Entrepreneurship can lead to a prosperous future filled with wealth, security, job creation, freedom to make your own decisions and more. In the past few years in particular, scores of downsized managers and executives have pursued entrepreneurship as a means of creating a job. But Carol Roth, author of The Entrepreneur Equation says before taking the plunge into business owner, one must first ask himself or herself, “Should I?”
“If you think about the fact that up to 90 percent of business are failing, or failing to succeed within five years, the fact that everyone seems to think that if they get down-sized, then the best option is to go to something with a 90 percent failure rate, is a little bit illogical,” says Roth. “So, that’s why I think it’s very, very dangerous particularly in our current time where somebody says, ‘okay, I’ve been rejected by a company and I’m going to take control of my own destiny,’ not realizing that, okay, you were rejected by one company and maybe rejected by a few others, but you’ve got 306 million potential customers in America that can reject you day in and day out.”
Roth, an entrepreneur herself, suggests a bit of introspection to determine if you’re cut out for the roller coaster ride that is entrepreneurship.
Are you Santa Claus or are you an elf? This may sound silly at first, but the first step, according to Roth is to ensure that you have the personality to lead a team. “Santa Claus has the whole strategic vision and breaks down all the different tasks and oversees everything where each elf then executes only one or a couple of things.” She says. “Do you like to have the vision, do you like to really oversee and wear multiple hats, or are you somebody who does a lot better when you’re given a really specific task? If you’re more like an elf, then you’re definitely not suited for entrepreneurship.”
Are you cut out for risky business? There’s always a high degree of risk in launching a venture and it’s important to gauge your tolerance beforehand. “There are a lot of very high highs and a lot of very low lows in entrepreneurship and you don’t have a lot of visibility on that,” Roth says. So, it is very much like being on a roller coaster, and so you’re up and you’re down and all of a sudden you hit a corkscrew. Are you somebody who can go with that or does that make you very uncomfortable?”
What’s your motivation? According to Roth, a lot of aspiring entrepreneurs go in with the wrong mindset. “A lot of entrepreneurs are very focused on themselves. They’re not happy in their job and looking to be more fulfilled, or they have a passion, or a creativity, or they want more,” she says. “But, business isn’t about you; it’s about your customers. The businesses that thrive and succeed are the ones that address a customer need and service that better than anybody else can. If you’re not entirely focused on your customer, you’re not going to succeed as a businessperson.”
Don’t hop on the bandwagon. “Every third business that I get pitched is Groupon for sock puppets or Groupon for roller-skaters or whatever it is, and you can’t just hop on a bandwagon,” asserts Roth. “You really have to look at the customer opportunity and then figure out why you’re best suited to serve that. So, I think a lot of people are motivated by the wrong reasons and not understanding the true dynamics of business.”
Check the timing. Just because an opportunity is not right for you today, doesn’t mean that it’s not right for you ever. “So, one of my favorite things are the people who come to me and tell me that they want to open a restaurant. We get lots of people who what to open a restaurant and I say,’Have you ever worked in a restaurant?’ And they say, ‘Well, no.’ And I say, ‘Well, why don’t you go work in one.’ She suggests looking at the business through thoroughly to learn everything you can first and try and figure out those things that might trip you up or that you might not know before investing money.