Pros and Cons of Starting a Business
GUIDE: START A BUSINESS IN IOWA | STEP ONE:
Pros and Cons of Starting a Business
Starting an Iowa Business
So, you’ve got an idea for a business and are ready to start raking in millions, huh? The dream of becoming your own boss seems so attainable that you cannot contain your excitement. We’re sure a lot of you reading this are feeling these very same feelings. And that’s normal! However, what’s not normal, is the pathway to success that every business must run through. Owning your own business is a never ending roller coaster of ups and downs, healthy cash flows and thoughts of closing the whole thing down. We hope that this How to Start a Business Guide will help get you started on your path towards financial freedom and happiness.
Pros of starting a business
Starting a business allows you the freedom to make your own choices, build a schedule that works for you, leave a family legacy (if you so choose), find personal fulfillment, have fun and maybe even help the world!
Cons of starting a business
Starting a business comes with its tradeoffs, too. You potentially could work longer hours than your traditional 9-5, feel on your own and without guidance, struggle with a lack of steady paychecks, struggle finding business financing, create stress between your friends and family, and potentially even lose money or fail completely.
SBDC Quick Tip: Take some time to reflect on your motivation for launching a new business. As you work through the planning process, make sure that your “why” is being considered and included in your plans. Is it control of your schedule? A bigger paycheck? Filling a need in your community? If you don’t build these goals into your plans today, you may not be able to meet them when you’re busy running your business.
Do I have what it takes to run my own business?
Running a business is hard. It’s filled with a lot of responsibilities that the typical employee will never face. Check out this article from the Small Business Administration on the characteristics and skills required to be a successful entrepreneur.
Is my idea a good idea?
Typically, we like to think our ideas are the best in the room because they are based on past experiences and framed in our own world view. But when it comes to running a business, the customer is ultimately the deciding factor whether or not your idea is good or bad or somewhere in between. If your customer doesn’t like what you’re offering, they won’t buy. Because of this, you need to know as much as you can about your customer as possible. Typically, learning more about your customers is called customer discovery.
How clear is my path to my first sale?
This depends entirely on your product market fit (determined during customer discovery). The more willing your customer is to buy your product or service, the more likely you are to make a sale. Seems pretty straightforward, right? Regardless of how you get your first sale, just remember, unless you can sell it, your business is essentially just a hobby. When you can find the factor(s) that convince someone to buy, you have found the right product/service for the right audience!
Should I find a business partner?
Yes and no. This depends entirely on your business, situation, personality, and future plans. Sometimes it just makes sense to work alone. Perhaps you run a handyman service, or only work for a handful of clients. Maybe you just don’t like working with others! However, maybe your vision of your company is much larger than it is now. Eventually you will probably need help, so maybe it would be better to start with help now rather than playing catch up later?
Maybe you want to join a business accelerator program, or get a loan from a bank (not necessarily a requirement to get a loan). If you do decide to identify and partner with someone, just make sure you find someone with a complimentary set of skills to your own. But what exactly does this mean? This means that if you are really good at certain things and not good at others, a business partner with complimentary skills to yours would be able to do those things you can’t do or don’t do well with ease.
Should I buy an existing business?
While it may be cheaper to start a new business, you definitely run a higher risk of failure when starting something brand new. A new business doesn’t have a customer base, a defined brand, positive testimonials, and frankly, the battle scars to prove the idea is a “winner”. Buying an existing business will likely come with a loyal customer base that recognizes its brand and can give you feedback on things to change or keep the same. If you are considering the purchase of an existing business, here are some of our partners who can help you assess the value of the business.
Should I buy into a franchise?
Just like buying an existing business, a franchise has an existing customer base and branding that can get you up and running right out of the gate. The entry price may be more than a similar-in-size existing business, however, the business model can be replicated again and again. If you are just starting a business without a proven business model, such as a franchise business, you may have difficulty finding financing. On the flip side, a brand new business has the potential to get started for a lot less money – though this isn’t true in every circumstance.
Just because a business is currently run by a second, third, or maybe even fourth generation family member, it doesn’t mean that you can’t make an offer to buy them out! Typically in family run businesses, there may be family drama or issues that hinder their performance or change perceptions among their customer base (“I liked when Steve (dad) was running things, but not that Kevin (son) is in charge it just isn’t the same.”). If you were to take over a family business, you wouldn’t necessarily have any direct involvement with family issues and can resolve things more efficiently than letting things drag on.
Should I have a counselor or mentor?
As you are starting a business, advice from a mentor or business counselor will be valuable to help you avoid common mistakes. Organizations such as SCORE and Small Business Development Centers can help you clarify your ideas and plans.
Frequently Asked Questions
Do you have questions about the pros and cons of starting a business? You should consider checking out our Resource Navigator. It houses the contact information of 400 of our most helpful partners from across the state, like the Small Business Development Centers, who provide no-cost confidential assistance to Iowa entrepreneurs and small business owners.
As many as you can! Technically, you should never stop talking to, and learning from, your customers. A good rule of thumb is anywhere between 20-50 interviews should give you a good idea of what your customers think about your product or service. Keep in mind that you should completely AVOID asking for input from your friends and family. Though they may be willing to help, anyone with a close relationship to you most likely will show their approval of what you are making/providing, but their opinion may not represent your entire customer base. Start with strangers, you’ll be glad you did!
It’s always a good idea to learn from others. It’s an even better idea to ask for input and guidance from someone who has already ventured down a similar path of your own. Finding a business mentor can be both challenging and rewarding. Start by looking inside your current network and work outwards. And no, advice isn’t always free. A mentor may charge you for the guidance they provide, but it can payout heavily in the future.
Absolutely not. Building a business is hard and takes time. As the famous saying goes, if you believe you can you can. If you believe you can’t, you can’t. Either way, you are right. The more you learn about your industry and customers, the more chances you have for success.
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