I get asked this question so many times from people of all ages and crafts - when is the right time to start my own business?
If you, like so many others before you, have been considering starting your own business or taking your craft to that next level, you may also be wondering whether there is the perfect time to take the leap from working for someone to working for yourself.
Given the current labour market conditions and the sluggish Australian economy, it is not surprising that 1 in 3 Australian Adults want to be their own boss (this number is 1 in 2 for young adults).
The trap that so many entrepreneurs fall into is that they haven’t truly considered the fundamental questions before taking the leap into business ownership: why do you want to own your own business? When should you take the leap? How are you going to create a thriving business that will support you financially?
Let’s go over each of these questions one by one.
So why do you want to own your own business?
The majority of entrepreneurs looking to start their own business, or who are in the early stages of business ownership tend to say the same things when asked why they want to start their own business: flexibility, self-management and potential profits.
According to a new report from KPMG Demographer Bernard Salt, access to better and cheaper ways of communicating in the digital world has created entrepreneurial ‘tribes’ meaning a shift from big business to disruptive startups. The Aussie start-up culture is brighter than ever before as both baby boomers and Gen Y lead a movement to ditch the corporate ladder in favour of being their own boss.
When you can run your business from wherever you want, engage with customers anywhere in the world online and create new and disruptive business models from anywhere you want it is no wonder 1 in 3 Australians want to leave the 9-5 lifestyle for more flexibility.
But so many individuals are drawn into the glamorous entrepreneurial lifestyle, which often falls short under enormous to-do lists, mounting expenses and a failing business model. In fact, the majority of new startups will fail in their first year and this number is only increasing with Dun and Bradstreet’s latest analysis of new and failed businesses claiming that the number of business ‘failures’ rose 42% in 2016 compared to the previous year.
The road to potential profits as a small business owner is long, and it is not for everyone, so before you take the leap out of your steady, full time work to pursue life as an entrepreneur, make sure you talk to different business owners in a similar profession to the one you want to enter into. I doubt they will rave about the flexibility, self-motivation and crazy profits, it is more likely they will tell you that it is hard work, stressful and comes with long nights and very little profit.
Then why do established business owners want to continue owning their own business?
Most will tell you that they love working on their craft, they love their customers and they thrive off challenges and small successes. (Most will also tell you they wish they could get up in the morning and have someone tell them what to do – I know sometimes I do!).
When should you take the leap?
I have read many articles on entrepreneurship, networking and business blogs about this same topic and they generally say the same thing, there is no perfect age or time to start your own business, only taking the leap of faith when you’re ready.
Although this is true, I actually find it misses quite a few steps in the entrepreneurial leap of faith, and one of those is the trapeze. The Barefoot Investor describes the trapeze as the time when you swing between your stable full time job, into your budding new life as an entrepreneur, without having to give up either or take big risks (eg. Falling from the trapeze).
If you believe you have a product, a niche or an opportunity that really adds value to the lives of those in the market, if you believe you can market that product effectively, simply and over the long term, if you are really passionate about your craft and can visualise yourself working on that business for many years to come, for many hours and for many days, then sounds like you should start working on it. Alongside your current career.
When I first started my consulting business I worked nearly 80 hours a week. I would work full time, learning as much as I could about business and processes, marketing and culture. I then went home and absorbed everything I could about the online marketing industry and taught myself everything there was to know about digital marketing and content marketing until I felt sure I could offer valuable advice to other businesses.
It wasn’t for another 18 months that I felt comfortable leaving my full time job and working full time as a consultant, but at least by then I had not lost anything (except a lot of sleep) and was more confident about my business objectives.
How are you going to create a thriving business that will support you financially?
This is a magic question that so many entrepreneurs fail to spend time on – what is your product offering and how am I going to convince people to purchase it. The most obvious way to find this out is to create a business plan.
Clemson University entrepreneurship professor William B. Gartner believes business plans are essential, “The importance of a comprehensive, thoughtful business plan cannot be over-emphasized”. He found that “.. business plans are about walking the walk not just talking the talk. Statistically, people who write business plans also do more stuff”. But not everyone will spend their time writing one or considering one (in fact less than one third).
