Should I start my own business?
By: Reinis Sietins
Tags: Customer Engagement, Business, Business Development, Starting A Business, Startup

Pros and cons of starting your own business. What to consider before you begin on your own.

This article starts a series where I will guide you through the process of starting your own business. The first chapter is about the concept of having your own business where main focus is on the idea of having a corporate entity, instead of being self-employed consultant or contractor, however, I am sure that some points will make sense to self-employed persons as well.

I am founder and CEO of www.gatetobaltics.com and www.99k.lv. I have started both companies in the last 3 years. Gate to Baltics is a corporate and legal service provision company where I am consulting private persons and companies on how to manage their business from corporate and legal perspective. The opinion in this article and in my future posts in these series comes from my personal perspective as a business owner and from my professional experience as a consultant in Gate to Baltics.

1. Why do you want to start your business?

As simple as it sounds, this is the main question that you must ask yourself to find the true motivation. Really. My recommendation to you is to open an empty document or to take a blank page and list there at least 10 reasons why you would like to change your status quo and start on your own.

The reasons might be different for everyone, however, at the end of the day the main reason should be very simple: you can make more money than you are making at the moment. It doesn’t mean that you must make more money from day 1. If in the long run you can’t see that you will have a better financial situation than at your current position, I would suggest thinking twice about having your own company.

I will speak more about financial nuances of running your own business in my next article about “How to start a business”. However, I urge you to think about the aspect that by starting on your own, you will have to earn at least the amount of your current salary + 30% which currently is paid by your employer in taxes to the state. Every month.

Other legitimate reasons behind your motivation to start your business:

I have worked in this field for the last “something” years and I see that with my experience and knowledge base I could be better than current service providers;

I feel uncomfortable for working for someone else. If you are thinking about this, then it means that you are already thinking about having your own business and you should start to think about the next steps to create your business;

I have a free time and energy to start something new;

Reasons which I consider as a bad motivation:

Freedom. You feel that you don’t get enough freedom in your current workplace, therefore you would like to start your own business;

Stress. You are too stressed at your job and think that if you will finally work for yourself the stress will go away;

You are not appreciated at your job.

All above mentioned “motivators” to start your own business can be easily replaced by getting another job.

In your own business you will have a freedom, because no one will be able to tell you when to show up and you will be “the big boss”, however, if this is the main motivation why you are starting on your own, then I am sure that you will fail. To run a (successful) business you have to be disciplined and follow strict schedule, which sometimes will feel that you have less freedom than in any standard office job. Also, if you think that you are stressed at your current job, then multiply it by 10 and imagine that this would be your comfort zone in running your own business. The same thing goes for the appreciation — if you don’t feel appreciated, then you should speak to your supervisor or change the job. In your own business there is no space to “be appreciated”. Your largest appreciation will be satisfied customers which will result in money in your bank account. Without that you will feel locked up and stressed because you won’t be able to pay salaries, utilities and taxes.

2. Money for business.

When you have gone through the first point and you have realised that you will be able to make more money than currently, then there comes the second point you should be asking yourself — do you have money?

Cash is king and without significant investments your business will die, unless you are some sort of genius who has created unique code which will solve major problems for many people out there.

Costs will arise from following aspects: incorporation of the company, accountancy, office premises, utilities, e-mails, salaries to employees. These are the basic costs for just setting up and running the business (keeping the business alive). And this is the smallest part.

The largest part arises from investments you need to actually make money. These are marketing costs, legal fees, business trips, research and development, etc. Make sure that you have thought about all these aspects in your business plan and you are able to cover them, otherwise you will be destined for failure even before you begin your own business.

In my future posts I will show how small companies with just an idea are able to access the funding.

3. Should I start alone my business?

This aspect (just like the previous) is so huge that it is worth to write an article just about it. In the recent years it feels like companies with more than one founder are more likely to succeed than single-founder companies. This is backed up by the approach of investors.

Literally every pitch deck during investment sessions has a slide with a “team” where you can see multiple co-founders where each of them have talent in different area. Also, when investors are “rating” startups, there is a point where company will get a higher score if there will be more than one founder and each of them will have their own qualities. From one hand such approach makes sense — if you are great in programming, but not so good in marketing you could team up with someone who is good at marketing — in this way you could save some money which you would have to pay to hire marketing agency.

However, the recent study shows that companies with only one founder are more likely to succeed than multiple founder companies. The reasoning behind this is that solo founder companies are faster in decision making and they don’t have to multiply expenses when it comes to business trips, setting up e-mails, renting office, etc.

There are many success stories about one-man companies as well as there are many stories about multiple founder companies. My opinion is that it depends on your personality and amount of money you have when you are starting the business. If you have enough funds to hire programmer, marketing specialist or legal consultant, I would recommend starting on your own.

