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Taking the Plunge; Tips for Getting over the Fear of Starting a Business

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Taking the Plunge; Tips for Getting over the Fear of Starting a Business

By Caron_Beesley, Contributor
Published: August 26, 2010 Updated: April 30, 2012

Starting your own business may be one of the biggest risks you will take in your life - and the statistics confirm it. According to the Small Business Administration (SBA), two-thirds of new businesses survive for a minimum of two years, with only 44 percent surviving at least four years.

Yet, in good and bad times, the dream of being your own boss and pursuing a for-profit or non-profit business venture can be an enticing one. In fact, when the economy struggles, the number of non-employer small businesses tends to increase at a higher rate than the number of employer businesses (Source: SBA Small Business Advocate, July 2009).

But how do you make that dream a reality and take the plunge into the risky waters of small business ownership?

No doubt there is a lot to wade through - tight credit, fickle consumers, and oftentimes stiff competition. Then there are the personal risks - the loss of a steady pay check, finding health care insurance, and so on.

These and other reasons are enough to make many potential entrepreneurs fearful of taking the plunge. But given the right preparedness, planning, and financing, many entrepreneurs do take the plunge and succeed.

Here are some tips for making these three factors work for you as you consider starting your own business:

1. Is Business Ownership Right for You?

When you get the calling to start your own business venture, it can be a compelling one. For some it's layoffs, for others it's the dream of taking a unique product or invention to market.

But there is a difference between a calling and preparedness. Being a successful business owner requires at least four fundamental qualities:

  • Diligence - Aside from being one of the seven holy virtues, diligence in business drives methodical work methods and an active rather than a passive approach.
  • Determination - A determination to succeed, no matter what conflicting advice you receive or doubts that you may have, must be there.
  • Hard work - This is the DNA of the successful business owner. You get from your business what you put into it.
  • Adaptability - As a business owner you must be able to shift with the market, learn from your mistakes, and change your business plans accordingly.

Take this quick Small Business Start-Up Assessment from the SBA to help better understand your readiness for starting a small business.

Another great resource is this checklist from www.business.gov - '10 Steps to Starting a Business' - that guides you through the basic steps of planning, preparing and managing your new business.

2. Do you have a Plan?

Many start-ups put writing a business plan on hold until they find they need to get a business loan. But, without a plan, taking the plunge into business ownership will surely end in disaster.

A strategic business plan should include a review of your strengths and weaknesses; an understanding of the market opportunity and threats; proposed sales and marketing strategies; as well as a clear plan for business ownership, management, and funding.

The government offers a great deal of advice to prospective and existing business owners on the subject of planning. This 'Write a Business Plan' guide for small businesses from www.business.gov includes tips and free training on how to write a business plan, offers hundreds of sample business plans, and more.

I also can't emphasize enough how important it is to talk to a representative or attend business start-up events at your local SCORE, SBA, or Small Business Development Center (SBDC). These organizations provide invaluable help and advice when it comes to business planning. Find one near you here.

3. Financing your Start-up: Low Risk Options

Financing can be a major road block to starting your business - not only do you need capital to get started, you also need a cushion to cover the ebb and flows of cash flow.

If you are reticent about taking on a large financial risk as your start your business, here are four options to consider:

  • Start from Home - Home-based businesses (approximately 50% of small businesses are home-based) require a lot less investment than operating out of a leased or owned business property. Read more about 'Starting a Home-Based Business'.
  • Start Online - Another option is to start your business venture online. Granted, not all businesses can operate online, but for retailers and some service providers starting an online business is a low-cost entry into business ownership. Read 'Starting and Growing an Online Business - An Entrepreneur's Checklist' for tips.
  • Start Part-Time - If you are currently employed, can you alleviate some of the risks of starting your business by venturing into it on a part-time basis? This is oftentimes a great option for freelancers who can build a client base while still maintaining a full-time job.
  • Government-Guaranteed Loans - When it comes to government-backed loans, the SBA's Microloan Program provides very small loans (up to $35,000) to start-ups. Read more about the Microloan Program and other SBA loans here.

