Are You Ready to be an Entrepreneur? Pop Quiz

Do you have what it takes to be an entrepreneur? Only you can answer that question, but this page will help you figure it out. You'll learn about the qualities of successful entrepreneurs (as well as the qualities that can hinder your business), plus ways to determine if you're really meant to run your own business. There's even a test you can take to assess your entrepreneurial potential. So what are you waiting for? Read on...and find out if you've got what it takes.

THE ENTREPRENEURIAL PERSONALITY

Every year, hundreds of thousands of people make the transition from employee to entrepreneur. But while some succeed, others fail. Many of those who fail do so because they simply weren't ready to make the change. Quitting a full-time job to start a business isn't something to be taken lightly. Anyone considering striking out on his or her own should carefully assess the proposition before doing so. How do you know if the entrepreneurial life is for you? Self-assessment tests such as the one in this chapter can be used to measure your potential success. But even if a test indicates you've got the right personality for entrepreneurial success, that doesn't necessarily mean you're ready to become one at this point in time. Many questions remain: Do I have enough money! Is my family ready for this! Do people need a product or service like mine! If the answers are yes, congratulations: You may be on your way to becoming a business owner.

Taking The Plunge

Most successful entrepreneurs recall a sense of urgency that made starting their own business not just a desire but a necessity. One entrepreneur says you'll know the time is right when "you can honestly say 'I'll put my house, jewelry and other personal collateral on the line to attain the start-up capital I need for the long-term rewards I deserve.' " Once you're ready to commit your own personal assets, you've probably crossed the line. But what motivates potential entrepreneurs to stop daydreaming about business ownership and actually do something about it! While many people think one single incident--such as getting fired or being passed over for a promotion--is the impetus for becoming your own boss, most experts agree it's usually a series of frustrations that leads to entrepreneurship. A fundamental need to control their own destiny ranks very high on most entrepreneurs' list of reasons for starting their own businesses. This need is so strong that entrepreneurs will risk family, future and careers to be their own boss. Unable to feel truly fulfilled working for someone else, these individuals cannot be happy taking orders from a higher-up. It's a lot of little incidents, maybe a series of four or five little things coming together at the precise time, that creates the start of a new business. It might be that potential customers start calling you, or perhaps a business in the area goes under and you see an opportunity. Maybe you feel as if you're underemployed (working below your potential salary level or your skill level) or not putting your talents to their best use. Or perhaps you're experiencing all these sentiments at once.

SMART TIP According to many experts, the final element that determines whether you are ready to become an entrepreneur is if you are able to raise significant amounts of money from investors. If you can make other people believe in your dream and share your goals so that they are willing to invest hard-earned cash in your venture, chances are you have what it takes.

Reality Check

Once you've made the decision to break away, there are a number of things you should do before taking the big step. You need to do thorough market research, make sure you have enough cash and discuss the decision with your family. It's important to understand that the rewards of small-business ownership are not instantaneous. You must be ready to defer gratification and make substantial sacrifices to ensure the rewards eventually do come. You must also make sure you're really ready for the responsibility that comes with being a business owner. When things go wrong, the buck stops with you. You will no longer have the luxury of going home at 5:00 while the company president stays all night to fix a chaotic situation. Someone whose only desire is to make a lot of money fast probably won't last long owning his or her own business. Through surveys and research, exports have found that entrepreneurs share some common personality traits, the most important of which is confidence. They possess confidence not only in themselves but also in their ability to sell their ideas, set up a business and trust their intuition along the way. Small business is fiercely competitive, and it's the business owners with confidence who will survive. If you can combine this all-important quality with the other characteristics mentioned, then the time is probably right for you.

BEWARE! If you've felt unfulfilled at your job for a long time, chances are you'll harbor resentment toward your past employer after you start your own business. But if you leave a job because you're angry, be sure not to transfer this anger to your new business, or failure is almost certain. Once you start your own business, you must leave behind any bad feelings about your former job or boss.

YOUR STRENGTHS AND WEAKNESSES

It's rare that one person has all the qualities needed to be successful in business. Everyone has strong suits and weak points, and the same is true of business owners. What's important is to understand those strengths and weaknesses. To do this, you need to evaluate the major achievements in your personal and professional life and the skills you used to accomplish them. The following steps will help: 1./ Create a personal resume. Compose a resume that lists your professional and personal experiences as well as your expertise. For each job you've had, describe the duties you were responsible for and the degree of your success. Include professional skills, your educational background, hobbies and personal accomplishments that required expertise or special knowledge. When complete, this resume will give you a better idea of the kind of business that best suits your interests and experience. It will also serve as a warning flag if you are planning to start a business that falls outside your talents and strengths. 2./ Analyze your personal attributes. Are you friendly and self-motivated? Are you a hard worker? Do you have common sense? Are you good with numbers? Are you well-organized? Evaluating your personal attributes reveals your likes and dislikes as well as strengths and weaknesses. Obviously, if you don't feel comfortable around other people, especially strangers, then a business that requires a lot of customer interaction might not be right for you. Or you may want to hire a "people person" to handle customer service, while you concentrate on the tasks you do best. 3./ Analyze your professional attributes. Small-business owners wear many different hats, but that doesn't mean you have to be a jack-of-all-trades. Just be aware of the areas where you are competent and the areas where you need help, such as sales, marketing, advertising and administration. Next to each function, record your competency level - excellent, good, fair or poor.

