AFTER honestly assessing these five factors, you still wish to make the transition to business ownership, you will be better prepared for the treacherous, difficult terrain ahead than most others contemplating a similar trek.