Is This A Good Time To Start A Business? (Part 1)

Recently, I'd had several friends pose this question. Included in
this group were people concerned about their future – both employed and
unemployed. They've asked:

– How important is the underlying economy to start up success? Answer: Somewhat important
– Can a new business really succeed in today's economy? Answer: Yes

The
core consideration is your personal tolerance for risk. Risk is a great
academic concept and a pivotal investment concept. On a personal basis, accepting the consequences
of risk can be hellish.

First and foremost, you have to be able
to define how much risk (think total dollar outlays for how long) just
to get a new business to positive cash flow. Every business has a start up cost — even a lemonade stand.

This chart re6a00e00981222d88330120a4e5d82c970b-115sipresents the concept. Typically, a more complex business requires much more start up investment than a straightforward personal service business. 

If you are thinking that starting a business is a way to create a salary for yourself — you probably going to be disappointed. 

Creating a business is about customers. It is not about you and your needs.

Peter Drucker famously said, "The purpose of a business is to create a customer."

In the next post, we'll dig into what it means to "create a customer".

One thought on “Is This A Good Time To Start A Business? (Part 1)

  1. Chris Elser

    Al:
    Interesting post — I hadn’t thought of it that way. When I’ve talked to friends who are thinking about starting a business, it is all about creating a salary for themselves versus thinking about creating customers. I think they’d have a totally different perspective about their business by looking at it that way. I’m looking forward to the next post!
    Chris

    Reply

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