FROM THE HORSE'S MOUTH One of the best ways to determine whether you are just day-dreaming about becoming an entrepreneur or actually ready for it is to meet with other entrepreneurs and see what they do. Looking at their lifestyles and talking about entrepreneurship can help you figure out whether you are really suited for life as a business owner. Usually when you talk to someone who's done it, they'll tell you all the bad things about owning a business, like the time they had to work a 24-hour day or when the power went out. Those are the things you need to learn about beforehand. Once you realize that entrepreneurship isn't a 9-to-5 job with a secure income, you may have to re-evaluate your interest. In addition to meeting with successful entrepreneurs, you might want to talk to a few who weren't so successful. Find out what went wrong with their ventures so you can avoid the same problems. Did they fail to conduct market research before forging ahead? Were they unwilling to work long hours? Were they undercapitalized? Did they have misconceptions about what the entrepreneurial lifestyle is really like? Many potential business owners find it useful to attend seminars or classes in entrepreneurship. You can often find such courses at community colleges or continuing education programs near you. Others seek assistance from consulting firms that specialize in helping small businesses get off the ground. All these methods can give you a taste of reality - and help you decide if you're prepared to take the plunge.

GO FOR THE GOAL

In addition to evaluating your strengths and weaknesses, it's important to define your business goals. For some people, the goal is the freedom to do what they want when they want, without anyone telling them otherwise. For others, the goal is financial security. Setting goals is an integral part of choosing the business that's right for you. After all, if your business doesn't meet your personal goals, you probably won't be happy waking up each morning and trying to make the business a success. Sooner or later you'll stop putting forth the effort needed to make the concept work. When setting goals, aim for the following qualities: 1./ Specificity: You stand a better chance of achieving a goal if it is specific. "Raising capital" isn't a specific goal; "raising $10,000 by July 1" is. 2./ Optimism: Be positive when you set goals. "Being able to pay the bills" is not exactly an inspirational goal. "Achieving financial security" phrases your goal in a more positive manner, thus firing up your energy to attain it. 3./ Realism: If you set a goal to earn $100,000 a month when you've never earned that much in a year, that goal is unrealistic. Begin with small steps, such as increasing your monthly income by 25 percent. Once your first goal is met, you can reach for larger ones. 4./ Thinking short and long term. Short-term goals are attainable in a period of weeks to a year. Long-term goals can be for five, 10 or even 20 years from now; they should be substantially greater than short-term goals but should still be realistic. There are several factors to consider when setting goals: 1./ Income: Many entrepreneurs go into business to achieve financial security. Consider how much money you want to make during your first year of operation and each year thereafter, up to five years. 2./ Lifestyle: This includes areas such as travel, hours of work, investment of personal assets and geographic location. Are you willing to travel extensively or to move? How many hours are you willing to work? Which assets are you willing to risk? 3./ Type of work: When setting goals for type of work, you need to determine whether you like working outdoors, in an office, with computers, on the phone, with lots of people, with children and so on. 4./ Ego gratification: Face it, many people go into business to satisfy their egos. Owning a business can be very ego-gratifying, especially if you're in a business that's considered glamorous or exciting. You need to decide how important ego gratification is to you and what business best fills that need. The most important rule of self-evaluation and goal-setting is honesty. Going into business with your eyes wide open about your strengths and weaknesses, your likes and dislikes and your ultimate goals lets you confront the decisions you'll face with greater confidence and a greater chance of success.

BEWARE! If you have a family, make sure they understand the emotional and financial sacrifices business success requires. When your family doesn't support your business, if they're always saying "Can't you leave that alone and come to dinner?" it's going to be tough to make your business work. Unless your family is ready for you to become an entrepreneur, chances are this isn't the right time to do it.

WHAT'S YOUR EQ?

Common characteristics in areas such as family background, childhood experiences, core values, personalities and more turn up time and time again in studies of entrepreneurs. Find out how you fit the mold by determining your Entrepreneurial Quotient, or EQ. The following test is no measure of your future success, but it may show you where you excel and where you need to improve to help make your business soar. Answer the following questions with a "yes" or "no," and total your score at the end to find out your EQ.

