Q: I am considering whether to take the plunge and make a business out of one of my hobbies. How do I know if I have what it takes to be a full-time entrepreneur?
A: There is obviously no aptitude test that can tell you if you are suited to entrepreneurship. However, after you've evaluated the feasibility of turning your hobby into a business, it is worth asking yourself a few questions to determine if you have the characteristics of an entrepreneur.
1. How committed are you? Successful entrepreneurs are committed to their businesses. This is simple to understand, but difficult to put in practice. Are you the type of person who has many hobbies and likes to dabble without commitment? Would you be easily distracted by the next business idea that strikes your fancy? When faced with a task, successful entrepreneurs are generally committed to excel and will not waver when the going gets tough.
2. Is your glass half full or half empty? Not all optimistic people are entrepreneurs, but almost all entrepreneurs are optimistic people. From the owner of the local florist to the founder of a Fortune 500 company, the common thread that runs through the fabric of entrepreneurship is the ability to see a positive opportunity in an otherwise challenging situation. Without confident optimism, it is very difficult to motivate employees, persevere in downtimes and keep your business growing.
3. Do you like to make decisions? Very few of us enjoy making decisions. Decisions mean commitment. Bad decisions lead to problems and can mean losing the respect of one's peers. Owning a business-particularly an undercapitalized startup-is all about making decisions with limited market research and imperfect information. Should you locate the business in your home or incur the costs of a separate office? Should you hire a marketing consultant or a full-time salesperson? How should you price your new products? What should be your first target market for your products? One of the main differences between having a hobby and having a business is the need to make real decisions with financial implications. Will you enjoy it?
4. Do you have the money to make it happen? Once you've written a business plan and established that your hobby can indeed be a sustainable business, the next step is to finance its execution. Unless you thrive on adversity, don't quit your day job until you know that you have sufficient money to fund your business plan. Getting financing is not easy and requires personal sacrifice-whether it involves borrowing from your family's savings, your relatives and friends, credit cards or professional investors. If things don't work out exactly as mapped out in your business plan, will you be able to support a contingency plan to ensure that the business survives? If you don't have the money from your personal network, will you be willing to sacrifice ownership and control to outside investors?
5. Do you like to sell? When I interview candidates for a position at my company, I ask them how they feel about selling. Some of them inevitably shift in their seats and give a half-hearted answer that they do not mind selling when they are asked to do so. Other candidates brighten up and persuade me that selling is a natural part of any job-even if they have never had a sales job. As an entrepreneur, you work in sales. You will have to sell your products, sell your vision for the company and sell yourself. And you will have to do this every day, multiple times. And you will enjoy it-that is, if you are suited to be an entrepreneur.
If you answered yes to most of the questions listed above, you are ready to shift from hobbyist to business owner. If you answered no to most of these questions, and you still want to turn your hobby into a full-time business endeavor, you may want to consider getting a business partner to help you make your plan a reality.
Asheesh Advani is CEO of Covestor, an online marketplace for investors. He founded CircleLending, which was acquired by Virgin.