You don’t need to be an Oprah Winfrey fan to understand the value of self-awareness and, if you’ve lived a few decades, you’ve had a good chance to get to know yourself. But that doesn’t mean you know who you are as an entrepreneur.
To boil “entrepreneurship” down to its essence, the key elements are risk and control, with the end game being, of course, making a profit. A good definition of “entrepreneur” comes from the Small Business Administration’s (SBA): “A person who organizes and manages a business undertaking, assuming the risk for the sake of profit.”
Getting one’s head around that definition is a lot easier than getting a loan from the SBA (which is a topic for another day, as in what to do when you can’t secure a loan, or don’t want to, to start your business). This article focuses on how to assess your own entrepreneurial readiness, and then how to pick a type of business that best suits you. Fortunately, entrepreneurship is not a one-size-fits-all proposition; let’s take a closer look at the two most key elements – risk and control.
How comfortable are you with uncertainty?
Before you select an entrepreneurial future, you need to figure out if you’re risk-averse and, if so, to what extent you’re uncomfortable with uncertainty: low, high or mid-level risk.
Low risk
On one end of the risk spectrum lies franchising, with the lowest degree of risk. That’s because the franchise’s head office dictates what inventory you carry, your marketing materials, the business processes and systems you use, and you’re locked into a multi-year contract to honor those terms. Along with that rigidity comes the certainty of systems that work, a guaranteed market, and the fall-back position of getting help from a national franchise chain of peers.
High risk
One the other end of the spectrum is the brand-new startup, wherein lies the greatest degree of risk. You have no back-up systems, no brand awareness, no existing customer base – just your great ideas and lots of hard work. While there is more risk with a startup, you will profit more from success. All that security provided by a franchise comes with a cost: a percentage of your earnings is owed to the franchise.
Mid-risk
In the middle of the risk spectrum lies the purchase of an existing business, say a liquor store that’s been in business for years. That comes with established employees and customers, brand awareness in the community, and possibly some business processes or systems that you’ll keep. You don’t have the backup of a franchise, but it’s less risky than a new startup.
How much do you want to be in the driver’s seat?
Along with degree of risk comes the other key element of entrepreneurship: Control. Being in charge of decisions around everything – from staffing and inventory to location and sales and marketing – is an intrinsic part of being an entrepreneur.
As mentioned, franchising gives you limited control as to what you can change; opting for a startup gives you total control over all business decisions. The middle-of-the-road approach, again, is the purchase of an existing business: you have a lot of control, but not completely, as the existing model, marketplace and customer base will dictate, to some extent, your freedom of decision making.
This is all well and good to know, but how does it apply to your personality, your style of doing business? Be sure you understand that before you buy or start any business! This quick quiz should help…
Respond to each question with the first honest answer that comes to you. Ready.. Set … Assess! (Pick only 1 for each.)
1. If I was left alone on a deserted island, I would:
a. probably go insane from loneliness.
b. eventually adapt to the situation.
c. be as happy as a clam.
2. The most money I’ve risked in either a business venture, gambling, or other situation is:
a. a month’s wages.
b. a year’s wages.
c. more than a year’s wages.
3. When a venture didn’t pay off for me, I felt:
a. devastated; I’ll never do it again.
b. down for a week or so, then I bounced back.
c. nothing ventured, nothing gained . . . on to the next venture!
4. When I have to make an important business decision, I feel:
a. analysis paralysis; I seek someone else to make the decision.
b. some anxiety and procrastination, but I follow through.
c. energized and fully engaged.
5. When thinking of investing, I expect a return on my investment:
a. as soon as possible (i.e., within the first year).
b. in the short term (over the next couple of years).
c. over a longer term (five or more years).
6. When I work in a team, what I really want to do is:
a. stay quiet so I don’t cause conflict.
b. build consensus so everyone gets heard.
c. take the lead, have control.
7. I would prefer to be involved in a team sport as:
a. a spectator.
b. a coach, trainer, or helper.
c. a key player on the team.
8. If I imagine having a business empire in the future, I feel:
a. skeptical; it’s not likely to happen.
b. cautiously optimistic about the possibility.
c. gung ho—let’s get ’er done!
Now add up your points:
1 point for each a answer
2 points for each b answer
3 points for each c answer
If your total number of points is…
8: You’re probably not ready to be an entrepreneur at this time in your life. But don’t give up; do some more soul-searching and research, and take this quiz again in a few months or a year.
9–16: You’re ready to become your own boss, cautiously at first. A “Company of One,” such as buying a ‘man with a van’ or home-based franchise, might be a good start for you at this time.
17–23: You’re busting to get started! Your best options probably fall under the “Boss of a Few” or “Business of Many” headings—that is, either buying an existing business or franchise, or creating a start-up.
24: Wow! You’re slated to become an entrepreneur on steroids—growing your venture quickly via diversification or multiple units. Learn more at yourbestboss.com/quiz.
