According to a recent study done by moneytips.com, 67% of millennials want to start their own business at some point. Having started my own financial planning firm less than a year ago, I can relate to this desire. There are certainly a lot of benefits to owning a business: a flexible schedule, choosing who you work with, and making business decisions. But starting a business is also a lot of work and comes with risks.
As a new business owner myself, below are some questions that I’d encourage you to ask yourself before deciding to start a business.
1. Why Do You Want to Start a Business?
If your main reason for starting a business is simply because you like the thought of owning your own company, you may be in for a rude awakening. Starting a business is hard work and it’s important to be passionate about the product or service that you will offer. I absolutely love the opportunity that I have to work one-on-one with people and help them to steward their resources in a meaningful way. This passion helps me to stay focused when facing challenges.
2. Do You Have a Valuable Service or Product to Offer?
It is important that there is a demand for what it is you are selling. You could manufacture the best VCR that has ever been on the market, but you wouldn’t sell many today. Make sure you have a product that people actually want. Before I started my business I saw a real need for fee-only financial planning for those who didn’t have significant assets accumulated. I have found that there is an even greater need for this service than I originally anticipated.
3. Do You Have the Skills and Training to Start a Business?
Having significant experience in the field that you plan to start your business is extremely helpful. I would not have even thought about starting my company had I not had more than seven years of financial planning experience and my CFP® designation.
4. Do You Have a Support System Around You to Help You Start a Business?
If you are married, having 100% support from your spouse is crucial. I’m thankful to have an incredible wife who was probably more excited for me to start my business than I was. She understood that our family would have to make sacrifices in order for me to own a business. It is also helpful to be part of a professional network for comradery and growth.
5. Are You in a Financial Position to Start a Business?
What are the startup costs of your business and how will you cover these costs? Do you have money saved? Will you take a loan? Is there someone from whom you can borrow money? Thankfully the startup costs for my business were low, but I still had to use a combination of the options above to get going.
6. What is the Worst-Case Scenario?
Think about the worst thing that could happen if you start the business. This was a helpful question for me because I realized that the worst thing that could happen is that I wouldn’t earn enough money to be able to stay in business and would have to join another financial planning firm. When I realized that this was the downside, it made it much easier to take on the risk.
7. What is the Best-Case Scenario?
This is a great question to ask before starting a business because it allows you to dream and think about the impact that you could make in your community or in the world. For me the best case scenario was that over time I could use the skills and abilities I have been given to build a team of advisors who could help thousands of people to faithfully steward their resources in a meaningful way. I’m not to this point yet, but Lord willing, I could still achieve this best case scenario one day.
If you are in the two-thirds of people who would like to start their own business someday, I hope that you find these questions to be helpful. Starting a business is not something to do on a whim but it’s also very attainable. If you have any follow up questions, please let me know.
I also wanted to let you know about an exciting opportunity coming up with moneytips.com on March 31st at 7 pm CST. More than two dozen personal finance pros will be online to answer questions about student loan and credit card debt, savings and investments. Register for the free Millennial Next Door Finance Chat (#MillennialTalk) for the chance to win a $1,000 savings bond.
In the meantime, pick up a free copy of the eBook, The Millennial Next Door [REVEALED]: How to be financially successful in your 20’s. Based on a survey of more than 500 millennials, the free publication takes an in-depth look at the attributes and behaviors of millennials living comfortably today and shares their strategies for affording the lifestyle they want in the future.
Photo courtesy of Death to the Stock Photo