Are you ready to start your own business? Not just dreaming—but actually poised to take the leap? You probably have jitters. That’s natural, but flat-out anxiety could be a big warning sign. Professor Caroline Daniels specializes in entrepreneurship at Babson College, known for its start-up focus. Here, she reveals the critical signs that you’re ready to work for yourself.
You have customers. You’ve proved to yourself and to key potential customers that you’re offering a product or service that people really want. “The art of reducing risk in business is to define your market and identify real potential customers before you invest big money or time in your business,” Daniels warns. “We call this proving that the idea is feasible—as in, there’s a real market you can sell it to. Make sure you’ve tested your concept with actual potential customers, not your best friends.” According to Daniels, countless businesses go bankrupt on this lack of diligence alone.
You have enough money. You’ve done your financials, and they show that you’ll be able to support yourself. “If your idea doesn’t have enough margin for profit, just don’t do it,” she says. The gross margin for a business should be 40%, Daniels says. Moreover, you should have cash to last at least 18 months—ideally three years—before turning a profit. “Having the added pressure of providing a living is not helpful when you’re starting a business,” she says. And remember: Cash isn’t the same as profit. You need cash flow to get you through the initial hurdles.
You’re on board 100%. “You know every single detail of your business from the ground to the sky, and you think about it all the time, taking action all day long. Starting a business and running it is more than a full-time activity,” she says. There’s no substitute for passion.
Your mate says yes. Last but not least, make sure you have buy-in from your partner or spouse. “They may see something that you’re not looking at realistically. When you launch a business, you need everyone in that boat, rowing.”
If you’re not there yet, don’t worry. Think of it as the time to knuckle down and get creative. “Is there a way you could start this business with fewer resources to get it going?” Daniels says. For instance, if you want to work as a marketing consultant, launch a website and take on a couple of freelance clients before quitting your day job.
The bottom line: when anxiety knocks, listen. “It’s a warning sign. You should be excited. If you’re anxious, believe your instincts. There’s a difference between being an entrepreneur and a gambler.” If you’re launching a business from a place of peace of mind and financial solvency, you’re already a step ahead of the competition.
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