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The Risks and Rewards of Going into Business for Yourself

The Risks and Rewards of Going into Business for Yourself

No one would deny that starting a new business is fraught with risks, but given the uncertainty involved why is it that the US sees over 500,000 new business starts every year? After launching and running several successful businesses, along with my fair share of duds, I’m confident in my explanation. Despite the potential pitfalls, entrepreneurs launch new ventures because the benefits can be equally if not more significant than the chances that something might go wrong.

Nonetheless, it’s up to everyone to decide whether the rewards outweigh the risks of going into business for yourself.

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Risks Associated with Starting a New Venture

Again, there numerous risks associated with starting a business. Here are five of the most common ones to consider before jumping in feet first.

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  1. Long and Erratic Hours. Whether you’re adequately funded and staffed or not, as a new business owner you can expect to put in many more hours than you would at a 9 to 5. In fact, you’ll probably work more hours than anyone else in your company and with good reason–entrepreneurs wear many hats. Plus, at the end of the day when all is said and done, as the business owner, the buck stops with you. So, the moment you start your new venture you’re signing up for long and often erratic hours.
  2. Many Ruffled Feathers. Again, long and unpredictable hours are often commonplace when starting a business. So, as you might imagine the hectic schedules that often come with entering a new venture often leaves little opportunity to cultivate what matters most–relationships. Hence, family and friends can often find themselves on the short end of the stick when you begin your new venture; therefore, it’s important to build breaks into your schedule because if you don’t force yourself to stop and smell the roses, it won’t happen.
  3. Unforeseen Changes in the Market Environment. Sometimes as entrepreneurs, we start businesses oblivious to massive shifts that are occurring all around us. Many of which could easily have the potential to negatively impact your new business concern. For example, I’ve seen so many sink tens of thousands into new storefronts only to be told by local authorities – after the fact – that upcoming zoning laws will require them to make expensive renovations to ‘stay within code’ or close their doors. Of course, you can sometimes offset these types of scenarios by performing your due diligence. Nonetheless, there are some changes that you just won’t see coming no matter how much planning and preparation you do, which is why you must factor a certain degree of the unknown into all that you do as a business owner.
  4. Lack of Management Experience. There is a notion that I’ve seen among many new entrepreneurs that if they hire good managers, the owner’s lack of management experience won’t matter. Unfortunately, as many find out this is often not the case because without the requisite experience, how will you be able to identify whether your managers are making mistakes. This inability to distinguish between wise or poor business decisions is why many business experts recommend that entrepreneurs take on management positions for someone else before striking out on their own.
  5. Potential for Financial Loss. Running a business requires careful budgeting and financial management. However, the problem with many entrepreneurs is that we tend to start businesses without understanding key management functions, like how to forecast profits and losses or create financial reports.

Our lack of financial know-how is often compounded by the fact that many new businesses start before they’ve had an opportunity to secure adequate funding. Hence, it’s not uncommon to see new business owners scrambling to find odd jobs to make ends meet. One way to avoid severe cash shortages is to set aside six to twelve months of personal expenses before starting your business.

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Rewards of Starting a New Business

While there are vast challenges that come with starting your own business, the rewards can often make up for it.

  1. The Opportunity to Grow through New Challenges. One of the best things about being an entrepreneur is that you get to break away from the monotony of punching a clock and doing the same job duties, day in and out. As a business owner, you’ll face new challenges and tasks on a regular basis. In fact, it is rare that you’ll do the same thing two days in a row! And the best part of performing new activities on a regular basis is that it gives you the opportunity to grow and learn, which will ultimately help you become a better business person.
  2. You Get to Surround Yourself with Great Folks. Let’s face it, as nice as it is to earn a steady paycheck, a 9 to 5 certainly has its drawbacks. Perhaps chief among them is having to work in an environment, not of your choosing. Doing so means that you have zero say in who you will work alongside. Hence, a common complaint among those who choose to work for someone else is that they can’t get along with their supervisor or other co-workers. However, when you’re the boss you get to choose the folks that you work with, and if it turns out that you hired someone that’s hard to get along with, you have the option of letting them go.
  3. Chart Your Own Course. The ability to determine the success or failure of your business is a big draw for many entrepreneurs. In fact, many business owners cite this as their sole reason for going into business. Given that entrepreneurship tends to attract those with a take charge mentality, the business arena is a great place to go if you enjoy making weighty decisions.
  4. A Flexible Schedule. Although we often associate entrepreneurship with long and unpredictable hours, there is another side to it. Running a new business sometimes gives you more flexibility than you’d have as a full-time employee. For example, many business owners have more time to travel and participate in volunteer than full-timers.
  5. Financial Potential. There are many different motivations for doing one thing or another. For instance, some are motivated by helping others, while others find motivation in facing new challenges. But whatever helps you wake up in the morning, it’s difficult to overlook the hefty financial rewards that could await those who can successfully manage business risks. As a business owner, you’re usually only one deal away from reaping huge financial dividends.

