This article was first published on LinkedIn.Sequoia India recently published some statistics on startup survival rates. 25% of startups making it past the first year. 2.5% of startups make it past the first 5 years. Only 0.24% of the startups last longer than 10 years. So don’t be surprised if you hear, “Entrepreneurship is anything but glorious“.
Entrepreneurship is the new sexy. And it’s not for the faint of heart. As more and more professionals, both young and old, are taking the entrepreneurial plunge, it’s important to know if you’ve got what it takes to be an entrepreneur.
Here are 10 things you should consider if you’re serious about starting up your own business.
1. Is your idea solving a problem?
The top reason for startups to fail is creating a product/service which doesn’t have a market. But if your idea is solving a problem of your target customers, you have a better chance to succeed.
2. Are you good at networking?
Business isn’t all about balance sheets and P&L statements. Relationships play a major role in it. As an entrepreneur, you’ll spend a lot of time building and nurturing relationships – be it with suppliers, vendors, investors, customers, your team, or other stakeholders. Neglecting this aspect of business can cost you in many tangible as well as intangible ways. Relax – no one is telling you to be a social climber. But you need to be the kind of person who invests in relationships. Because sometimes, you’ll even have to work with people you don’t get along with.
3. Do you have enough funds to even bootstrap?
Cash is king yet you have little of it to grow your business. As the founder, you have to understand how much cash can carry your company to the milestone that will lead to successful financing. Can you get there without help? If you’re falling short on your runway, can you turn to other sources? What would you do if you can’t?
4. Are you planning a business loan ?
In most cases, it can be a big mistake. Sure, some businesses need substantial startup capital. In most cases, however, it is possible to simply bootstrap your way to revenue – and just make things self-sustaining from there. Keep in mind that your idea may or may not succeed, but those EMIs will start ticking the moment the loan hits your bank account.
5. Do you have a contingency fund?
If things go wrong, are you ready to tackle it? It can come in the form of a medical emergency, a lawsuit, defaulted payment, bad debts, or sunk cost. Of course, it may not be practical to calculate and prepare for everything. But having a contingency fund can offer you support in many ways.
6. Are you thinking your best friend to be the co-founder?
It always sounds like a good idea to start a business with a person you share crazy things of life. However, it may not always strengthen your friendships or make business fun. You could practically destroy your long-term friendship for the simple reason that your friend may not perform well under high-pressure or that their skill-sets aren’t very different than your own. Choose whom you work with on the basis of their skills and experiences rather than on the basis of your friendship.
7. Are you willing to live the Ramen-life?
Oh yes, the stories are true. There may be weeks, months or years where you can’t afford a fancy restaurant or pub. Because you’re bootstrapping. You’re making do with cup noodles or street food. It’s going to be a long time before you can start splurging. It’s going to be difficult. You won’t have a fixed salary you can depend on coming in at the end of the month, at least for a while.
8. If your idea doesn’t work, are you ready to adapt?
Don’t have any illusions. Not everyone is going to like your idea. It may not even be something someone wants. Would you change your idea in such a case? Is your idea more important, or running a successful business?
9. Are you okay working most time than socializing?
This is probably one of the biggest problems you’ll have to face on a personal level. You’ll be spending more time working than making weekend plans with your friends. Your startup team ends up being your social circle. Maybe it’ll just be you and your co-founder(s). Or maybe, you’ll be your only company. You must ask yourself if you’re okay with that.
10. Can you go back to work every morning with the same passion?
When you’re not growing as fast as you like, or things aren’t going the way you’d like them to, it is extremely easy to get discouraged. Self-doubt can be terrifying. No matter how daunting it gets, you need to keep that smile and start another day with the same smile, enthusiasm and zeal to run your show for as long as it takes to succeed.
Starting up is not the rosy picture it’s painted to be. Don’t be fooled by million-dollar valuations, fancy offices, press coverage, and seven-figure exits. It doesn’t happen to 99% of startups. And the ones it happens to put in their sweat and blood into making it happen. Don’t go chasing unicorns.
In the end, entrepreneurs are the ones who have the capacity to turn their pressures into pleasure. If you are one, just go for it.