4. Are you ready to fail in business?

I understand that this sounds corny as hell, however, people too often consider themselves too good to fail and when it happens, they simply can’t handle it. Failure is a part of every successful business and the difference between good and bad business is how they prepare for these situations.

In my work, companies often approach me when they have failed in some certain area. Typical example is that they have failed to obtain a license which is required for their business operations. They have spent thousands of EUR in legal fees to get it, but for some reason it hasn’t happened. In these situations, I can actually see the difference between companies who are managing their risks and companies who went “all in” to get this specific license. Companies who are properly prepared for failure, they approach the problem rationally and are ready to amend mistakes by hiring us and re-applying for the license; while companies who went “all in” are desperate, they blame everyone else and are forced to freeze their operations because they have spent their last money to previous legal service providers to apply for the license.

My message is that there will be setbacks in the business. You must always be able to afford the failures and move on.

5. Financial instability.

It is highly probable that you will face uncertain income and cash flow problems. Therefore, if you are thinking to start on your own, you must have savings and you most certainly must be ready to change some of your habits. For example, when I started, I had to abandon eating outside, vacations and even gym membership just to be able to cover areas where my business required funding.

6. Everyday hustle in business.

This is a thing when you are on your own. Every moment when you decide to watch YouTube videos or take a “long lunch” break to have a meeting with your friend who you could previously mark as a “potential business partner” is a moment when you don’t earn. Especially in the beginning of the business when you are responsible for most of the things. You will get a whole another meaning to the expression “Time is money”.

7. One man show.

In the beginning of your business, you will be responsible for everything. Especially when you will start alone. You might think, what do I know — you will hire accountant, lawyer, IT guy, business development manager, marketing team and will focus solely on managing them. Well, if you have EUR 1M savings and you are able to hire 10+ people from the beginning, then probably you have a chance to success. But in my case, when I started alone, I had to take care of everything by myself. It means that one day you will be marketing specialist, another day business development guy, the next day SEO expert, etc.

I won’t lie, it is rough in the beginning and you must put in a lot of work to move on to the next level when you can start hiring people. However, there is a bright side to this. Even if you won’t manage to succeed (which is highly possible) you will come out as a winner, because you will learn many new things in the process. Starting with marketing, IT (setting up e-mails and developing website), sales, etc.

8. Courage to start (and fail) business.

You must be brave to leave your comfort zone and start on your own. I have nothing but the largest respect to most of the people who have started their own business. For me, it actually doesn’t matter if their business has succeeded or not. The fact that someone decided to say — I am going to take the risk and start on my own is enough for me to give my full respect to them. I agree with Nassim Nicholas Taleb that there should be a day when people give their respect to all fallen business owners who have had the courage to start their own business. However, there is no such thing, and before starting on your own, you must acknowledge the fact that there exists this stigma in society that if you start your business and you fail, then you are unsuccessful business man (loser) who tried on his own and failed. Unfortunately, people take too much joy in failure of someone else and this is just something you must accept. Therefore, you must have the courage to leave your comfort zone, start the business and face the consequences if you will fail.

9. No excuses in way to success.

No one actually cares how hard it is for you. You are in this for your own profit, therefore don’t complain by making excuses that you didn’t have enough money from the beginning or that someone got a support from their parents. Instead of complaining, I suggest to regroup and re-focus. If you feel like you are in the corner and everything is falling apart, then instead of complaining try to find the main reason why you are in this situation. Again, this sounds so self-explanatory, however, there are many people who are running with head in the wall just to get out of their corner.

Example: when things didn’t work out for me, I initially complained. Then I realised that no one gives a damn about my complaints, because everyone is their own person and is struggling in some sort of way. After watching several (mostly useless) motivation videos and reading some books, I realised that no one else will help me. My problem was simple, yet complicated — I didn’t have enough money. Yeah, right? My company didn’t get enough customers. With all previous customers our engagement rate was close to 100% and the same goes with our provided services — in all cases we have solved problems for our customers. The problem Nr. 1 for us was that we didn’t get enough traffic to our website. Therefore, I sat down, created marketing strategy and started to solve this particular problem.

10. Customer Acquisition for small business.

As Mark Cuban said — customer is the most important part of the business. Without customers, there is no sense of your business, because you simply won’t earn. As simple as it sounds, many people doesn’t realise this when they start their business and it becomes the main reason for failure. Therefore, my recommendation to everyone who is thinking to start on their own, is to start with a clear road map which illustrates customer acquisition. And trust me, boosted posts on social media in most cases don't work. There is just too much information out there and customer acquisition for small companies has become harder than it was before social media era.

Conclusion.

Not everyone should start their own business. It is hard and it gets messy sometimes. There is a feeling of struggle and financial instability — especially in the beginning. If you feel that you are not able to face these challenges, then I don’t recommend starting your own business. However, there is a huge upside of having your own business. It is financial freedom. With hard work and discipline, you will be able to achieve financial stability.