Small Business for Dummies: Do You Have "The Right Stuff?"

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by Eric Tyson and Jim Schell

There aren't many positive things to say about our current economy but one does spring to mind: it inspires lots of people to start their own business. Maybe you've been downsized, or maybe you're simply fed up with the corporate bureaucracy and game-playing. Either way, you've been toying with the idea of becoming your own boss. Should you view your current circumstances as your cue to jump, full-force, into small business ownership? And do you have what it takes to succeed in the rough & tumble small business world?

It's this last question to which financial counselor Eric Tyson wants you to give some serious thought. In his new book Small Business For Dummies®, 2nd Edition (Wiley Publishing, Inc. 2003, ISBN: 0-7645-5481-6, $21.99)—co-authored by fellow entrepreneur and small business owner Jim Schell—he provides a wealth of strategies for building a winning business. But before getting to the "nuts & bolts" information, he spends considerable time urging you to figure out whether doing so is really right for you.

"Maybe you've always been a successful employee and maybe you have a great idea for a small business," Tyson and Schell say. "But neither of these factors mean you'll be a successful entrepreneur. Remember, the culture of a Fortune 500 corporation and that of a small business are worlds apart. And the things that motivate an employee are very different from the things that motivate a small business owner. Make sure you can successfully make the transition before you leap in with both feet."

That said, Tyson and Schell provide several tests, exercises and thought-provoking questions that help you determine whether or not you have the "right stuff" to own and operate a small business. Here are a few tips excerpted from Small Business For Dummies, 2nd Edition:

*Take the Small Business Owner's Aptitude Test. Tyson and Schell have created a 20-question test that reveals how well suited you are to the entrepreneurial lifestyle. A few sample questions:

• Using your friends and/or coworkers as a barometer, how would you rate your energy level?
• Do you like being in charge, in control, and at the center of attention?
• How good are you at achieving/keeping your New Year's resolutions?

The authors recommend that you have a good friend or coworker take the test alongside of you, with you as the subject. This should help you gain a more accurate score, as we seldom have unbiased opinions of ourselves.

* Examine your entrepreneurial SKILLS. There are certain skills necessary to running a small business. You will either need to possess these skills yourself, or involve someone in your business who possesses them. They are:

• Numbers skills: These skills include those related to borrowing money, accounting for it, and reporting on the financial performance of your company.
• Sales skills: The small-business owner is always selling someone—be it his customers, employees, or vendors.
• Marketing skills: Everyone has to market her product or service—no one is exempt.
• Leadership skills: The small-business owner is the Grand Poobah of the venture. Grand Poobahs are only as good as the manner in which the business's employees are led.

* Examine your entrepreneurial TRAITS. Unlike the skills listed above, it's pretty difficult to "hire" the character traits entrepreneurs must have. They are:

Confidence: Small-business owners have to be able to coexist withrisk and possibly debt.

• Intuition: Call it intuition or call it gut instinct, the small-business owner has to call things right more often than wrong, or he will be calling it quits.
• Optimism: Rarely pessimistic, successful small-business owners see good fortune, not misfortune; upsides, not downsides; and opportunities, not problems.
• Drive: Successful small-business owners are driven to create a product, to service a customer, and to build a successful business.
• Passion: An entrepreneur's passion is infectious. Your employees, your vendors and your customers—everyone you come in contact with—can feel your passion, and feed off it.

* Understand the pros and cons of small business ownership. There are many reasons to give the boss the old heave-ho—and just as many reasons not to keep collecting a paycheck. Be sure you understand the reasons why people choose to own a business . .

• The satisfaction of creation
• The establishment of your own business culture
• The greater probability of achieving a high income
• Self-sufficiency
• Control over your own schedule
• Special perks (such as better retirement account options and tax write-offs)

. . . and the reasons why they choose not to:

• Responsibility-and too many work hours
• Relentless pursuit by competitors
• Necessity to constantly change
• Chance (interest rates, the economy, theft, sickness, etc.)
• Red tape (taxes, tariffs, OSHA, NAFTA, etc.)
• The very real possibility of business failure.

