One of the most common reasons why many would be entrepreneurs hesitate to start a business is the fear of failure.
“What if the business fails?”
It’s a scary thought, especially if you’ve given up a lot in order to jumpstart the business. The key is to prepare and have a plan of action.
The first step is to identify what’s the worst thing that can happen if the business fail. This is not being too negative, or even fatalistic (as Ayn Rand said in The Fountainhead, “You don’t start out by giving up” or something to that effect). Thinking through the worst thing could help you get a feel for the risks involved, and whether you can handle the risks if and when it happens.
Some of the worst things that could happen include:
- Losing all your savings
- Inability to pay off loans and losing your collateral (your house!)
- Losing a year of your life
- Learning that your dream business is not going to work
- Broken relationships due to failed business partnerships or investments
- Disappointing yourself, your family and friends
To help mitigate the risks, you can:
- Work on jumpstarting the business while still employed. You can start the business on a part time basis (or work part time while spending most of your time starting the business). So even if the business fails, you still have your job to sustain you.
- Get the support of your spouse. Your spouse can work and provide the steady paycheck (and even health insurance) while you focus on building the business.
- Get the support of your family. If the business fails and you run out of money, you can go back and live with your parents. It may be a tough choice, but living with parents is a sure way to have a roof over your head if the failed business wiped out your savings.
- Choose a business with lower risks, especially if your resources are limited. If you have poor credit and no savings, don’t start a business producing organic cleaning products that will require millons in production and marketing in order to compete in the marketplace. Start a business that you think you can handle, even if it means foregoing your dream business at the moment until you’ve built enough capital for yourself.
- Have a fall back position. If the business don’t work out as planned, think of alternative courses of action for you. You can go back to the corporate world. You can go to school. Or you can try again, but this time avoiding the mistakes you made in your first try.