1. Did your parents immigrate to the United States? __ Yes __ No 2. Were you a top student in school? __ Yes __ No 3. Did you enjoy participating in group activities in school, such as clubs, team sports or double dates? __ Yes __ No 4. Did you prefer to be alone as a youngster? __ Yes __ No 5. Did you run for office at school or initiate enterprises at an early age, such as lemonade stands, family newspapers or greeting card sales? __ Yes __ No 6. Were you a stubborn child? __ Yes __ No 7. Were you cautious as a youngster? __ Yes __ No 8. Were you daring or adventurous? __ Yes __ No 9. Do the opinions of others matter a lot to you? __ Yes __ No 10. Would changing your daily routine be an important motivator for starting your own enterprise? __ Yes __ No 11. You might really enjoy work, but are you willing to work overnight? __ Yes __ No 12. Are you willing to work as long as it takes with little or no sleep to finish a job? __ Yes __ No 13. When you complete a project successfully, do you immediately start another? __ Yes __ No 14. Are you willing to commit your savings to start a business? __ Yes __ No 15. Would you also be willing to borrow from others? __ Yes __ No 16. If your business should fail, would you immediately work on starting another? __ Yes __ No 17. Or would you immediately start looking for a job with a regular paycheck? __ Yes __ No 18. Do you believe being an entrepreneur is risky? __ Yes __ No 19. Do you put your long- and short-term goals in writing? __ Yes __ No 20. Do you believe you have the ability to deal with cash flow in a professional manner? __ Yes __ No 21. Are you easily bored? __ Yes __ No 22. Are you an optimist? __ Yes __ No

What's The Score?

1. If yes, score one point; if no, subtract one. Significantly high numbers of entrepreneurs are children of first-generation Americans. 2. If yes, subtract four points; if no, add four. Successful entrepreneurs are not, as a rule, top achievers in school. 3. If yes, subtract one point; if no, add one. Entrepreneurs are not especially enthusiastic about participating in group activities in school. 4. If yes, add one point; if no, subtract one. Studies of entrepreneurs show that, as youngsters, they often preferred to be alone. 5. If yes, add two points; if no, subtract two. Enterprise usually can be traced to an early age. 6. If yes, add one point; if no, subtract one. Stubbornness as a child seems to translate into determination to do things your own way - a hallmark of successful entrepreneurs. 7. If yes, subtract four points; if no, add four. Caution may involve an unwillingness to take risks, a handicap for those embarking on previously uncharted territory. 8. If yes, add four points. 9. If yes, subtract one point; if no, add one. Entrepreneurs often have the faith to pursue different paths despite the opinions of others. 10. If yes, add two points; if not, subtract two. Being tired of a daily routine often precipitates an entrepreneur's decision to start an enterprise. 11. If yes, add two; if no, subtract six. 12. If yes, add four points. 13. If yes, add two points; if no, subtract two. Entrepreneurs generally enjoy their type of work so much, they move from one project to another - nonstop. 14. If yes, add two points; if no, subtract two. Successful entrepreneurs are willing to use their savings to finance a project. 15. If yes, add two points; if no, subtract two. 16. If yes, add four points; if no, subtract four. 17. If yes, subtract one point. 18. If yes, subtract two points; if no, add two. 19. If yes, add one point; if no, subtract one. Many entrepreneurs make a habit of putting their goals in writing. 20. If yes, add two points; if no, subtract two. Handling cash flow can be critical to entrepreneurial success. 21. If yes, add two points; if no, subtract two. Entrepreneurial personalities seem to be easily bored. 22. If yes, add two points; if no, subtract two. Optimism can fuel the drive to press for success in uncharted waters.

Determining Your EQ

A score of 35 or more: You have everything going for you. You have the potential to achieve spectacular entrepreneurial success. A score of 15 to 34: Your background, skills and talents give you excellent chances for success in your own business. You should go far. A score of zero to 14: You have a head start of ability and/or experience in running a business and should be successful in opening an enterprise of your own if you apply yourself and learn the necessary skills to make it happen. A score of -1 to -15: You might be able to make a go of it if you ventured on your own, but you would have to work extra hard to compensate for a lack of built-in advantages and skills that give others a leg up in beginning their own businesses. A score of -16 to -43: Your talents probably lie elsewhere. You should consider whether building your own business is what you really want to do because you may find yourself swimming against the tide. Working for a company or for someone else, or developing a career in a profession or an area of technical expertise may be far more congenial to you and allow you to enjoy a lifestyle appropriate to your abilities and interests.

SMART TIP Once you understand your own strengths and weaknesses, there are two ways to deal with them: You can either improve your abilities in the areas where you're weak (by taking a class in bookkeeping, for example) or hire an employee to handle these aspects of business (for instance, hiring a bookkeeper).

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