Q:  How do I know if starting a business is right for me?

A:  There are two considerations when acknowledging whether or not starting a business is in the best interest of an individual.  The first consideration falls under “personal readiness” and the second relates to “business readiness.”  Both require inward reflection and basic research.

Personal readiness means that an individual needs to understand how business start-up fits into his/her lifestyle at this point in time.  Consideration needs to focus on their health, family supports, and financial readiness.  Rarely do these stars align at the exact time, but one needs to at least focus on all three areas and be aware of major barriers that could impede their personal ability to plan for business start-up.  For example, an individual who just lost a job and is trying to establish Social Security probably does not have the personal stability at this time to be heading down a self employment path that demands so much.  In this case, it is likely that the individual would need an immediate financial return from the business activity.  In reality, the ability to personally draw funds from a start-up business is rarely an immediate outcome.  It often times takes months for the business to stabilize before the owner can receive any financial reward.  In another example of personal readiness, acknowledging how to approach disability issues throughout the rigors of business planning and start-up is a challenge for many.  Making sure that any needed assistive technology is available and in place so that the business planning process is effective contributes to personal readiness.

Feeling personally ready to plan for business start-up only benefits an individual when the same level of business readiness is in place.  Simply stated, a good business idea that is feasible is a requirement to establishing business readiness.  Business feasibility should be the first step toward actual business planning and requires that an individual enter the “reality zone” by asking a few simple questions: 

• Is the concept feasible? Can you clearly define your business idea and how well suited you are to owning this type of business?  Concept feasibility should start with identifying a specific business idea and then connecting the dots between the idea and your background, knowledge base, skills, experience, and education as it relates to operating that business.

• Is there a market?  As if drawing a circle on a map, can you clearly identify where your customers will be located?  As well, within than circle, can you identify who the competitors are?  Finally, a profile of anticipated customer groups clarifies exactly who will be the “target markets” and makes is much easier to begin measuring the size of the target market in order to understand whether or not it is viable for your business.

• Is this business idea financially feasible?  Based on what you have learned from analyzing the market, how much money would it take for you – or anybody – to adequately capitalize the business idea.  It is no longer real to rely on others to finance 100% of your future.  Financial participation by the business owner is healthy and, based upon a number of ways to come up with a contribution, it is realistic.  As well, it is important that promising business owners stop trying to match the business financing requirements with what they have.  Conversely, they should be asking “how much will be required to start the business” and then taking inventory of their resources.  Those resources may include public funds, others may be private through friends and family.  Regardless of the composition, they all work together to ensure adequate capitalization.

Personal readiness coupled with business readiness translates into an open door to formally begin the business planning process.  For more information about personal and business readiness, visit The Abilities Fund website at http://www.abilitiesfund.org/programs_and_services/increasing_options_for_entrepreneurs.php to learn more about the Increasing Options initiative that includes Informed Choices©, a data collection tool to help entrepreneurs collect their thoughts regarding both personal and business readiness.  For a free electronic copy of Financial Planning for Your Microenterprise, a publication of the National Endowment for Financial Education and the Association for Enterprise Opportunity, send an email to loans@abilitiesfund.org.