Thursday, 15 December 2011

5 Bad reasons to start a small business

I'll admit that my business experience is more academic than experiential, however even with my short time in the business world I've encountered a lot of wannabe entrepreneurs.  I've had people approach me with ideas at social events, over the Internet, at birthday parties, holidays, on the street, in school, and waiting in line. Most of the time it's because I start conversations with people and I talk incessantly about business.

What I've discovered from these conversations is that people have all sorts of reasons for starting businesses, and an awful lot of them are bad. And so I present to you, dear readers, 5 bad reasons to start a small business.

1. "I want to be my own boss"

Are you sure? What a lot of people really want is to not have a bad boss.  This statement is often a reaction to feeling like you have little control in your current job.  The boss is controlling and mean and the solution is to work for yourself.  Set up a small business in your basement and you're free!

Why this is a bad reason

Thing is, I hear this from people who aren't cut out for management. If you're not comfortable being a boss, you probably shouldn't be your own boss.  Sure it'll feel good for a few days, but after a while you'll realize that someone has to cold call, hire people, seek funding, set up organizational structures, purchase websites, etc.  If you're not into that, it's better to find a new job instead.

2. "I want to work from home"

No you don't.

Why this is a bad reason

When you work from an office, that means:
  • Your work is at your office
  • The work related emotions are at your office
  • Things you hate about your office are confined to your office
  • Work related phone calls and emails are at your office
  • Work related stress is at your office
When you work from home all these things bleed over into your normal life.  You will have trouble resting, you will always feel you have to be doing something work related, and you will not like being in your home anymore.  If you simply must work from home, keep everything work related in one room and don't use the room for anything leisure-related.

3. "The company takes all the money and gives me peanuts"

I have heard this before.  I think the idea comes from one of those wealth seminars or something.  The idea is that companies buy and sell things and make enormous amounts of money and pay you the minimum possible to keep you working.  You're getting cheated, so you should start a business.

Why this is a bad reason

Because it's not entirely true.  A company shoulders the risk of running the business, and the employee gets a stable, predictable income.  If you choose to go it alone, there is the possibility of reward but you have to be prepared for the associated risks.  It can be intimidating to actually put down the money required to launch a business. If you're not comfortable with the risk, it might be better to find a job that pays you what you feel you're worth instead.

4. "I have a great business idea and no one is doing it!"

So you've thought of a better mousetrap.  Have you Googled it first?  You sure nobody's doing it?  Really? Google is your friend.  Just... try Googling it.  10 seconds now could save you a lot of time later.  Ok you've  done it?  It really is unique?  Great! It's still a bad reason.

Why this is a bad reason

First of all, if nobody is doing this idea then either you're brilliantly innovative or the idea isn't workable. Nine times out of ten bet on the latter, even if you are brilliant.

Secondly, if this was the 1950s then maybe the key to business success would be coming up with an idea that nobody had ever heard of before. The business world was very different then. Today, ideas spread with the speed of the Internet. If you have a great idea that nobody is doing, as soon as you launch it someone will copy you. Your first mover advantage isn't as valuable as you think.

5. "I want to have more free time"

Yes, yes, people say this.  I think all the Internet spam going around gives people the impression that they can fire off a few emails in the morning and make $10k/week.

Why this is a bad reason

Yes, there are entrepreneurs who have successful businesses that don't take up tons of their time.  But if "I want to have more free time" is one of your reasons for starting a business, chances are you don't have the skills or experience to get a company to that level in the short term.

Companies can suck your time away.  Don't start a business because you want more time and money, or for any of the reasons here. Don't start a business to deal with other issues in your life.  Start a business because you want a business.  Start a business because you have a passion for something.  Start a business because you want to pour into it and watch it grow.

If you have a small business that you have started for good reasons, you may be interested in consulting services


Lori said...

Too true, If you really want to be an entrepreneur you will work far longer hours for less pay and security than you ever did as an employee. "Driven" by Robert Herjevic should be required reading for any one thinking of running their own business.

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