Friday, September 14, 2012

Should You Start a One-Person Business?: 14 questions

Today, it seems that more people than ever are considering starting a one- or few-person business. Perhaps that's because, in this terrible job market, ever more people can't land a decent job.

These questions may help you decide if you'd be wise to start such a business.

1. Running your own one-person business means you must be a self-starter: structure your days, and keep working hard, even in the face of setbacks. How confident are you that you'd work hard and well enough?
A) Very
B) Quite
C) Moderate
D) Minimally

2. How confident are you in the viability of your business concept or your ability to find a viable one?

A) Very
B) Quite
C) Moderate
D) Minimally

3. How confident are you in your ability to create an excellent (if brief) business plan that will address funding, cash flow, and marketing?
A) Very
B) Quite
C) Moderate
D) Minimally

4. How confident are you in your ability to persuade people to buy, invest, sell to you, calm down customers, etc.
A) Very
B) Quite
C) Moderate
D) Minimally

5. If you were buying furniture for your business, you'd mainly buy:
A) used items from Craigslist ads, garage sales, etc.
B) used items from a used furniture store
C) new items from Office Depot, Target, Ikea, etc.
D) new items from a higher-end furniture store

6. If you owned a store that sold eyeglass frames, you'd most likely buy them from:
A)  a manufacturer(s) in a low-cost country
B   a U.S. manufacturer(s)
C)  a wholesaler whose sales rep called and then visited you.
D) Costco

7. How confident are you that you would devote the usually-required 10-30 hours a week on marketing, especially in the business's first year or three.
A) Very
B) Quite
C) Moderate
D) Minimally

8. Even one-person businesses usually require significant paperwork: bill paying, bill collecting, answering emails, government forms, etc. How likely are you to keep up with it and/or to afford hiring someone to do it:
A) Very
B) Quite
C) Moderately
D) Not

9. Every business has problems that arise: technical, human, logistical, mishaps of all stripes. If you too frequently have to hire someone to solve them, your profits can erode quickly. How confident are you in your ability to solve such problems by yourself in a timely manner:
A) Very
B)  Quite
C) Moderately
D) Not

10. Many one-person businesses, especially service businesses can be started for under $2,000, especially if it's a home-based business. Of course, the business you choose to start could cost much more--opening a cafe, for example, usually costs six figures. How confident are you that you have the capital to start your business, plus the operating capital to keep it running for the months or even year or two it may take to become profitable? (You needn't have the cash yourself: You could borrow on your no-interest credit card, borrow from Uncle Ernie, and/or get an SBA loan, especially if you're a woman or minority.)
A) Very
B) Quite
C) Moderate
D) Minimally

11. Many one-person businesses operate at a loss or minimal profit for months or even a year. Can you afford that?
A) Yes
B) With modest strain
C) With serious strain
D) No

12. If your business ended up generating little or no profit and you lost all the money you invested in it:
A) You'd still be able to essentially retain your lifestyle and financial security.
B) It would hurt your lifestyle or financial security but you'd probably be okay.
C) It would hurt your lifestyle or financial security but it wouldn't be devastating.
D) It would be devastating

13. Facts aside, how worried would you be about your business failing?
A) Very
B) Quite
C) Somewhat
D) Minimally

14. Overall, how excited are you about the prospect of starting and running a one- or perhaps two- or three-person business?
A) Very
B) Quite
C) Moderately
D) Not

SCORING: For all items A=3 points, B= 2 points, C=1 point  D=0 points.
Obviously, no set of questions can definitively indicate whether you should start a business. But the closer you scored to the maximum of 42 points, the more the indication you'd be successful and enjoy running your one-, two-, or three-person business.

3 comments:

Anonymous said...

Hi Dr. Nemko, I was just wondering if you give these questions (this chart with numbers) to your job clients. Thanks.

Marty Nemko said...

We evaluate their viability in self-employment more individualistically.

Anonymous said...

Whoops!! You let the cat out of the bag in #10. We're supposed to be pretending that sort of thing (giving preferences) doesn't happen.