There’s no doubt that starting a business can be one of life’s most fulfilling adventures. It’s an opportunity to pursue your passion, create your own schedule, and gain valuable experience. And, not to mention, it can bring great rewards if all goes well.
But creating a business is like starting a relationship: you have to be ready to devote time, resources, and effort in order for it to grow and thrive. You have to be ready to commit.
So when’s the best time to become an entrepreneur? Is it when you’re young, and have few commitments and plenty of time? Or is it after you’ve gained enough experience and resources to be ready for the risk?
To get to the bottom of this, we sat down with our Chief Behavioral Officer Dan Ariely, and asked: When’s the best time to become an entrepreneur?
“Because startups are so risky, the right time to attack them is a time when you can actually sustain some risk in your life,” said Professor Ariely.
Does this mean we should wait until we’ve accumulated enough resources? Not exactly.
“For some people, it might be when they’re young, and they don’t have bills to pay,” explained Professor Ariely. “For other people, it may be good to do so once they’re retired, because at that time, they have a cushion and can sustain some risk.”
How should you decide if now is the time to start your own venture? We’ve gathered a few tips and tools to help you find out.
1. Assess yourself
Ask yourself this: are you in the right state of mind to start your own business? Do you have the right personality traits right now? There’s no denying that successful entrepreneurs usually have specific characteristics and mentalities that contribute to their success, both in the early and later stages of their career.
But which traits do successful entrepreneurs usually possess? In a study, entrepreneurs were asked to rank of traits in terms of their importance for entrepreneurial success. (William E. Jennings, “A Profile of the Entrepreneur”) The seven most highly-ranked qualities were :
- The desire and willingness to take initiative
- A strong need to achieve
- Good physical health
Does this sound like you? If so, it could be time to start your next venture. To find out for sure, you can take a personality quiz that’ll tell you if you have traits that match up to typical entrepreneurs (for our suggested quiz, see below).
2. Check your financial health
It’s no secret that financial health is an important prerequisite to becoming an entrepreneur. Starting a business is full of expenses – from creating a website to hiring a team to compensating yourself; you’ll need to make sure you’re fully prepared.
The good news is that you don’t have to quit your day job and cut off revenue streams to start your business successfully. In fact, research shows that people who maintain their regular gig while launching their new ventures are a third less likely to fail than those who quit their job and go all-in.
So ask yourself: In my current state, am I prepared to take a financial hit to start my own company? To figure it out, calculate the cost of launching your startup, as well as your living expenses and taxes. You should also assess how much you think you’ll make within a year (remember: it’s always better to be conservative!), and factor it into the mix. If you leave these calculations confident that you can bare the costs, you may just be ready to start your own gig.
But if you’re not quite ready yet, no worries – financial health takes time. Based on your calculations, figure out how much money you’ll need to save each month, and commit to maintaining a budget. These 4 tricks make it easier than you think – they’ll help you maintain a healthy budget, negatively impacting your everyday happiness.
3. Ask the right questions
Once you think up an exciting idea, or have the urge to start your own business, it’s all too easy to take leaps forward without doing due diligence. Being passionate about your idea is a crucial first step, but it’s important to check in with yourself, and have a firm understanding of the market you’re looking to enter into.
Here’s how: First, figure out your underlying motivation for starting your own venture. This is harder than it sounds. You’ve gotta ask yourself difficult questions, and be honest your answers (beware of cognitive dissonance!). If you find that your reasons are along the lines of, ‘I’m passionate about my idea, and confident it will deliver value,’ rather than, ‘I don’t like my current situation, and want an easy way out,’ you’re on the right track.
And before you start your own venture, get a grip on the industry you’re looking to enter. Will your product fulfill a genuine need among consumers? Is there anyone else out there trying to do the same thing as you? Are there any barriers or costs that could stunt your growth? If you don’t do your research, you’ll have no way of knowing if your product will actually serve a need.
If the time is right, go go go!
There’s no doubt that starting a venture can be a super fulfilling, exciting, and rewarding undertaking – but realistically, the success your venture brings depends on whether now is the right time to start. If it’s not, kudos on doing your due diligence before taking a leap. Your time will come, and the time to start working towards it is now!
And if you realize now is the best time to become an entrepreneur, let’s get to it! Professor Ariely said it best: “Whatever your point is in life, the moment you can take some risk, I would highly recommend: invest in yourself, learn something exciting, and try to do something on your own, that you’re in charge of.”
Tricks & tools
- Here’s a quiz that’ll tell you how your background, traits, and mentality compare with those of a successful entrepreneur
- This handy guide outlines step-by-step which factors to consider when thinking about the costs of your new business
- Here are 20 reasons to start your own business – some good, some bad. If you identify more with the ‘bad’ reasons than the ‘good,’ it may be time to take a step back and ask yourself if you’re in this for the right reasons. If you identify more with the ‘good,’ you’re on the right track!
- Here’s a step-by-step guide that’ll help you determine whether you’re financially ready to start a business