Before you start a company, ask yourself these six questions:
- Do you believe you have what it takes? We don’t mean personal characteristics- or not just personal characteristics, anyway. Do you believe you have all the skills, energy, money, people and knowledge to start a business? Founders who carefully identify and evaluate their resources in pursuit of a well-defined goal display “entrepreneurial self-efficacy,” a trait many academics believe to be the best predictor of success.
- Are you able to let other people down? A founder may set out in a rowboat, but pretty soon, she is piloting a cabin cruiser with investors and employees on board and their families huddled below decks. Risking your own fortunes is easy compared with risking the fortunes of those who believe in you. These people may not completely understand the business or the level of risk, but they think they’ll be okay because you’re smart. Breaking their dreams sometimes is very painful.
- How do you handle setbacks? When you are smiling, the whole company smiles with you. In their book, Resonant Leadership: Renewing Yourself and Connecting With Others Through Mindfulness, Hope, and Compassion, Richard Boyatzis and Annie McKee explain that emotions are contagious: Morale rises and falls with the mood of the leader. Consequently, people who succumb to black moods or depression can fatally infect their own companies.
- Are you really an inventor, rather than an entrepreneur? Raising a child is generally more challenging than creating a child, and the same is true of new products and services. Some people mistake the act of invention for the tough part. Too many times, these inventor types spend an inordinate amount of time on the patent making the prototype just so. They think that once they’ve done that, the world will beat a path to their doorstep.
- Can you accept that your company may outgrow you? Some entrepreneurs love to rag that they don’t need an exit strategy, because they are not going anywhere big anyway. But at some point, your business may need you less than you need it. That’s particularly true at fast-growth companies where entrepreneurs may not have enough time to develop the necessary leadership and business skills.
- When you look in the mirror, does an entrepreneur look back? If so, and if that’s the reason you are starting a company, BEWARE. Many traits- persistence, creativity, and risk tolerance among them- are commonly ascribed to entrepreneurs, but having those traits doesn’t much improve the odds that you will succeed. Things like persistence and need for achievement explain only about 5 to 10 percent of the difference between people who start companies and those who don’t.
excerpted from July/August issue of Inc. Magazine.
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