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Risks of Starting Your Own Business

If you are thinking about starting your own business, make sure you are aware of the risks involved.

Risks of Starting Your Own Business

More than half of all entrepreneurial ventures fail. Having gotten that fact out in the open, we're now telling you to ignore it if you're considering starting your own business.

Don't Go There

Many entrepreneurs try to start a business without a business plan because they're intimidated by the idea of writing one, and they end up failing because they don't have a guide. If you don't know how to write a business plan, consult the Small Business Administration's Web site at www.sba.gov. There's a model plan there that you can adapt as your own.

There are reasons that business ventures fail, and, when you know what they are, you can avoid them. Sure, there are risks involved with starting your own business. You could lose a lot of money. You could become estranged from your family if you put all your time and energy into work. You could lose your business to fire, an earthquake, or flood.

But there are risks involved with working for somebody else, too. You might lose your job. You might hate the job and be miserable every day of your life. You might have to take a salary cut, or become estranged from your family because you're traveling for weeks at a time.

All of life involves risk. If you go into a business, or a marriage, or anything else thinking that you'll fail, then chances are that you will fail.

Most businesses fail because the person who started them didn't set goals, or failed to thoroughly think through what he would do, and how he would do it. Some entrepreneurs try to start a business without ever writing a business plan, which is a huge mistake.

A business plan is the entrepreneur's bible, and an absolute necessity. It not only serves as a road map for where your business will go and how you'll get it there, it will be an important sales document when you're trying to attract funding for your business.

If you do your homework, and adequately prepare before starting a business, chances are good that you can make it work. And remember that not attempting something you really want because you're afraid of the risk involved might be the biggest failure of all.

Rewards of Going It Alone

Money Morsel

Having money is nice, but remember that it doesn't solve all your problems. Someone once said something like, “When you have money, people think you have no problems. All money means is that you don't have money problems. You still have all the others.”

Why then, if the hours are long, the pay unpredictable at first, and the future uncertain, do so many people succumb to the urge to start their own businesses?

They do it because they believe the potential rewards far outweigh the risks involved, and they have enough confidence in themselves to believe they'll be successful.

Let's cut to the chase. Most people start their own businesses because they hope to make money—lots of money. And, they're drawn to the prospect of being their own boss. Other factors count, such as the opportunity to meet other people in business, or to be recognized within the business community. Basically, however, it boils down to money and freedom.

Making a lot of money is good because it gives you great freedom. Think about how nice it would be to not have to worry about how you'd pay for the kids' college educations or fund your own retirement? Think about being able to pack up on the spur of the moment and head out for an island getaway. Or taking the whole family on a ski trip to Aspen over Christmas.

Money is definitely an incentive, and one of the greatest rewards of being an entrepreneur. The freedom of being your own boss is another reward of owning and running your own business. It's nice to be able to take off for a couple of hours to watch your daughter's soccer game or to take your elderly parent to his doctor's appointment.

Of course, being your own boss also entails a lot of responsibility, but it provides a very attractive sense of freedom. One additional reward—and it's a big one—of starting your own business, is the great feeling of accomplishment that comes with having built an enterprise from your hopes and dreams.

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