Take a test before starting a small business

Dear Professor Bruce,

I am thinking about starting a business, but I was wondering whether I have the best background to begin. Is there a "right" kind of background for a small business owner?

Answer:

There is no magic background for a successful small business owner; they come from all occupations and lifestyles. However, studies show that certain backgrounds can be more helpful.

A recent paper by Chad Moutray, chief economist of the Office of Advocacy of the U.S. Small Business Administration, shows that the likelihood of running your own business increases with additional college education. For instance, heads of households with some postgraduate experience are 8.3 percent more likely to be self-employed.

Likewise, the study also showed that individuals are more likely to be self-employed if they are wealthier and if they are veterans.

However, the key thing to know is that being a successful small business owner requires hard work and dedication. In fact, a new survey sponsored by Staples shows that 62 percent of leaders in companies with fewer than 20 employees work well beyond a 40-hour week, and 21 percent work a double week, logging an extra 40 or more on-the-job hours.

Even with all that hard work, the Office of Advocacy reports that 66 percent of new businesses with employees survive at least two years, while 44 percent survive at least four years. These results are similar across industries.

If you don't have a lot of formal education, but are willing to put in the hours, is there anything you can do to increase your chances of success?

One of the first things you can do is take the SBA's online Small Business Assessment Tool at http://www.sba.gov/assessmenttool/index.html. In less than 10 minutes, you'll have a good idea if you are ready to start a business or if you need more time to research and gain some skills.

The assessment will suggest steps that direct you to the most appropriate SBA resources to help improve your business preparedness. These include classes at your local Small Business Development Center and personal advice from a small business counselor.

Owning your own business is challenging and requires dedication, hard work, and a willingness to take risks. The rewards can be great, not only monetarily but psychologically as well. So remember, background can be important, but desire and drive will ultimately help determine your success.

For further information visit www.sba.gov.

Bruce Freeman is president of ProLine Communications, a marketing and public relations firm in Livingston, NJ and author of "Birthing the Elephant" (Ten Speed Press). E-mail questions to Bruce(at)SmallBusinessProf.com.