* Be sure you've really found your niche. Chances are, you wouldn't be thinking about starting your own company if you didn't have some idea of what you want to do. On the other hand, maybe you're drawn to small business ownership but aren't sure what kind of business suits you best. Either way—to confirm your existing idea or discover your niche—Tyson and Schell provide eight questions that help you inventory your skills, interests and job history:

1. What top three business skills have you displayed over your business career? (Examples include such categories as sales, accounting, marketing, administration, writing, communications, quantitative analysis, hiring, training, employee motivation, product development, customer service, focus, delegation, accountability, attention to detail, and so on.)
2. Using the same list of examples as included as part of Question #1, in which of the categories are you the weakest?
3. Over your working history (include part-time and full-time jobs), which three jobs have you enjoyed the most? List the reasons why you liked those particular jobs.
4. Over your working history, what three jobs have you enjoyed the least? Again, list the reasons why you disliked those particular jobs.
5. What are your top three overall personal skills?
   Examples include leadership, intelligence, creativity, listening, counseling, etc.
6. If this were a perfect world and you could select the industry in which you'd like to spend the rest of your life, what would be your top three choices?
7. Many people develop a hobby or special interest (such as photography, golf, coin collecting) into a business. What three favorite hobbies or special interests of yours might be conducive to creating a business?
8. Given what you know about the retailing, service, manufacturing, and wholesale career choices, rank the four in order of desirability.

These questions are meant to help you take an introspective look at yourself and lead you to where you would logically fit in the broad spectrum of business opportunities available. You will probably need to come back to these questions several times before you arrive at the business that's right for you.

Of course, the above tips are only a small sampling of the information that's packed into Small Business For Dummies, 2nd Edition. From drafting a business plan to managing costs to avoiding common mistakes, you'll profit from expert advice and real-world examples that cover every aspect of building your own business.

Even if you read the first few chapters and decide that small-business ownership isn't for you, the book is still a wise investment. If you simply aren't cut out for entrepreneurship, it may keep you from making a costly mistake. As Tyson points out, if owning a business were easy, there would be no need for a 400-page book to help you make the right decision.

"For some people, indeed for many people, drawing a paycheck will always be preferable to writing one out," he says. "And though small-business ownership can be rewarding, if it's not right for you there are other ways to satisfy your entrepreneurial urges. You can create an entrepreneurial enterprise inside a larger company, or move from a large company to a small one, or invest in someone else's business. Our book explores these options, too. If it helps you decide whether to keep looking for a new job or create your own, it has served its purpose well."

About The Authors:

Eric Tyson is an accomplished financial counselor and freelance personal finance writer. He is the author of numerous other For Dummies national bestsellers on personal finance, taxes, investing, and home buying, and is a syndicated columnist. His work has been critically acclaimed in hundreds of publications and programs, including Newsweek, The Los Angeles Times, The Chicago Tribune, Kiplinger's Personal Finance Magazine, The Wall Street Journal, Bottom Line Personal, as well as NBC's Today Show, CNBC, PBS's Nightly Business Report, CNN, FOX-TV, CBS national radio, Bloomberg Business Radio, and Business Radio Network. His radio commentaries can be heard on the nationally syndicated public radio Sound Money program. Eric is a former management consultant and holds an M.B.A. from the Stanford Graduate School of Business.

Jim Schell earned a B.A. in Economics in 1958. He served in the U.S. Air Force in Klammath Falls, Oregon, and spent six unhappy years underperforming for a variety of businesses. Finally, Jim's entrepreneurial genes were allowed to surface. In 1968, when Jim was 34, he and three Minneapolis friends started The Kings Court, at the time the nation's first racquetball club. Two years later, Jim bought General Sports, Inc. After another two years, he started National Screenprint, and, finally, in 1974, he partnered with an ex-employee in Fitness and Weight Training Corp. Each of the start-ups was bootstrapped, and each was privately held. For several years, Jim involved himself in the management of all four businesses at the same time. His third business, National Screenprint, ultimately grew to $25 million in sales and 200 employees.