careernav.

By Paul Madgwick

Want to be an Entrepreneur – Are you made of the right stuff!

For many people, doing work they enjoy as an employee, for fair and regular wage or salary, gives them all the job satisfaction and control they want. If this is you, that is nothing to be ashamed of. But others have an itch to do more – to be their own boss, to fulfil their own vision of their ideal business. If you burn to create and control a new business venture you may be a natural entrepreneur, with a vision of offering a service or product, generally one which does not yet exist on the market, and taking responsibility for the risks and outcome of your enterprise. Entrepreneurs are also known as founders.

A few recognisable Australian entrepreneurs are John Symonds, boss of Aussie Home Loans; Gerry Harvey, founder of Harvey Norman; Naomi Milgrom, the head of the Sussan fashion chain; Lindsay Fox, creator of Linfox Logistics; and Crazy John’s founder, the late John Ilhan. There are many more successful entrepreneurs in Australia – and perhaps in a few years’ time, one of them will be you.

An annual index recently listed Australia as one of the easiest nations for entrepreneurs to gain access to funding. Milken’s Capital Access Index ranks countries in terms of their capability to sustain entrepreneurial activity by providing access to capital.  Recently this index listed Australia as the ninth best nation for entrepreneurs, out of 122 countries. You should be encouraged by this positive rating if you’re interested in starting your own business venture.

People often misunderstand entrepreneurs as wild risk-takers, believing that they are gambling their resources, time and money on a chance. In truth, entrepreneurs do take risks – but these risks are carefully calculated and evaluated, and only taken if the chance of success is high. It takes a particular type of person to succeed at entrepreneurship, with the right personality, skills, and characteristics. If you fancy yourself as an entrepreneur, then consider the following important entrepreneurial qualities and ask yourself if you have them.

• Perseverance, not opposed to hard work and long hours
• Willingness and ability to take initiative
• Competitiveness and strong need to achieve
• Self-reliance and self confidence
• Ability to calculate risks
• Good physical health
• Flexibility
• Ability to turn abstracts into a reality
• Strong commercial nous
• Ability to pick trends ahead of time, see the abstract

Questions to consider as a potential entrepreneur:

• Is there a gap in the marketplace and what facts substantiate this gap exists?
• How big is the market gap?
• Is the opportunity sustainable and does it offer scale advantages with growth?
• What market research or independent data can you draw upon to sell your concept?
• What is your meaningful point of difference – the difference unique enough to attract users?
• Can others replicate your concept quickly or with great difficulty?
• How long does your first mover advantage last before you confront competitors?
• How much capital does the project need – both capital for infrastructure, transfer of technology fee, and capital to fund the ongoing expenses of the venture commonly known as ‘working capital’
• Does the business plan you have written contain a ‘commercial justification’ section that is well reasoned with valid arguments to support proceeding?
• If you need capital what shareholding % of the venture are you prepared to give away and for what level of equity capital?
• If you start with a bank facility, what hard assets do you have (for example your family home) and are your prepared for the bank to take a charge over these assets and further risk losing them if the venture fails?
• Does your venture have clever marketing to support it?
• Does your venture have proven management, especially with new venture start up experience?
• Is your intellectual property protectable with a patent, trademark or copyright?
• How conservative is your worst case scenario and what level of sales volume is needed to recover your total expenses? What share of the market does this volume represent – the lower the better
• Have you surrounded yourself with quality employees?
• Has an independent individual assessed your business plan?
• Have you had legal agreements drawn up to protect yourself and your business such as public liability, partnership agreement, license agreement etc
• Could you go without sleep, family and socializing for long periods?

These are all relevant questions when determining whether you’re entrepreneurial material or not. It’s not an easy road to walk down, and most fail, so it is important that you know whether you are able to deal with the ups and downs of starting your own business. You simply have to be made of the right stuff! 

Still interested? Perhaps you would benefit from considering the pros and cons of. being an entrepreneur. It can bring you success and pride, not to mention potential wealth and security if all goes well. However, there are many downsides to consider first, like business failure, loss of your money and possibly your personal assets not to mention that ugly word ‘bankruptcy’ and the wasted investment of money, time, and energy.

Pros of entrepreneurship

• Independence: You are your own boss. You make all important decisions, and you have control over your own future.
• Freedom of choice & flexibility: You can choose your own hours, employees, business style, work location, culture and environment.
• Financial rewards: If successful, you earn not only a wage or salary for your efforts  but personal wealth from shares in and dividends from a profitable organization You may enjoy  tax advantages from a company structure.
• Excitement: Entrepreneurs deal with high levels of risk, and so there is also a sense of adventure -  perhaps equally made up of anticipation of success and apprehension of failure!
• Competition and originality: You could be filling a niche in the market or blazing the trail for a new market and so will have the advantages of reduced competition and a high level of customer interest .
• Job security: You manage your own employment but you will need income protection insurance.
• Utilising your talents or limitations: You can create the business to make the best use of your talents, such as skills, knowledge, experience, qualifications, and creativity. Many successful entrepreneurs have been able to overcome disadvantages, including actual disabilities.
• Self-satisfaction: Starting your own business will bring a great sense of personal achievement and recognition.

Cons of entrepreneurship

• Business failure: The chance of business failure is high, some say as high as 90%. Success can never be guaranteed.
• Time-consuming schedule: The working hours of an entrepreneur are long, unpredictable and impact on your relationships. The buck stops with you, you’re on-call in an emergency, and while the business is starting up, you’ll likely be working overtime to reduce costs and ensure operational excellence
• Salary/Financial risk: You relinquish the security of a regular paycheck. Initially entrepreneurs generally have a reduced and spasmodic income. And in the event of a failed venture not only have you lost opportunity income but lost real income and likely some hard assets as well..
• Sacrifices: There are a number of things you will have to sacrifice while you are starting up your own business. Time with family, friends and other loved ones, sufficient sleep, financial stability, and a calm mind, are all things you will need to sacrifice at different times.
• Pressure and Stress: You will feel significant pressure to become cash positive and succeed. The uncertainty of the income will cause unwanted stress. Another source of stress is that  ‘the buck stops with you’ in unanticipated ways, perhaps right down to putting out the dustbins.
• Benefits: You are likely need to be less generous with yourself with regard to fringe benefits and this may impinge on your family lifestyle, especially in the start-up phase.
• Procedures: You may find the absence of formal policies and procedures place additional burdens on you.
• Responsibility: You will have a range of responsibilities. Since you are the boss, you can’t leave these for someone in a higher rank to do. Essentially, everything is up to you.

Many successful business people have failed as entrepreneurs.  The keys to success include sufficient capital, a great product and great staff, a market that really wants your product or service, and some clever marketing. It can be a tough decision whether or not to venture into the exciting, uncertain career path of an entrepreneur. You must have what it takes to survive in the competitive world of business and own most – if not all – of the entrepreneurial qualities listed above. But it’s not all stress, pressure and financial insecurity. Once your business takes off, you can have the luxury of a stable income, choice of work hours, the personal satisfaction of having founded a successful business and the personal wealth it has created.

Only then can you look back and say ‘I did that’.