Additional Resources

Note: Hyperlink directs reader to a non-government Web site.

About the Author:

Caron Beesley

Contributor

Caron Beesley is a small business owner, a writer, and marketing communications consultant. Caron works with the SBA.gov team to promote essential government resources that help entrepreneurs and small business owners start-up, grow and succeed. Follow Caron on Twitter: @caronbeesley

Comments:

You've covered a lot of great points here. I find that a lot of people get scared by those statistics on how many businesses survive. However, it's important to note that many of those businesses did not go bankrupt or even fail. Many people start and run businesses while attending university, while working full-time at another job, while raising small kids or while cruising into retirement. It's not uncommon for someone to become a consultant or start freelancing as a side business or as a short term goal. I've seen some people run consulting businesses successfully for several years, then leave to run something else that interests them. Some people also change direction and start new businesses. As the editor www.consultantjournal.com 's Become a Consultant Blog for the past 8 years, I've had the opportunity to work with thousands of small business owners and independent consultants. Some of them have the goal of doing this for the next 30 years, but others just want to do this till their kids get into school, while they put the twins through college, or till they build up enough of a reputation to get hired on as a VP at a company in a specialized field. There is no shame in any of these things and it's actually a sign of success. I teach at the university level and I really think it is helpful for people of all ages to see these as changes in business opportunity and structure, as opposed to failure. It's better to look at success and position for it. Great points - loved this post.
I had the fear for a long time, reading this article still helped mw even though I already made the plunge.
 In addition to the items mentioned above, I'd suggest being strategic about the kind of business and business model that you decide to pursue.  Some businesses--restaurants, for example--have high costs associated with them (rent, equipment, employees, etc.), and unless you have the cash available for those costs, you'll take on debt, which increases your risk.But if you start a business which has relatively low costs, allows easy entry to the market, and allows more flexibility, you'll improve your chances for success.One of the easier ways to start a business is by consulting, since a consulting business has:   -->low start-up costs,   -->flexible hours,   -->high hourly pay rate, and   -->you likely already have the expertise to get started. I've found that fear often stops aspiring consultants from starting a consulting business--or any business--and on my blog, I talk about how to overcome those fears.  I also talk about practical, concrete things you can do to start and run a successful consulting business, along with tools, tips, tricks, and techniques for automating your business and keeping costs to a minimum.  The info I give is applicable to most other types of businesses as well. I started my consulting business over 4 years ago as a part-time way to make extra cash, and it's grown into my full-time endeavor, where I've QUADRUPLED my former day-job salary. Greg Miliateshttp://www.StartMyConsultingBusiness.com
Michael The SBA's Office of Advocacy provides a lot of data about small businesses. Refer to rhis report: 'Advocacy Small Business Statistics and Research' http://web.sba.gov/faqs/faqIndexAll.cfm?areaid=24 (see point 7) for the source data I used in this article. Lots of great data here reaffirming why small businesses are critical to the US economy. Hope this helpsCaron
Caron writes: 'Starting your own business may be one of the biggest risks you will take in your life - and the statistics confirm it. According to the Small Business Administration (SBA), two-thirds of new businesses survive for a minimum of two years, with only 44 percent surviving at least four years.' Could you provide a link to this? 
Michael The SBA's Office of Advocacy provides a lot of data about small businesses. Refer to rhis report: 'Advocacy Small Business Statistics and Research' http://web.sba.gov/faqs/faqIndexAll.cfm?areaid=24 (see point 7) for the source data I used in this article. Lots of great data here reaffirming why small businesses are critical to the US economy. Hope this helpsCaron
Caron writes: 'Starting your own business may be one of the biggest risks you will take in your life - and the statistics confirm it. According to the Small Business Administration (SBA), two-thirds of new businesses survive for a minimum of two years, with only 44 percent surviving at least four years.' Could you provide a link to this? 

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