This is a complicated question. Well, sure. Maybe. It depends?

The idea of starting your own business and cutting ties from a reliable source of income (like a stable job) is a scary idea. At the same time, it has been shown to be an extremely effective path to wealth and fulfilment for those who have the right stuff. So how do you know if you can really run your own small business?

The first task is to understand the odds. In other words, we need to understand just how difficult it is to build a sustainable small business. According to the Small Business Association, 78.5% of new establishments make it through year 1. Not bad right?

Only about half of small businesses make it five years. 

Clearly, the odds are NOT in your favor. There is risk, and it needs to be taken seriously. 

Research, careful consideration, and risk mitigation are key.

It is imperative to gain a deep understanding of both yourself as a leader, and the marketplace you are attempting to enter, before taking on an entrepreneurial venture. One of the best ways to do this is by consulting experts who have been through the process before.

Adam Stetzer, Ph.D. is CEO and Founder of HubShout, a White Label SEO Reseller firm, and has been working in business for 25 years. In addition to founding several businesses, for the last 11 years he has consulted exclusively with small business owners in the digital marketing space. According to Stetzer:

“After speaking with over 1,000 small business owners over the last decade, we’ve seen just about every mistake possible when it comes to starting a small business. And I’ve many mistakes myself. The biggest mistakes seem to be centered around the notion that customers will automatically come to you when you build a product or hang out your shingle. This orientation leads to wasted resources and time, which ultimately causes the business to fail. A much better approach is to be extremely incremental and discipline, where every step in the business launch sequence is validated by actual paying customers before proceeding to higher levels of investment.”

Stetzer, and many other successful entrepreneurs, follow the Eric Ries Lean Startup Methodology. Using this method, the notion of market research and early business development are merged together so that very inexpensive, almost embarrassingly simple, prototypes are presented to actual customers as fast as possible. Customer purchasing behavior is then measured as a validation that the product being presented is actually desired by the marketplace. 

This rapid and inexpensive approach to research is a radical departure from more traditional mindset that includes lengthy branding, research and build activities - followed by a BIG launch. Big, untested, launches are more expensive, and therefore more risky to business owners when they don’t hit the mark.

Another excellent strategy for applying Lean Startup to a new business venture is to NOT quit your job while you explore the product / market fit of your idea. Many new business owners do not do this and end up in serious financial trouble. Those that maintain their job, even on a part-time basis, find better long-term success. They can more easily pivot away from bad ideas as the customer reactions to their pitches are not as positive as they had anticipated.

When the financial pressures are not as severe, entrepreneurs are often more open to creative customer feedback on early prototypes. Additionally, they just have more time to get it right. And business formation and growth takes time.  

The idea that customers will help you form, or re-form, your product offering is sometimes referred to as customer development, and is an excellent method for building strong customer relationships. In fact, the more the customer is involved with the idea generation, the stronger they will feel about promoting the product. 

Finally, new business owners need to think carefully about their own curiosity and passion for the space they are contemplating. Owning and running a business is serious business, requiring strenuous long-term efforts. A deep understanding of yourself is required to ensure that focus, sustained energy and resilience are present and available to the new business venture. 

Recent research on long-term achievement by Angela Duckworth has labeled these traits as “Grit”. If grit is not present, there are many strategies for developing the perseverance, continuous curiosity and passion required for long-term business ownership success. 

Knowing if you can really start your own small business is tricky business. Using the resources and experts outlined in this article can help you determine if you have what it takes. Additionally, these strategies are great for getting you starting without taking a huge financial risk.