In my quest for financial freedom, I have chosen to achieve this by being an entrepreneur and starting my own business. This is nothing new to me having been involved in a successful internet business during 2004/2005 and then running my own mortgage brokerage business from 2006-2008.
However, I’m sure there are many out there that have always had jobs, and though they may have no desire to run their own business, if their ultimate goal is financial freedom, then I would suggest that this could be achieved quicker by setting up and running your own business.
Before you do though, take a bit of time to evaluate a potential business opportunity to see if it is right for you, as well as evaluating the business to ensure that it is actually a business and not just self-employment – a mistake I was guilty of making with my mortgage brokerage!
Evaluation criteria for a business opportunity
1. Is the opportunity you are considering something you have an interest in? If not, it may be best to steer clear of it, as you will be putting in the hours for this, so it better be something that you have some passion for.
2. Do you have something unique to offer the marketplace? If the answer is no, then it will be harder to make it a success – essentially you will be just another player in a crowded marketplace with little to make you stand out from the crowd, and don’t think that your pricing strategy is enough to make you unique – it isn’t!
3. Is there sufficient demand in the marketplace to sustain your new business? Especially important if it is already a mature marketplace with existing businesses already thriving, even more so if the market is not growing rapidly. Essentially, if you are entering a market that is mature and not growing, then to make your business a success, you will have to steal the customers from other businesses, and you can be sure that your competitors will not like this and most likely take action to counter this. This makes customer acquisition and retention much more costly.
4. What demographic trends are going to help your business? Clearly starting a pie shop in a wealthy, health conscious marketplace will probably not do that well. However, starting an organic farm shop will probably thrive, firstly because of the demographic trend on your side, and secondly because organic products are premium products, which makes them less price sensitive and theoretically higher margins.
5. What risks are there that are totally out of your control? I speak from experience, I have seen my ability to trade wiped out because I didn’t understand the risks that were inherent in being a middle man or a broker in the mortgage intermediary market – the lenders control the market by way of the products they make available to brokers, if they decide to sell their own products cheaper than brokers can, it undermines ones ability to trade. This is pretty much what put me out of business as a mortgage broker, and is a lesson I will never forget. Take great care in evaluating any business idea to ensure that have as much control as possible, don’t rely on another business(es) being able to continue to supply you with anything.
As well as these five points that will help you to evaluate a business opportunity, I would also advise you to think about these other factors:
1. Are you willing to do what it takes to become a successful business person? It may involve taking drastic measures, like selling your home, living in a caravan, living on a tiny amount of money while you get the business going, doing without nice holidays, cars or even designer labels! If you want to continue to live a high consumption lifestyle while trying to get a business of the ground, I can tell you that this will make it almost impossible, so it’s better to change your way of thinking (and spending) before starting your business.
2. Are you willing to deal with all the negativity and scorn that others, sometimes those closest you, will deal you? You’d be amazed at how closed minded people are when it comes to entrepreneurs, although in my experience this is only when you are starting out. Once you start showing a profit, suddenly everyone becomes a believer! This is simply a result of the fact that most people do not have the imagination to think “outside the box”, and therefore cannot comprehend starting a business. Most people need to see to believe, to be a successful entrepreneur, you need to believe before you see – can you do this? Do you have the ability to visualize your future, a future where you are running a successful business? Does the thought of making more money than you ever did as an employee excite, rather than intimidate you? If you answered yes to these questions, then you probably have what it takes to be a success, if you answered no, then don’t bother, you will fail and lots of people who said “I told you so” will be smug that they knew better.
3. Are you in a stable relationship, with a partner that supports your dreams and is prepared to stand by you come thick and thin? If not, then be prepared to walk away from them should they not be supportive or be prepared to fail in your endeavour because having an unsupportive partner will do nothing other than undermine your efforts, most likely resulting in your business not succeeding.
I know this is quite blunt and to the point, but it has to be. Starting your own business is not something to be taken lightly, you need nerves of steel, determination and most of all, the ability to learn, quickly. In addition there are probably a bunch of other critical attributes that are needed that I will go into in another post.