Entrepreneurial Readiness: Are you ready to start a business?

By: VentureHow Staff Writer

Updated on: May 19, 2021

Entrepreneurial readiness is a subject that is not often a hot agenda item in a rush to plunge into the exciting world of starting an own business.  The readiness to start a business is a critical success factor, and every person with a dream in her/his heart and an idea on their mind should do an entrepreneurial readiness assessment.

We are not talking about the legal, regulatory and related frameworks and hurdles.  In our discussion about entrepreneurial readiness, we will focus on self, finances, and family.

Not everyone is a born entrepreneur. True! However, not everyone is born to be an entrepreneur, either. Being a business owner and taking the entrepreneurship journey and making it requires a different kind of skills, competencies, and mindset.

Factors influencing Entrepreneurial Readiness:

Aptitude:

Do you have a deep and abiding interest in the idea for your business? Of course, sometimes pivots are possible, but in general, you should have a long-term commitment to the concept and the opportunity, which is the foundation of your business.  For example, after seeing a lot of entrepreneurs securing funding for food-related ideas on Shark Tank does not mean you love making donuts or cupcakes or brownies all day, every day, and for years to come.  We are not talking about the viability, feasibility, profitability yet (which will be addressed in a later section), but just the appetite (pardon the pun) to engage in the business day in and day out.

All-in-One Role:

Unless you are a super-well funded startup right from day one, or a trust fund kid, or have money from a previous gig, it is inevitable that a small business owner may not be able to hire a lot of people to help out. Hence, it is imperative an entrepreneur be ready to be a Jack of all trades. (For a small business, a critical milestone is when you a prepared to hire an employee, but that is the topic for another story.)  Small business owners, at the beginning of the entrepreneurial journey, will need to don many hats – CEO to Janitor and all the things in between.  (Of course, it is always advisable to get the help of an attorney and an accountant, but since you can’t use them at the tip of a hat, you will have to do a lot of legwork in those areas, depending on your need, comfort level, and budget.  For example, if you want a simple partnership agreement, finding a template and filling in some details and crosschecking the final draft before filing may lower the amount of money you will have to pay. Similarly, using intuitive accounting software to keep your books and using an accountant for critical tax and filing questions/work may lower the financial burden.) Many would-be entrepreneurs are not comfortable in context switching and donning that many hats – particularly those that have held corporate jobs.

Financial Matters:

A matter at the heart of entrepreneurial readiness is money.  Do you have enough money to fund the business? Or does your business warrant and is capable of getting OPM (other people’s money) as an investment? Do you have the personal resources to support your livelihood when the small business is in its infancy and yet to generate significant cash flows?  Does your spouse work to help the family in the interim?  These are critical questions.  Of course, some service businesses may not need investment, and the launch of the company with a client may suffice (for example, an IT consultant starting out as an independent contractor). On the other hand, if you are starting a sandwich shop, the time to break even may be longer than one anticipates.

Support Structure:

Do you have the support structure to help you during the initial stages of an entrepreneurial journey? Whether it is informal or formal advisors, a supportive spouse/significant other/parents, and a network of peers, all of them can play a pivotal role at the right juncture.

Handling Adversity:

A big part of entrepreneurial readiness is the ability to handle adversity, particularly unexpected, intense, and sometimes prolonged adversity.  Some people think being a small business owner or launching a startup is all fun and games and the journey is smooth. It is anything but. Except for a few rocket ships, for the rest of us, dealing with adversity is a critical readiness factor.

Decision-making without all the data:

Last but not the least, the hallmark of a small business owner is the ability to make decisions under duress and without complete information. Many a time, waiting for the complete context and then acting could result in negative results.

For example, do you hire the salesperson or wait for someone “perfect.” Is there someone perfect?  Do you fly to see the prospective customer or is it too early to commit to time and expense?  Do you take the deal at $10,000 or stick to the proposed price of $12,500.  There is no perfect answer, and an entrepreneur’s decisions are dynamic, situations are fluid, and the parameters are ambiguous.

Do you think you pass the test for entrepreneurial readiness?  Are there other significant factors affecting entrepreneurial readiness that we missed? Please share your thoughts.