Telltale Signs It’s Time to Leap Into Small Business Ownership
For Brian Hart, the a-ha moment came when he realized he had his hands in every aspect of a small public relations firm – from accounting to product development – even though he was hired to do PR. Rianka Dorsainvil’s eureka moment happened after being forced to turn down people clamoring for her personal finance advice. Those signs were enough to inspire them – even though they’d worked for others their entire careers – to make the leap into small business ownership.
“It got to the point that I was not only leading accounts, I was on the marketing committee, helping out business development, helping develop the digital offering, even picking out their healthcare,” says Hart, president and founder of Wyomissing, Penn.-based Flackable, a public relations firm. “Being involved in every aspect of the business gave me the confidence and realization, and that’s when the ideas started to flow.”
Owning a business isn’t for everybody, but small businesses are a vital part of the U.S. economy. Currently, there are 28 million small businesses in America, accounting for 54 percent of all sales and providing 55 percent of all jobs. Since 1990, small businesses have added 8 million jobs while corporations have slashed 4 million.
That’s the upside. But there’s a downside, too: Many small businesses don’t succeed. Around half of new ones make it to the five-year mark or more and one-third last 10 years or more, though failure rates have been declining of late.
“You have to be very passionate about the business you are about to start and be willing to do it for free,” says Dorsainvil, founder of Your Greatest Contribution, a Washington D.C.-based fee-only financial planning firm. “There have been times I put in 70 hours of work emailing and building a network and not one dollar came in.” Dorsainvil knew it was time to leave the financial advisory firm she worked for and start her own when she was forced to decline potential clients because they didn’t have enough money to invest.
A passionate financial planner, Dorsainvil’s expertise in the industry led her to become the go-to person for anything personal-finance related among friends and family. “This started happening more often than not. I created a personal finance blog, and because I couldn’t take them on as clients, I would direct them to the right resources,” she says. “Person after person kept coming. I took that as a sign that it was time for me to launch a non-traditional firm where you don’t have to have a million dollars in investable assets.”
There’s never a perfect time to make the leap
Determining if you are ready to go it alone isn’t going to be an exact science, but there are some telltale signs you are ready. Sara Oberst, vice president of marketing at Manta, a Columbus, OH-based online resource dedicated to small businesses, says would-be entrepreneurs will know it when there is no sacrifice too great to keep them from their dream. “Starting a new business is incredibly rewarding, but it also requires a lot of compromise and sacrifice,” Oberst says. “I drove a 12-year-old car that was a little beat up rather than take on a car payment during the first two years of owning my own business.”
Another sign for Oberst: a willingness to go beyond the easy stuff such as designing a business card or coming up with a mission statement. Oberst recalls struggling with the number crunching portion of her idea and realizing she was ready when a working business plan came out the other end. “When you don’t feel intimidated by those tasks anymore, it means you’re ready to get serious,” she says.
Risk-taking required to start a small business
An appetite for risk can often be the deciding factor when mulling being your own boss or working for an employer. That’s especially true for cash-strapped entrepreneurs such as Flackable’s Hart, who wasn’t in a strong financial position when he launched his public relations firm. “When I initially jumped off the cliff and went independent, leaving a stable job, I had no money and started with just myself,” he says. “My first client came just days afterward, which helped tremendously in getting started.”
Of course, one client wasn’t enough to replace Hart’s salary, but it gave him the confidence to pursue the small business venture, which today has clients around the country. Hart took a big risk by quitting his job to get the business off the ground but credits the lack of capital for his drive to succeed. “Entrepreneurs who try to do it safe, those businesses rarely work out,” he says. “If risk is a scary word and you can’t learn to embrace it, entrepreneurship might not be right for you.”