In many business advice columns, the implication is that if you don’t have at least one operation of your own running, you’ve been cast into the plans of another. Maybe this has a technical truth to it, but it doesn’t also mean that any possible business you could launch would be superior. Sometimes a stable job in a role you’re good at and with good compensation is much more preferable to taking the massive financial risk of launching a business.
Should everyone launch a business? Perhaps not. Should you? That’s another question, only one you can decide the answer to for yourself. That being said, it’s not an answer you have to give on gut feeling alone. There are some parameters you can use to at least guide your decision, so you can look back (even without success) and say “I gave it my best and most rational shot at the time.”
For that, you have to decide if your small business idea is worth it, and what “worth it” means to you. Let’s discuss that below:
What are your revenue and earnings potential, or profitability margins?
Of course, you need to develop the product or service first, but part of that development means llooking at what you could realistically charge for either, and comparing that to all your potential costs. You need to know how many sales you need to make just to break even, and then how many sales you need to make a decent profit. This isn’t a fun or exciting step, but it’s absolutely necessary if you want your business to be sustainable.
You might want to grab a margin calculator to help you figure out exactly what your percentage profit will be after everything is accounted for. Thinking through these numbers helps you avoid the common pitfall of being busy but not actually making any money - though remember that a business doesn’t need to be perfectly profitable its first year to be worthwhile. Breaking even is fine if everyone is paid. However, a business that requires you to work eighty hours a week just to pay your bills is probably not the kind of rewarding business you’re hoping to launch.
Whats your one-year, three-year, and five-year plan?
Launching a business is always a marathon and not a sprint, and for that, you need to know where you’re running. Setting milestones for yourself to aim towards will help you measure your success in that pursuit, and you can split them by years. Think of the one-year plan as getting established, such as by securing those first customers, making sure your basic operations are running, and perhaps hiring your first employee.
The three-year plan should look at scaling up. Maybe you want to expand your offerings, reach into a new area, or double your revenue. By the time you get to the five-year milestone, you should be looking at the big picture, asking what does your exit strategy look like, or where do you see the business fitting into your long-term life?
Is there a market out there, and what do they look like?
You might have the most brilliant idea in the world, but if nobody actually needs or wants to buy it, it won’t go anywhere. It’s just the cold reality of business. So, doing some solid research into the market is means nailing who your potential customer is and how you’re going to reach them. You need to know their demographics, their spending habits, and what problems they currently have that your product solves better than anyone else in the market, even if you just realise your local area is mad for the almond cakes you make in your bakery - it shows a unique value proposition you keep and what you should exploit, so to speak.
With this advice, we believe you’ll better gauge if a small business idea is worth it or not.
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