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Plenty of people dream of launching their own business, but then they undermine themselves, coming up with reasons to put off their dream just a little longer. And then they put it off again. And again. Maybe they don’t feel like they have the capital to pull it off. Maybe they simply can’t summon the nerve to take the risk. But, with the arrival of 2021, perhaps now is the time to ask yourself this question: “Am I ready (finally!) to go from employee to entrepreneur?”
It’s an easy question to ask. It’s a much more challenging one to answer.
After all, it’s natural to feel a little trepidation about leaving full-time employment with an established company to branch out on your own with a startup. Giving up the relative security, regular paycheck, predictable infrastructure and perks requires a certain kind of courage.
When you start a new business, success is not guaranteed. About 20 percent of small businesses fail in their first year, and half succumb by year five, according to the Bureau of Labor Statistics. Those numbers aren’t exactly reassuring, especially if you aren’t naturally the risk-taking type.
Of course, the transition from employee to boss could be an easier call for someone who lost his or her job because of the economic problems that 2020 and the pandemic brought. Those individuals aren’t giving up anything to make the move; for them, this might be the perfect opportunity to finally give in to any entrepreneurial urges.
If you are considering taking the plunge and starting a business this year, let me offer a few words of advice:
- Take a calculated risk, not a reckless one. Yes, starting a business requires a certain amount of risk, but that doesn’t mean you should be foolhardy. While I agree you have to commit to any endeavor for it to succeed, I’m also pragmatic enough to know that the risk must be balanced. Have a comfortable safety net before you jump. Chances are, debt will outweigh income at the beginning. So, for those currently employed, take advantage of the income from your full-time position before you cut ties.
- Think about building your business around your experience. For many entrepreneurs, success can be attributed to the fact that he or she started a business in a field in which they had prior experience. He or she was familiar with the industry from the inside and acquired a keen understanding of both its potential and its constraints. Certainly, some people do venture into an area where they have no background, so the “build your business around your experience” approach is not true for absolutely everyone. But in the cases where it is true, it definitely can make for a more solid transition and increase the likelihood of success.
- Be adaptable. One thing that separates successful startup businesses from ones that fail is the ability to adapt to changing circumstances. We’ve seen this firsthand throughout the pandemic. Being adaptable doesn’t mean just introducing a new product to your realm of offerings. It requires constant attention to what’s going on in the world, analyzing your competitors, and most importantly, not getting too comfortable at the top of the pyramid. The business cycle is much like a StairMaster – once you get to the top, you have to keep climbing to stay up there.
- Don’t ignore reality, and don’t panic. In 2020, the pandemic threw just about everyone’s plans out of whack. Businesses that started the year with optimistic revenue goals suddenly discovered they were dealing with a completely different world. There was no hiding from it, certainly not if you wanted your business to survive. I firmly believe that successful entrepreneurs confront the brutal facts and deal with reality as it is. But they also are grateful, counting their blessings and trying to find the best in even the most trying of circumstances. For so many people, 2020 was a real test of leadership and entrepreneurial grit. But it also reminded us that entrepreneurs and business owners are the key to a successful economic recovery.
If you had launched a business a year ago, how would you have fared? Would you have kicked yourself for taking the risk or bemoaned your bad luck? Or would you have been up to the test, found ways to adapt, and dealt with the reality before you?
Ultimately, the only way to truly find out whether a person can succeed as an entrepreneur is to just do it, no matter how unsettling that first step might be.
Making the shift from the steady life of a full-time employee to the unpredictable world of entrepreneurship takes smarts, guts and support. But you’ll never really know if it’s right for you unless you embrace the risk.