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5 Questions to Ask Yourself Before Starting Your Own Business

U.S. News & World Report logo U.S. News & World Report 8/26/2015 Arnie Fertig

Pensive woman in cafe. © Betsie Van Der Meer/Getty Images Pensive woman in cafe. There are many reasons people contemplate opening their own home-based small business or consulting practice. On the one hand, this might be a lifelong goal. Or, on the other hand, you might have been downsized out of your job in corporate America, have some capital to invest and feel like this is a viable alternative to seeking another job.

Whatever your background, think about the following points, among many others, in your decision-making process.

1. Will you miss the corporate watercooler?

Co-workers talking in break room. © Jose Luis Pelaez Inc/Getty Images Co-workers talking in break room.

There is a certain allure to being able to work at will out of your home, dressed in the most informal attire, while still within earshot of your family members. But if you have been in a work environment where you can casually interact with others at a moment's notice, share a business lunch or meet in a conference room, you may find yourself feeling isolated at home.

Moreover, in corporate culture, there is the accountability factor of others expecting you to be at your desk at a certain time. When you are at home, it's easy to be distracted by this or that task that "just has to get done," and despite your best intentions, it can be hard to carve out the hours necessary to get your business off the ground.

2. Do you really have enough money to make a go of it?

Pile of U.S. money. © Ingram Publishing/Getty Images Pile of U.S. money.

It's more common than not for new businesses to fail in the first year or two and to not operate in the black until the third year or even later. One of the most prevalent causes of failure is undercapitalization from the onset.

Do you have access to the money necessary to buy equipment, inventory, insurance, website development and other advertising? And can you afford any part- or full-time employees you might need to hire, as well as a host of other expenses integral to starting and running your business? And how long can your funds last if your revenue projections fail to materialize?

3. Do you have the humility and willingness to do it all?

Full garbage can in corner of office. © Martin Poole/Getty Images Full garbage can in corner of office.

Chances are, when you were in a larger company, you could count on the maintenance crew to empty the waste baskets, an administrator to handle the mundane tasks and others to whom you could delegate a multitude of responsibilities. When you hang out your own shingle, you'll be doing both the stuff you love to do, as well as a whole lot more to make your operation run smoothly. Are you ready for that rude awakening?

4. Are you passionate about the goods or services you'll be selling?

Woman tasting her food in kitchen. © Zero Creatives/Getty Images Woman tasting her food in kitchen.

People often want to turn their hobbies into their careers. When you are emotionally involved with your products, you will likely learn that your business is not just about that passion, but also about all the behind-the-scenes "business stuff" with which you were never previously involved. It can be overwhelming when you realize you are making it possible for others to do what you love to do, but that you don't have time anymore to do it yourself.

5. Do you have the ability to differentiate yourself from your competition?

Man looking at a marketing and business strategy. © Martin Barraud/Getty Images Man looking at a marketing and business strategy.

Only rarely will anyone come up with a radically new business idea for a product or service that no one else is selling. It's far more likely that you'll be entering territory in which others have already established themselves. Do you have a solid marketing plan to show how what you do is better or more economical than your competition?

Are you prepared with a solid answer to this question: Why would anyone besides your friends, family and existing contacts want or need to do business with you?

Of course, there are many other questions you should be asking yourself. If you have good answers to all of them, and you are still enthusiastic, you may be that budding entrepreneur who finds personal and financial fulfillment.

Happy hunting!

Arnie Fertig, MPA, is passionate about helping his Jobhuntercoach clients advance their careers by transforming frantic "I'll apply to anything" searches into focused hunts for "great fit" opportunities. He brings to each client the extensive knowledge he gained when working in HR staffing and managing his boutique recruiting firm.

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