There seems to be a lot of debate about when the best time is to launch a business. The favourable answer to that question is now, for if not now, when?
However, we argue that there is a time and a place for everything.
Financial Stability
It is preferable to launch a company without the weight of debt hanging on your shoulders but that is not always possible. This does however not imply that you will go to rack and ruin because of it.
Debt is not some kind of ticking-time bomb that will explode at any given moment, at least it shouldn’t be. You may have heard of good and bad debt, and although both seem synonymous, there is a significant difference between the two.
According to Sanlam, “Bad debt” refers to unnecessary debt that does not contribute to your wealth in the long term. “Good debt” is debt that may increase your net worth and generate value on an ongoing basis in the long run.
Unfortunately acquiring a loan is not as easy as walking up to your nearest bank and demanding a start-up capital of R 500,000.
Numerous factors play a significant role in the approval process.
Reasons your loan may be denied:
High levels of debt
High levels of debt can make you a higher-risk borrower to banks.
Poor credit score
The credit score of your business, paired with your own personal credit score, can be a determining factor on whether your loan will be approved or not.
Lenders use credit scores to determine if you are likely to make payments on time or whether you are likely to have high debt levels.
Low credit scores are indicative of trouble making payments on time or having a high debt load, thus causing lenders to dismiss your loan request.
Credit history not enough
Reputable lenders look for evidence that you are a responsible borrower with a track record of paying back debts on time.
Having the capital to withstand obstacles
When a business opens its doors, capital expenditures such as equipment, inventory, hiring, and general business expenses can drain start-up capital.
It is therefore crucial to make provisions beforehand. A rainy-day fund is always wise, as most business owners fall into debt at some point in their business journey.
Considering this hard truth when launching your business can help you to avoid closing your doors before you’ve had the chance to establish your name in the industry.
Your Only Priority
Launching a new business requires a major commitment of time, energy and dedication.
The journey will be challenging, and to overcome each obstacle and prosper in the process, you will need a strong support system.
It’s easy to lose faith in yourself when you’re managing a business; dealing with long hours and stress, in addition to feeling exhausted physically and emotionally, you may isolate your immediate family and friends.
To avoid harming your marriage or relationships with others in the business startup process establish boundaries and improve communication within the relationship.
If you still have not had the time to settle down and are still on the lookout for the “one” you might want to wait a couple of years before setting up your company.
When starting a new business, you become “married to your work” for those first couple of years.
The Alternative Board found that most business owners work an average of 50 hours per week, spending 68% of that time on daily tasks and 31% on growth strategies.
The price to pay for independence is steep, so be sure you are willing to make that sacrifice.
No major personal problems in your life
Never attempt to start your business when going through a divorce or any other difficult time in your life that affects you or a loved one.
The saying “suck it up” is outdated and flawed. It is not only unwise but detrimental when trying to start a business when you as the owner have enough personal problems on your plate.
When undergoing a divorce, you are bound to feel even more stressed and overwhelmed. Your mental health can affect your focus, confidence, and decision-making, which can have a significant impact on your business.
Moreover, mental health struggles can negatively impact your well-being. The importance of mental health cannot be overstated, ignoring your struggles can have serious consequences for your career and personal life.
Even without taking into account the emotional impact, a divorce or the illness of a loved one will be very costly for you and your company.
Experience
Debates around entrepreneurship are often sparked by different opinions surrounding age and experience.
A number of the world’s most successful companies were launched by young entrepreneurs, such as Steve Jobs, Bill Gates, Mark Zuckerberg, Sergey Brin and Larry Page, all of whom were in their early 20s.
Sadly, cases like those are not as common as one might hope. A study conducted by the University of the Western Cape found that 70-80% of small businesses fail within the first five years of operation in South Africa.
As a result, you are facing an uphill battle. So, to play the odds, you have to play it safe. An experienced business owner can avoid costly mistakes and run a profitable enterprise.
Without investing any capital, you can learn about the industry and how the market operates. In addition to learning the economics of your idea, you get more time to explore business opportunities and unleash your creativity.
Ways to gain experience:
Take a part-time job in your target industry
If you want to open a restaurant franchise and you have never worked in food service before, consider taking on a part-time restaurant job, such as a nights and weekends position.
Talk to your future customers
Customers are your business’s biggest asset. Discover potential customers’ wants and needs.
Learn from someone who’s been there
Speak with experienced business owners to learn about the industry’s pitfalls. If possible, shadow them for a day or two, or take on an unpaid internship.
There is a saying that implies if you do not do it now, you will never do it. However, this does not always hold merit.
It is desirable to become one’s own boss immediately, however, sometimes it is better to wait for a better time when one has the capital, knowledge, experience and time to pursue that dream.
Take that leap of faith, but be prepared to stumble along the way. Rome wasn’t built in one day, but its legacy still stands to this day.
