The unemployment rate is low and the stock market has been thriving, meaning many aspiring entrepreneurs are beginning to entertain ideas of launching their own business empires. Despite the allure associated with foraying into the competitive marketplace and starting your own company, however, many people are ill-prepared for the tense business world they dream of conquering.
There are many reasons to start a business – and just as many not to. Here are 5 reasons that help explain why starting a new business isn’t always the best option to pursue.
1. Your old business is failing
Sometimes, when a romantic relationship begins to fail, partners may attempt to “take it to the next level” and get married in hopes that this new commitment will solve their problems. Similarly, when some amateur level business operations begin to suffer due to a lack of commitment on behalf of the involved parties, it may seem like a good idea to formalize the business, launch it as a real legal entity, and then expect things to take off now that you’ve “committed yourself to doing it seriously.” In both cases, however, the same problem is being ignored; small issues that prevent you from succeeding at an amateur level can’t be dismissed by taking things up to the next level, as this will just generate additional problems.
If you’re running away from a terrible job that’s not paying your bills, you need to understand that launching a business is a costly and risky endeavor. If you launch a business without financial security to bolster you in the case of failure, you could be turning a shaky situation into a downright disaster. Don’t overextend yourself and try to do it again if your old business endeavors are failing – instead, look to what’s going wrong with your current operations and try to right the sinking ship.
2. You expect to earn a massive fortune
If you’re interested in launching your own business because it will reap you millions, it’s imperative to wake up and realize that most small businesses don’t earn profits for at least a few years, and many of them fail. About half of small businesses fail before existing for 5 years, according to the Small Business Administration, and while those who make it through the ringer usually attain profitability, that’s a long-term investment to make if you’re hoping to earn a quick buck by launching a new brand.
3. A family member has a proposal that’s too good to be true
There are pros and cons of doing business with your friends and family. One of the worst cons is that family members often expect you to back them and their ideas even when they’re not founded in reality. The dangers of doing business with your family are many, but it’s important to understand there are few things worse than foraying into a competitive industry only because you were convinced by a close relative who you may not be willing to criticize honestly when assessing their business proposal.
If you’re being told that you and your brother, aunt, niece, or uncle may be able to make huge sums of money by working to “start a family business,” be aware that the financial reality of your situation may hit you hard sooner rather than later.
4. You want to see if you “have what it takes”
It’s perfectly understandable to dream about starting your own small business – sooner or later, most people give it some thought. What’s less understandable is risking your financial future and public image on the bet that you “have what it takes” to launch your own company if you lack serious business experience elsewhere. Is starting a company worth it? Usually only if you have some pre-existing management or entrepreneurial experience, like Smith’s tree removal, that will help you get through the early days, which will be filled with long working hours and tough business decisions that could make even a veteran crack under pressure.
If you’ve never held a serious business job before, consider getting some experience under someone else’s purview before leaping headfirst into an unfamiliar market environment where you’ll be expected to call all the shots.
5. You have an unresearched innovation
Countless individuals have claimed to have devised a new method of doing business or to have created a new product which will “change everything.” What too few of these individuals do is check to see if their idea is truly unique; often, you may think you’ve solved a great market problem and stand to make huge sums of money, but you’d be surprised to find someone else may have patented something similar well ahead of you. Always research your innovations to determine if they’re authentic and protectable. If you launch a business on the thin, unvalidated hopes that your idea, product, or business method is truly unique only to discover it isn’t so, you’ll waste valuable time, money, and effort.