GaudiLab / Shutterstock.com
While there are no guarantees any small business will succeed, taking the wrong approach to starting one may often guarantee its failure. If you are considering starting a business during a recession, here are a few signs it may be a bad idea.
See Our List: 100 Most Influential Money Experts
Looking To Diversify In A Bear Market? Consider These 6 Alternative Investments
You Want To Get Rich Quick
Why do you want to start a business? Maybe you are driven by a sense of purpose or have an idea that can solve problems for an underserved demographic.
Some people, however, don’t share this passion. Their goal for starting a business is to make a lot of money quickly, even if it means doing something they don’t really care about or find interesting. If your “why” is to make a lot of money fast, it may not be a good idea to get into entrepreneurship.
Starting a business, and making it profitable, requires an investment of time, energy and effort. Some businesses take years to become profitable. Those hoping to experience overnight success may be in for a shock if their endeavor doesn’t immediately take off — and they may even quit out of frustration.
Take Our Poll: Do You Think You Will Be Able To Retire at Age 65?
You Feel Scared To Invest
In the current economic climate, marked by inflation and rising costs of living, many people are trying to hang onto every dollar.
Starting a business is a risk. A lot of money needs to be invested. Money not only positions the business to succeed in the long run; it acts as an investment as the owner gradually learns more about the industry and potentially develops into a thought leader.
You might not be ready to start a company if you feel too scared to invest money or don’t feel like the idea has a concrete enough foundation.
You Don’t Have a Plan
All entrepreneurs should have a business plan. This acts as the company’s foundation, helping to guide them toward reaching short- and long-term goals as well as defining milestones and determining how the business will generate revenue and receive funding from investors.
If you don’t have a plan or your plan amounts largely to you being the boss, you’ll have a difficult time detailing the course of your business now and into the future.
You Aren’t Financially Prepared
Step back and look at your current financial picture. Do you have student loan debt or are you carrying a hefty credit card balance? Are you struggling to make ends meet and/or living paycheck to paycheck?
While it is certainly possible to start a business with not much money or bootstrap the company, it may be challenging to commit to starting a full-time business if you carry debt. Small businesses often come with hidden costs, including application fees to obtain business licenses and to incorporate. Entrepreneurs need to be able to calculate the expenses of the business while managing their personal finances.
The savvier decision, if you still want to start a business regardless of your financial situation, may be to start off as a side hustle. Keep your passion project as a part-time endeavor. As it starts to turn a profit and grow its customer base, you may begin editing your business plan to set more long-term goals that position it to become a full-time business.
More From GOBankingRates