There you have it, the most common risks and rewards of starting a business. Learn how to mitigate them, and you’ll be well on your way to big things in the business arena. Here’s to entrepreneurial success!

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Last Updated on October 18, 2018

10 Key Characteristics of a Highly Successful Entrepreneur

10 Key Characteristics of a Highly Successful Entrepreneur

When it comes to starting your own business and pursuing your dream of becoming an entrepreneur, it can be advantageous to go all in and embrace the flexibility of finally quitting your day job.

Keep in mind, though, that it takes a special kind of person to take the business world by storm: a person who has cultivated the key characteristics of entrepreneurial success.

People with these characteristics are likely to succeed, whereas people without them have difficulty moving forward with even the most brilliant business ideas.

These characteristics of an entrepreneur are so important that I’ve decided to cover all 10 of them in detail so that you can start your business with your best foot forward.

1. Successful Entrepreneurs Practice Discipline

Plenty of business experts claim that you can’t get anywhere as an entrepreneur without vision or creativity, but that’s simply not the truth. Instead, the one quality that no entrepreneur can be successful without is discipline.

To build an idea into a business, you have to have the discipline to spend time slogging through the least fun parts of running a business (like the bookkeeping), rather than taking that time to do something fun.

Andrew Carnegie, one of the most financially successful Americans of all time, grew up working dull and difficult jobs in factories. Despite going to bed hungry some nights, he continued doing his best work. He was eventually hired by a railroad company and continued to move up the ladder until starting his own successful businesses. Carnegie is a fine example of an entrepreneur dedicated to discipline and hard work. He truly earned his dreams of prosperity and success.

When you’re the boss, there’s no one to keep you at work except yourself — and there’s no short-term consequences for skipping out early.

Sure, if an entrepreneur plays hooky enough he knows that the business just won’t happen, but it’s very hard to convince someone that ‘just this once’ won’t hurt (and to keep ‘just this once’ from becoming a daily occurrence).

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2. Successful Entrepreneurs Keep Calm

Things go wrong when you run your own business.

Most entrepreneurs go through crises with their businesses — and more than a few wind up with outright failures on their hands. But when you’re responsible for a business, you have to be able to keep calm in any situation. Any other reaction — whether you lose your temper or get flustered — compounds the problem.

Instead, a good entrepreneur must have the ability to keep his cool in an emergency or crisis. It may not make the problem easier to solve, but it certainly won’t make it harder.

Honestly, losing your calm is a quick path to becoming the kind of person who gives up in the face of adversity. Instead giving in to frustration, remember classic entrepreneur Benjamin Franklin.

Franklin kept his calm as he experimented and tweaked his inventions again and again in pursuit of success. He didn’t give up during his many failures – he chose to innovate. You can choose innovation, too.

If an entrepreneur can handle failure without frustration or anger, s/he can move past it to find success.

3. Successful Entrepreneurs Pay Attention to Details

Restricting your attention to the big picture can be even more problematic than ‘sweating the small stuff.’

As an entrepreneur, unless venture capital has magically dropped out of the sky, a small expense can be a killer. It’s attention to detail that can make a small business successful when it has competition and it’s attention to detail that can keep costs down.

Attention to detail can be difficult to maintain — going over ledgers can be tedious even when you aren’t trying to pay close attention — but keeping your eye on a long-term vision is just asking for a problem to sneak in under a radar.

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After a business grows, an entrepreneur might be able to hire someone to worry about the details. In the beginning, though, only one person can take responsibility for the details.

Skeptical about the importance of details? Look no further than Howard Schultz, who grew a small coffee shop called Starbucks into one of the most globally successful coffee businesses in the world through his extreme attention to detail.

He is famous for taking all aspects of growing a business into account, paying attention not only to financially smart business decisions, but also focusing on socially responsible business decisions. Details can take you far.

4. Successful Entrepreneurs Embrace Risks

No entrepreneur has a sure thing, no matter how much money s/he stands to earn on a given product. Even if a product tests well, the market can change, the warehouse can burn down and a whole slew of other misfortune can befall a small business.

It’s absolutely risky to run a business of your own and while you can get some insurance, it’s not like most investment options. Even worse, if something does go wrong, it’s the entrepreneur’s responsibility — no matter the actual cause. In order to deal with all of that without developing an ulcer, you have to have a good tolerance for risk.

