Many people ponder the question ‘should I start my own business?’ at some point or another. Most never do much more than that. However, if you’re one of the more serious people contemplating the road of entrepreneurship, there are some specific questions you should ask yourself before committing to starting your own business.
Entrepreneurship can lead to a fulfilling life with exciting challenges, prosperity, new relationships, and other opportunities. But, let’s face it – it’s not for everyone. In fact, it’s not for more than 90% of the population.
With failure rates of new businesses slightly above 50% within the first five years, the mere thought of starting your own business may be too much. Perhaps you have a family relying on you to make money. Maybe your risk tolerance isn’t high enough. Perhaps the market isn’t ready for your product (timing matters). And that’s all fine. But, if you think starting your own business is a good idea, please, take this questionnaire I’ve prepared. Answer it honestly and tally your score at the end.
For some context, it’s worth noting what I do for a living… I have a fair understanding of what makes successful entrepreneurs. Aside from having launched businesses (generated millions of dollars in revenue) part of what I do consists of investing in startups, and development stage companies. I’ve been doing it successfully (that doesn’t mean not without my fair share of failures) for more than ten years. Throughout my journey, I’ve noticed several consistencies from a personality and motivation perspective in all the successful entrepreneurs, some of which have gone on to become multi-millionaires in a relatively short period, I’ve invested in.
So let’s get started with this 10 question questionnaire. Mark your answers down on a piece of paper and add up your score at the end. Once you’ve tallied your score, see the legend at the bottom to get my opinion on whether starting your own business is a good idea.
Questionnaire: Should You Start Your Own Business?
What is the main reason for wanting to start your own business?
a. To become rich and have the freedom to do what you want with your time
b. To solve a recurring problem in the marketplace
c. Because you’re passionate about the industry and product you want to commercialize
d. Because you are an expert in the industry
Why will your business idea be a success?
a. Because you’ve done market research and there is demand for the product/service
b. Because you are a winner and refuse to quit until it is a success
c. Because you know other businesses like it that are succeeding and believe you can do better
d. Because no one has done this type of business before
e. None of the above
Why is your personal situation ideal for starting a new business?
a. Because you have no children
b. Because you have accumulated a substantial savings
c. Because you are inherently risk tolerant
d. Because you have supportive family and friends
e. Because your monthly bills (fixed costs) are low
f. None of the above
Do you have an obsessive personality?
Are you afraid of public failure?
Does your business idea impact a niche or a large market?
c. In between
Best describe yourself with one trait from the list below:
Do you start projects, be it chores, fitness programs, diets, books, etc. and often not finish them?
Do you avoid investing in risky opportunities and early-stage companies?
c. I have never invested in anything
Is your social life an important priority (i.e. hanging with friends, sports team, hobbies etc.)?
Now that you’ve completed the questionnaire by writing down your answers for each question, add up your score from the legend below. After tallying your score, scroll down further for my opinion on whether entrepreneurship is right for you.
Add up your ‘Entrepreneur Score’ from the questionaire
a. 4 – it’s always important to understand the marketplace and do your homework before taking the plunge. If the data you find is supportive of starting your business, that’s a good start.
b. 5 – there is no trait more valuable for an entrepreneur to possess than persistence
d. 1 – novelty is good, but it’s rarely the chief reason for success
f. – you need something in this list
a. 5 – fearing failure to a point where you won’t start anything is not good, but starting something and being afraid to fail is important
b. 0 – fear is the greatest motivator. You should be afraid to fail, that’s what will keep you pushing when you want to give up.
a. 5 – studies show that small businesses which service niche markets are more successful than those which do not.
b. 1 – it’s a tough go when you are servicing a large market. You’ll be competing against major players with deep pockets and broad distribution and marketing strategies. Not saying it can’t be done, but it’s a lot tougher.
c. 0 – sounds flaky
b. 5 – it’s important you have the determination to see things through. Finish as strong as you started.
b. 5 – it is crucial you have the stomach for losing capital and investing in high risk/high reward scenarios.
c. 0 – look to invest in similar opportunities to the type of business you are looking at launching (startups). It’s important to learn from others, and unfortunately, you learn more from failures than successes. So it’s not necessarily a bad thing to lose a little bit on someone else’s venture provided you’re paying attention to where they went wrong. Consider it an education cost.
a. 0 – for the first couple years as an entrepreneur you won’t have time for a personal life. If leisure time is very important to you, then you’re going to be unhappy as an entrepreneur
43 or higher: Entrepreneurship is your calling.
31 to 42: You’re on the right track. Refine your plan or personal situation a tad more, and get ready to launch your own business.
25 – 30: You’ve got many of the traits, or your personal situation is almost ideal to start your own business. However, there may be something missing in the equation. Perhaps right now isn’t the time to start your own business.
24 or less: Entrepreneurship likely isn’t for you.
The score is not meant to be an absolute, but it should provide a strong indication of whether you should start your own business or not.
PS – Subscribe to my newsletter below to receive weekly entrepreneurial know-how and strategies as well as the occasional investment opportunity. Only my best content will land in your inbox.