Joe Johnson, Ph.D.
Entrepreneur. Investor. Startup Expert.
Starting a business is always exciting, whether it’s your first or your fifth. Whatever your level of experience, there’s always the question of how best to proceed from the point of initial decision to action. There are many different paths to take, but these are some of the most important points you should consider as you move toward self-employment:
Quit the Day Job?
One option mulled by many would-be entrepreneurs is whether they should quit their day jobs in order to fully commit themselves to their new enterprise. This obviously isn’t an option for everyone. If you have sufficient financial resources to cover your needs until you begin to consistently operate in the black, then leaving your day job may result in your devoting enough additional time to your nascent business so as to move up the happy day.
However, a 2014 study by Joseph Raffiee and Jie Feng shows that entrepreneurs who begin their businesses while still employed have a 33% greater likelihood of success. Known as the ‘hybrid path to self-employment’, it describes business owners who use their existing jobs to provide financial stability as they work on their own businesses after hours. It’s believed that businesses begun in this way are more successful because it provides business owners with more time to focus on getting the varied aspects of their business right before becoming financially dependent on them. This alleviates the pressure of generating an immediate profit and enables business owners to focus on creating a more solid foundation for the long-term future.
Also, you may wonder if now is the best time to start a business. Perhaps you’ve heard of certain ventures that were brought to market either too soon or too late. While it’s always easy to say with the benefit of hindsight, the truth is that you can’t always control the timing. Ultimately, the optimal time to start a business is when you’re ready to start a business. If you’ve decided that it’s what you want to do, then now is the right time.
There are plenty of business ideas out there – some that have been around for years and others that have only just occurred to you. Not every business idea is viable and not every idea is right for every entrepreneur. Certain enterprises, like restaurants, carry more inherent risk than others.
If you’ve decided to start a business, you may already have an idea for your endeavor. If so, the next step is to think it through more thoroughly while creating a business plan, an organized process for which I’ll cover in the next section of this article.
If you have the desire to run your own business, but haven’t yet had that EUREKA moment, there are still plenty of options. Thinking about your hobbies, skills, and talents may help you arrive at an interesting and viable business idea.
For example, if you’re an avid knitter who’s frequently ordering yarn and supplies online because of a dearth of local knitting shops, running your own yarn shop might be appealing. If you’ve been helping friends optimize their websites and improve their organic search ranking, perhaps SEO consulting would be a good fit. If you have a green thumb and love being outdoors, you might find a landscaping business to be fulfilling.
If you find yourself still seeking ideas, this Entrepreneur article on the idea phase may help.
Whatever your interests, there is no shortages of ideas. There is only ever a shortage of passion. You want to wake up each morning excited to work on your business. If you lack passion for the essential concept, this probably won’t be the case. It’s far better to return to the proverbial drawing board than to start down the path with an idea that doesn’t excite you.
Business Plan or Business Model Canvas
Your business plan isn’t going to be perfect. That’s fine; ‘perfect’ isn’t necessary. What it should be is an iterative, malleable outline that will be easily adaptable to changes going forward to provide you with the best opportunity for success.
A business plan is a detailed document that incorporates information about you, your business, and how you plan to conduct business. It should serve as a roadmap for your future plans. The process of completing a business plan should help you to determine your business idea’s feasibility and should generate useful data about your target audience and future goals.
If a business plan doesn’t seem to fit your style, you may prefer a business model canvas. The business model canvas, which was introduced in 2008 by Alexander Osterwalder, helps to visually map specific business variables, including financing, key partners, value propositions, and customers. By simply describing the components of a business’ infrastructure, offerings, customers, and financing, the resulting business model can be easier to understand (and create) than the traditional business plan.
If that still seems too complex, the Lean Canvas is even simpler. It’s an entrepreneur-focused canvas with just six areas of concern. It can serve as a useful tool as you begin to flesh out ideas. The Lean Canvas focuses on the problem being solved, the solution, and the value proposition.
To Go Lean or Not?
As you begin to explore entrepreneurship resources, you’ll probably encounter the concept of the ‘lean startup’. The idea of starting with little capital and getting the ball rolling quickly may sound ideal, but is it right for you?
Steve Blank’s article in the Harvard Business Journal, Why the Lean Start-Up Changes Everything, offers a broad introduction of the lean model as compared to the more standard stealth business model.
In trying to determine whether a lean business model might be in your best interest, you should consider how much risk you’re willing to assume, how quickly you can implement parts of your business, and the value (to you) of constant customer feedback. If you find that you’d prefer to tinker with your business in response to feedback, then the lean model may be for you.
There are a few resources with which every business owner should be familiar. If you don’t have an accountant or lawyer on retainer, you’ll need to learn which tax forms to file and how to register your business in your state. Plus, you’ll need to decide which business structure to choose.
Registering Your Business
If you’re ready to choose your name and register your business, the SBA can provide you with the resources necessary to do so in your state.
Naturally, the IRS will provide you with need-to-know tax info.
Business Plan: Entrepreneur’s Step-By-Step Guide to Making a Business Plan
SCORE, business mentoring: https://www.score.org/
Deciding to start a business can be exciting. There are many choices to make, but, thankfully, there are lots of resources to help potential business owners formulate their ideas and bring their products and services to market.
Raffiee, J., & Feng, J. (2014, August 1). Should I Quit My Day Job?: A Hybrid Path to Entrepreneurship. Academy of Management Journal, 57(4), 936-963. doi:10.5465/amj.2012.0522
About the Author
Dr. Joe Johnson is an entrepreneur, investor, and startup expert. He is the founder and principal of GoodField Investments and the GoodField Foundation (www.GoodField.com).
Joe has a Ph.D. in Entrepreneurial Leadership and an MBA. He is the author of the upcoming book on The Science of Why Most Entrepreneurs Fail and Some Succeed.
Most importantly, he is the incredibly blessed husband of one amazing wife and father of six wonderful children. He resides in Bradenton, Florida. For more information on Dr. Johnson and his work, go to www.JoeJohnson.com.