The world of startups is one filled with uncertainty. Some of the best-planned startups fail miserably, while some that fly by the seats of their pants prove wildly successful. But that doesn’t mean you should take your new business idea and run with it blindly. Before starting a new business, preparation can help you save you the time, money, and frustration that goes with a failed startup.
Once you have a business idea, it’s time to pass it through three tests. If it passes, moves onto the next step. If it fails any of them, it’s time to reconsider launching that startup. This comes from experience; I rejected many “good” startup ideas because they failed one of these three factors. It wasn’t until I developed an idea that passed all three that I ventured out onto my own.
Here are three factors you will need to consider before starting a new business.
1. Are you a potential customer for your business?
You don’t have to be part of the target audience for the business you create. Your business idea might come from an observation that does not relate to your main areas of interest. While such a business can succeed, it is much less likely. The reason lies in a term that, while overused, still carries much weight: passion.
The internet might have leveled the playing field, but it has also invited unprecedented levels of competition. In order to succeed in this environment, you must be able to live with the ups and downs, the dips and the dives of industry. They’re far more tumultuous than they were even 10 years ago. If you’re not passionate about your product or service, you might not be able to power through the tough times. Or, as Seth Godin would call them, the dip.
How do you know if you possess the requisite level of passion? Chances are if you are a potential customer of your business, the passion is there. So, would you patronize your business if you didn’t own it? If so, good. You’ve passed Factor No. 1.
2. Do you have enough free time to dedicate?
This is the second factor you will need to consider before starting a new business.
Even if you have a perfect business idea and you’d be the perfect customer for your own business, you might lack the one thing any entrepreneur needs in abundance: time. Thankfully, time is what you make of it. If you do truly have a passion for your business, you will find time for it. The only question is whether you have enough time.
It’s a basic fact that different businesses will require different amounts of time to build and operate. A service-based business will necessarily require a greater time investment than a business that resells products from another company. Someone with a 9-to-5 day job might not be able to afford the time necessary to run a service-based business.
This is why it is important to conduct crucial research before you even get your business idea off the ground. Once you go over the four factors Dragan lays out in his post, “You Have a Business Idea – What’s Next?” you’ll have a better sense of the time investment required for your business. That will indicate wither your idea is feasible for your current situation.
3. When will you have to leave your day job?
There comes a time in any successful business where it can grow no further unless the owner invests more time and resources. For those entrepreneurs who keep a day job, this represents a critical juncture. It is time to decide whether to quit your day job and keep the business running or else to shut down the business (or sell it, if possible). Since this decision can be one of the most important ones in anyone’s life, it pays to think ahead.
For time-intensive businesses, that point might be right away. That is, the time investment might be so great that you cannot create the business and still work a day job. Are you prepared to make that leap? For other businesses, it will come a few months, or maybe years, down the road. Will you be willing to sacrifice the security of a 9-to-5 for the uncertainty, but also the great potential, of a self-owned business?
This is a determination best made before you even put an ounce of energy into the business. If you can’t see yourself being willing to leave your day job before your startup becomes reliably profitable, chances are you’ll never be ready to dedicate yourself to the business. Knowing that beforehand can prevent you from wasting significant time.
Does your business pass the tests? If so, it’s time to move onto Dragan’s “What’s Next?” ideas. If not, you might want to reconsider before launching that startup.