How many times have you asked yourself “should I set up my own business”?  Well, if you asked me, the response is usually going to be… “Hell yes”, followed by “however…”.  Different things work for different people, and I believe that business has to be founded with an element of reason and logic.  We’ve all heard of those great stories of entrepreneurs that went out on a whim, threw a few things together and WHAM!  They’re turning over $10,000,000 (as a side note, notice how the media never reports on how much profit people actually make?  I’d much prefer to be taking home $5m per year than turning over $50m and only taking home $2m – big deal, my business isn’t turning over as much as yours, but I’m keeping more of it!).  I’m sure you’ve heard the stats – 80% of businesses go broke in the first 5 years, and of those that are left, another 80% of them don’t last the distance.  I’ve been running my own business for 14 years now – so I guess I’m a statistical anomaly.

So back to the “hell yes” comment – I think setting up your own business can be one of the most rewarding and challenging things you can do in life.  Rather than working and fulfilling a function and being paid for it, you’re testing every element of your mental skills and taking a risk that few will try in their lifetime.  One of the highest of the human needs is certainty and safety – and you’re not going to get any of that running your own business – at least not for a while.

A close colleague of mine talked to me about setting up her own business – she was talented, very well connected, had great customer service and was seriously passionate about what she did.  Did it make sense for her to go set up her own business?  I didn’t make sense not to.  But how do you know if you’re one of those people?  Are you the one that should putting your website online at the same time as handing in your resignation letter?  There’s really only one way to know, however here are some tips which will help you to know if it’s going to work and potentially keep you safe if you decide to.

Prepare in advance

If you’re wanting to set up your own business, don’t decide today, quit and start working on it tomorrow – plan.  Running your own business is going to be HARD WORK – so get used to it.  While you’re employed, use every spare moment – on the way to work, lunch, on the way home, at home, away on the weekend – to put the pieces together.  You may be thinking that’s a lot of work, but when you start up you’re going to need to put in that level of work to make it happen.  You can test the waters, talk to existing contacts about your plans and see if they would be receptive.  Do some market research.  If your work contract allows, even try running your business while you’re working.  Will it be seriously successful as a part time business fitting around your normal work?  Probably not – however if nothing takes, there are no customers, people are not willing to entertain the idea of your service or product, you may have worked out that you need to refine or change what you’re doing before you’ve quit your day job.

Structure correctly

So many people want to register the company, set up the trusts and do all the fancy legal stuff before they’re turned over their first cent.  Don’t.  It can wait, usually.  There are some professions where a little asset protection will go long way – however it’s pretty easy to run things for a little while as a sole trader to see if it’s worth the thousands of dollars to start setting up complex structures.  However when it is time to do it, do it properly.  Don’t skimp – it’s always tempting to do it all online, but I’m telling you it will hurt you later if you do (unless structuring companies, asset protection and tax minimisation is actually what you do for a living).

Budget

This one is pretty simple – think about how much money you’re doing to need, double it.  Think about how much money you’re going to make – now halve it.  Now you’ve done that, do you have sufficient capital to keep going?  You don’t need anything too complex, but on the balance of averages, blind enthusiasm does not make a good business person.  I know I’m being conservative, but hey, I’m getting old – make sure you’ve got enough money otherwise you’ll be back working before your business idea even had a chance.

Network like there is no tomorrow

Everyone knows the expression “its not what you know, it’s who you know”… and this is so true in business.  Your network are your supporters, your help, your outreach for assistance, your assets.  If you have one, work it.  If you don’t have one, work your backside off to build one.  Having people you can confide in is priceless, and if you look after your network, they will look after you.  Attend functions, even if you’re a socialphobe.  Learn how to do it – it’s important.

And finally – work your backside off.  Good things come to those that put in the effort.  We all know the 2 year old that sold an app for $62 billion dollars… but in reality, the majority of people that have successful and fruitful businesses have worked damn hard for them – put in the effort and you can be one of them.