You’ve had an idea itching the inside of your head for months. You fantasize about quitting your job and striking out on your own. Maybe your business will make it big, but it almost doesn’t matter: it’ll be yours, and that’s what counts.
But then you think about all the ways that it could go wrong. What if you’re not capable of it? What if people don’t like it? What if you lose all your money?
How do you figure out the path forward? Unfortunately, there’s no silver bullet, but there are four gates to path through before you can say that you’re 100% ready to start that business.
The First Gate: Mindset
The first, and most important, consideration is whether you’re ready. The experience of starting a business can take you through challenges ranging from mild difficulties to brutal conflicts. Evaluate your own state: are you ready mentally and physically, to take on these challenges?
One exercise that you can do is to take an hour or two to write down all of the things that could go wrong in the course of building your company. Rejection from customers, late payments, dishonest employees, public missteps. Write down all of them and put yourself mentally into each of those situations. How will it feel? How will you react? Then record how you will pick yourself up from these setbacks and keep going.
If you’re still excited about starting a business after this exercise, you should proceed to the next Gate.
The Second Gate: Family
Even if they’re not directly involved in the business, it’d be silly to start something without getting your direct family on board first. If you have a spouse, they’ll be your hidden partner in the entrepreneurial journey - there through every failure and success. If you start something without their buy-in, you’re both short changing yourself and unfairly burdening them. Plus, if you can’t get the person closest to you on board, how likely is it that you’ll be able to get customers, investors, employees, and suppliers on board?
So, where to start? Set aside some time to talk to your spouse - a date night, a long walk, or similar - and lay out what you want to do and why you’re confident that it’s a good idea. Ask for their input. Listen to their hesitations, their hopes, their fears. Treat them like a partner.
Repeat this with anyone else in your family that is likely to be a hidden partner on your entrepreneurial journey.
A word of caution: most people do not have the risk appetite or insight needed to start a business. They may instantly start listing reasons why your business can’t possibly work. Unless they’re your spouse, this probably isn’t a deal breaker. The goal is to get them to feel included in the process.
Got their blessing? Great. Now, you can move on to the Third Gate: finances.
The Third Gate: Finances
Starting a business can be an expensive endeavor, or it can be done very frugally - often it depends on the type of business that you’re starting. It’s worth sitting down to project out expenses for at least the first year to understand how much money will need to be spent to get the company off the ground.
Once you have a sense of that amount, you’ll be able to determine whether you can fund the business yourself, need to find partners, or want to start looking for investors. All of these options require different types of planning and have different trade-offs.
Before you get too far, make sure that you project a ‘worst case’ scenario. Say that it takes three times as long to earn your first dollar, startup costs are a lot more than you expect, and something important breaks early on. Will you have enough financial cushion as a business and as the founder to survive?
Don’t skimp on this Gate - many businesses fail because of poor financial planning. You don’t want yours to be one. You also don’t want to go bankrupt personally because you didn’t spend enough time getting your ducks in a row before starting your company.
The Fourth Gate: Idea
While you might think that this should be the First Gate, “Idea” is last for a reason: we assume you’ve already got a good one, or you wouldn’t have made it through the first three Gates!
Still, it’s worth spending time at this stage doing some market research and validating your idea - follow our framework here.
Essentially, you’ll need to build a basic business plan to make sure your business model is viable, talk to customers to learn whether you’re truly solving a problem for them, and talk to other owners of similar businesses to learn from their triumphs and mistakes.
Conclusion
This may seem like a long process to go through before even starting to launch your business, but if you take the time to go through each of these four Gates, you’ll emerge on the other side with more confidence in your idea, support from your family, and a strong sense of how you’re going to make it through the trials and tribulations of building a business. Good luck!
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