Entrepreneurs are more than just business owners. They are idea generators, risk takers and community builders. Being a business owner can be the most rewarding thing you ever do. It can, and likely will, be one of the most difficult things you’ll ever do too. Consider the realities entrepreneurs experience on a day-to-day basis and evaluate if this is the right journey for you.
Entrepreneur personality traits
There are a lot of words often used to describe entrepreneurs: innovative, passionate, creative, resilient, courageous, persuasive, driven and problem solver.
Reflection: Compare how people around you would describe you and your character; would they use words like these?
The tenacity business ownership takes means being able to dream big, while being comfortable with failing big. Finding the right balance between having an appetite for risk and a determination to succeed is critically important; pair these two things with a growth mindset and any failure can become an opportunity. Entrepreneurs know their capabilities grow through hard work, discipline and a willingness to learn.
Reflection: What is motivating you to start or own a small business?
The realities of entrepreneurship
Starting a business from your initial big idea through to fruition is about more than “being your own boss.” As much as it is exciting, it takes a lot of preparation and hard work to be successful. There is no one-size-fits-all approach to starting a business, but there are common threads that every entrepreneur will experience. Not only will you experience a rollercoaster of emotional highs and lows, but there will also be potential barriers that keep your business from growing as quickly as you originally hoped.
Because entrepreneurship is a high reward, it’s also high risk. According to CFIB’s “Your Voice” survey from January/February 2023, 29% of Alberta business owners felt pessimistic about their business performance over the next year; 14% plan to scale down or close permanently in the same time frame. Factors like inflation, supply chain challenges or post-pandemic economic recovery are not necessarily in your sphere of control; working together with your ATB business advisor can help you focus on how to mitigate potential challenges and determine how to not just survive the rough patches but also grow and thrive. One in four businesses has plans to expand this year, with many sectors set to see big developments over the next 12 months (entertainment and manufacturing to name a couple).
This is where setting yourself up with a support network can help guide your next steps. Having a strong network is a cornerstone of entrepreneurial success, and having a few close people who can shift your thinking while talking out your victories, opportunities and struggles is critical. Build relationships both within and outside your industry to add unique perspectives and challenge you and your business plan in the right ways.
Reflection: Entrepreneurs are surrounded by a support system of mentors and champions. Who can you reach out to within your network to lean on?
Know the financial fundamentals
The foundation of a business’ success comes down to understanding the financial fundamentals. Business owners need to understand profit margins, assets and liabilities, and revenue and growth potential. These can be broken down into a cash flow statement by identifying what your business will need to operate, invest and finance.
You must understand how your personal credit will affect your startup. Poor personal credit indicates to lenders you are a high-risk borrower and can lead to rejected loan applications, higher interest rates and even issues with vendors or suppliers. Apply for a copy of your credit report and see where you rank, check for errors and consider if you need to take time to build your credit. It can take less time than you think! Ideally, you’ll want to have a solid credit history and a rating of around 700 or more as a baseline for financing. For more details, see our article on how to be bankable.
Startup costs will vary depending on the type of business you’re looking to build. Remember the assets and liabilities we mentioned earlier? Whether you’re investing in equipment, products or office space, highlight all the one-time expenses that need to be made, plus annual investments in the business like franchise fees, memberships or other dues. This can vary from $2,000 to $20,000+.
Reflection: Are you prepared with the funding you need to start, and if not, how will you get it?
Required skill sets
Do you know how to read and use a spreadsheet? What about an income statement or balance sheet? One of the biggest languages of entrepreneurship is numbers. Understanding how to read spreadsheets and financial documents is going to be critical to ensuring you’re on the right track.
Reflection: Will you need to invest in upgrading your financial literacy?
Build vs. buy
You may not have thought about buying a business as being an option to enter the entrepreneurial ecosystem, but there are unique opportunities to build into established business entities or franchises. Succession planning is a big part of business planning. While markets ebb and flow, entrepreneurs have different ideas of when they’ll be ready to walk away from their business. Not all small business owners start net new!
Reflection: What type of business are you more excited about: building something new or growing something already established?
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Are you ready to take on entrepreneurship? Learn more about identifying your business idea.
If you’ve already got your business idea, let’s tackle how to structure your business.