Those that spend the time doing a business plan including research, planning out marketing campaigns and putting together a sales funnel are twice as likely to succeed, twice as likely to secure financing and twice as likely to experience growth in their first year. (Small Business Trends).
Tim Berry from Small Business Trends concluded that ‘writing a business plan correlated with increased success in every one of the business goals included in our study’.
Many businesses do succeed despite a concrete business plan and strategy but before you give up your day job, I believe it is essential to put together some sort of business plan whether it be on a whiteboard, a paper napkin or in a 135-page comprehensive strategy.
Other questions I get asked a lot:
Should I keep my current job?
If your craft, your goal and your vision is to sell and distribute pasta sauce, then you may not want to keep your job as a receptionist for the local plumber and instead opt for a job within the food distribution and wholesaling industry, learning as much as you can about the industry and developing connections along the way.
In the meantime you can create and build up your business ‘on the side’ until you are generating enough revenue and have enough traction to take up the business full time. This way you are taking on less risk, working harder than you ever have before and can ensure your side project has enough traction to become your full-time craft.
When have the most successful entrepreneurs started their businesses?
According to Forbes, the best two times to start your own business are either influenced by opportunity, or by preparation. Some entrepreneurs, like Mark Zuckerberg or Steve Jobs jumped into an industry as it was emerging, giving them the chance to be the dominant player. This they did in their late teens or early 20’s when their age and understanding of the marketplace was perhaps more in tune than their older, more established competitors.
Other entrepreneurs who launched their businesses in their 30s or 40s like Michael Bloomberg entered existing industries when they had already finished their education and had accumulated enough experience to find a niche or improve on their competitors. In an established industry, it seems true that to dominate the market you have to have enough experience and expertise to create a niche and unique proposition.
But even then, there are exceptions - Col. Sanders was in his late 60’s when he started KFC. In the past, it seems to be true that if the industry is emerging you should get in early before established companies can solidify their position in the market. If the industry is already established you should get the experience you need before you enter, ensuring you can be competitive and create a niche that consumers will respond to.
I read the best time to start a business is in your 40’s
Statistically, the average age of an entrepreneur in Australia is 45 but that doesn’t necessarily mean that that those that are in their 40’s have the most success in their business ventures or find it more rewarding than those at other stages of their life. If you focus on the market you want to enter, your craft, and your value and swing on that trapeze until you are ready, your age should not come into consideration.
Should I start a business in my 20s?
One of the advantages of starting a business when you are younger is that the perception of risk is different in your 20’s to when you are in your 30’s. When you have a family or more financial responsibilities, starting a business can be more calculated and appear more risky rather than when you are younger and start a business on pure passion.
The younger you are, the more adaptable you tend to be to changing business ideals, circumstances and also technology. In your 20’s and 30’s you have a better chance of recognizing and incorporating new technologies into your business since you are more agile when it comes to major technology disruptions. Similarly, on the other end of the age spectrum starting a business later in life perhaps in your 50’s or 60’s can be less risky and come with less fear by knowing what you want out of life and following your passion.
Regardless of your age, experience, or market before you start any business you should ensure you consider the following things:
- Why do you want to own your own business?
Take the time to do some soul-searching, ‘not wanting to take orders from anyone’ is not a good enough reason to want to start your own business.
- When should you take the leap?
It could be today! But make sure you swing on the trapeze, there is no point jumping off that ledge until you know you can make it to the other side risk free and safely.
- How are you going to create a thriving business that will support you financially?
Those that have written and considered a business plan are twice as likely to succeed than those who do not. It might seem like a tedious task and you will want to Google, ‘Rich entrepreneurs that started their business without a business plan’ in an attempt to boycott the (sometimes tedious) task, but the clarity and the energy that comes with writing down the future of your business is very powerful indeed.
About the author:
Amy Miocevich is the owner and founder of Montie and Lumos Marketing. She’s a Content Marketing consultant and loves working closely with small businesses to help make their marketing strategies more efficient.