You don’t need to channel your inner frat boy and take on absolutely stupid risks, but you need to know just how much you can afford to risk — and get a good idea of how likely you are to lose it. If the numbers make you uncomfortable, the risk is too great.

Embracing risks is essential for growth and additional success, as well. Walt Disney, for example, could have stayed comfortable with his advances in the film and animation industries, but decided to expand his brand with a new dream: a theme park that soared above the competition. Without taking this risk, the incredibly successful Disney theme park empire would never have come about.

An entrepreneur has to be willing to accept pretty big risks, with some level of comfort.

5. Successful Entrepreneurs are Balanced

You can take any characteristic too far. There’s a point at which attention to detail can become obsession or calm can become unemotional response.

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As an entrepreneur, you have to be able to balance your characteristics, getting the most of them without going over the edge. But balance for an entrepreneur goes far beyond keeping your characteristics in check, though.

Just as an entrepreneur doesn’t have a boss to keep them at work when necessary, they don’t have one to send them home when they’re done. If you are working for yourself, you have to decide how to balance your work and home life — and if you have a day job to add into the equation, balance just gets more complicated.

Oprah Winfrey, one of the most successful and influential entrepreneurs out there, understands the importance of balance. Winfrey has a lot going on; she runs her own media kingdom, acts, produces films, publishes print, and more. In an interview with Fast Company,[1] she talks about her efforts to balance priorities and self care, saying that she must ask herself what is truly important in each limited day.

You may or may not have as much on your plate as Oprah, but learning how to balance whatever you have going on in life will certainly help you farther along down the road as you learn to be a great entrepreneur.

6. Successful Entrepreneurs are Passionate and Motivated

In order to develop any of the above characteristics, you must have a foundation of passion. Staying disciplined day after day during the building of your business takes unrivaled motivation.

Before you start any business, ask yourself if you can sustain true excitement about your idea during even the darkest days ahead of you. If the answer is yes, then good for you! Nurture your natural motivation by taking these action steps throughout your business journey:

  • Commit to making short and long-term goals. Check in with them often to stay on task.
  • Have a plan in place for the inevitable days when you feel discouraged. Make a list of things that will help keep you motivated and focused.
  • Share your ideas with trusted individuals who are just as excited as you are. They will help keep your enthusiasm rolling even when you are feeling down.

By being prepared for apathetic days and holding fast to your authentic passion, you can actually enjoy your journey to success.

7. Successful Entrepreneurs Adapt

Remember this one word: flexibility. Seasoned entrepreneurs know that change is not only a part of life, but also a part of the business world. Expect change and choose to adapt.

As a new entrepreneur, it will be tempting to cling to your original business plan with no exceptions, even if you notice it isn’t working. Good entrepreneurs know that it’s okay to make smart, informed changes in order to ensure efficiency.

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8. Successful Entrepreneurs are Marketing and Sales Experts

No matter what kind of business you are starting, a knowledge of marketing and sales will save you many headaches. A passion for creating a beautiful handmade lifestyle product is not enough to run a successful lifestyle brand; it is critical that you understand key business principles in addition to your natural skills or great product line.

Not sure how to start? Taking business courses is a great idea, but you can also easily brush up on sales and marketing through free online resources. Check out these 10 Sales Skills Everyone Should Master To Be Successful to begin now.

9. Successful Entrepreneurs Have Strong Money Management

Along with sales and marketing skills, money management is a very useful tool in the box of the entrepreneur. Understanding how to best manage your money can be the difference between early success and early failure in the business world.

If money management isn’t your strongest skill, prepare to hire a financial expert to help you with any tricky business that comes up. Financial guidance and knowledge is never a bad idea.

10. Successful Entrepreneurs Ask Questions and Continually Improve

Pride is a natural human quality, but it’s important to humbly conduct some constructive criticism every now and again on both yourself as a leader and your new business as a whole.

Assess how things are going and be willing to make positive changes if necessary. Here’re 15 ways to cultivate lifelong learning.

If you are always improving, then how can you ultimately fail?

The Bottom Line

Let me remind you of one important fact: the qualities of an entrepreneur listed here are not exclusively available to some people and elusive to others.

Although some people may have natural strengths and weaknesses, these qualities can be learned by anyone interested in taking up the entrepreneurial challenge. It might not be easy to change old habits, but it is absolutely possible to cultivate these characteristics in yourself.

Whether you’re a business owner or an aspiring entrepreneur, with hard work, you can train yourself to develop the qualities that truly determine the entrepreneurial spirit and future success.

Featured photo credit: Unsplash via unsplash.com

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