Starting a new business and making it profitable is always much harder than it sounds. This article focuses on some of the skills you will need to make it happen. Some of these skills you will need yourself and others can be covered with help from professionals.
What it really means to be your own boss
Most people think being your own boss sounds like it is the ultimate ticket to financial success and freedom – and it can be. However, we shouldn’t be fooled into thinking you’ll be able to put in minimal hours each day. The reality is that businesses require a lot of hard work for many years – before you start to make a reasonable profit. Many businesses will fold before they even reach that point.
Here are some of the top things you should be aware of.
You will need to be passionate about what you do. Setting up your business is challenging. If you’re not passionate about what you do, you will find it hard to stay motivated when problems arise. Suppose your business is just another money-making idea and not something you’re passionate about. In that case, you’ll lack that key ingredient needed to make your new business stand out as more attractive than the already established competition. Before you start any business, make sure you ask yourself if you’re passionate enough about what you plan to do.
You’ll need to make sacrifices, at least during the first couple of years. Just coming up with a business idea and putting the plan into action requires a lot of hard work and usually a lot of money to get it established. You’ll probably have to work harder than most of your mates and make a large number of sacrifices. It might mean less time for sport or hobbies, socialising or even less time with your family. You’ll also more than likely be taking home less money if any. You might need to sacrifice holidays or put major household purchases on the back burner until your business is established. Ask yourself if you’re prepared to make the necessary sacrifices to make it a success – and check that your family is also prepared to make these sacrifices.
You’ll face risk and uncertainty. When you start your business, you won’t have regular payments from an employer. Your business may also not be in a position to pay a wage for the first few weeks, months, or even years. You might have to draw on your savings or even take out a loan to finance your business operations. There’s always an element of uncertainty and risk when you start out on your own. You will need to be sure that your business idea is feasible. Further, that you have enough money saved to support yourself and your business until you reach your break-even point and start turning a profit.
You’ll need a never-ending supply of patience and persistence: A start-up rarely has everything run according to plan without any minor or major teething problems. You will likely encounter your fair share of setbacks and challenges, from demanding customers and problem staff to financial issues. While there’s a fine line between pushing on against all odds (when the business is not viable) and just giving up when the going gets tough, you’ll need an abundance of persistence and patience to make your business a success.
Getting the skills you need to run your own business
People who set up their own businesses rarely start out with all the skills they need. The secret is to do an inventory of your skills and identify the gaps in your knowledge base. You can then get the training you need or employ people with the right skill set for those areas you need help with.
You’ll need the following skills to run your business.
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- Market research skills help you understand the market you are entering and stay ahead of market developments, customer preferences, and competitors.
- Money management skills to understand your financial position at any point, to forecast when you expect your business to break even, and assess the financial implications of any business decision you make.
- Marketing and sales skills to help promote your products or services effectively and reach your break-even target sales as soon as possible.
- People skills will help you manage and motivate staff and deal with all types of customers.
- Negotiating skills to help you be able to strike the best deal with suppliers or other contracts.
In the long term, it’s a good idea to do some courses in all these areas, especially those you’re not that comfortable with. If, for example, if you are not good with people, don’t like figures, or try to develop these skills over time. Understanding financial statements and the key metrics for your business mean will help you run your business better.
Do you have what it takes self-test
Here’s a quick self-test o take to see if you have what it takes to start your own business.
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- Do you have years of experience in the industry you’re considering entering? If not, it might be best to continue working in it for a few more years until you increase your knowledge and contacts.
- Starting your business is always challenging. Do you thrive on a challenge? If not, starting your business may not be the right choice for you as this will be one challenge after another.
- You will need a broad range skillset to run a business successfully. Are you prepared to undergo the necessary training to develop the skills you need or take input from specialist advisers in areas you do not specialise in? If yes, starting a business could be right for you.
- There’s no one to fall back on when you run your own business. Do you enjoy making, and having to be responsible for, your own decisions? If yes, then starting your own business could be right for you.
- You’ll need to invest a lot of time into your business. Are you prepared to work very long hours without the promise of a steady income? If not, starting your own business may not be the best option for you.
- You probably won’t be able to pay yourself a wage for a while. Are you prepared to have to lower your standard of living until your business starts to make a profit? Do you have enough savings or an alternative income that you can live off during the start-up period? If not, It may be a good idea to put starting a business on hold for a while and save some money.
- Most small businesses fail because of poor management, lack of planning, or just plain inexperience. If you are constantly working on overcoming these common problems, then starting your own business could be right for you.
- Starting your business has ramifications for your family, including less income, less family time, and taking on additional responsibilities. Is your family understanding of this and support your desire to start a business unconditionally? If yes, then this could be right for you.
- Regardless of how much you want to start your business, there is always a chance you may fail. Are you prepared to take the chance of losing all of the money you invest in your business? If it is a yes, then starting a business could be for you.
- It will be challenging to run your business on your own. Are you ready to hire staff and delegate them responsibilities or use the services of a professional? If not, this could then reduce the chances of your business being successful.
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