24/05/2016 11:17 BST | Updated 25/05/2017 06:12 BST

Five Questions to Ask Yourself Before Starting a Business

We've looked before at the benefits of becoming your own boss, and it's clear why the prospect of starting your own business might appeal. But amongst all the excitement and the ponderings about why, where and how you could start a business, there is one question that many people over look: should you?

While entrepreneurship and business development bring a number of rewards, they also bring pitfalls, and it's important to make sure that in launching an enterprise you're doing the right thing, and not just acting on a momentary whim. To help you work out the answer to that question here are five others that I asked myself before starting PeoplePerHour that are worth considering.

  1. Why are you doing this? Quantifying the value of one form of motivation over another is something of a thankless task, but it really does help know what your motivation is, because then you have something to work towards. It also allows you to make sensible decisions. If you're looking for a more flexible lifestyle, for example, then starting a business that requires you to work rigid hours in line with customer expectations is never going to succeed. If, instead, you're looking for - and need - an instant and reliable revenue stream, then you may want to consider taking over an existing business, or opening a franchise because at the beginning very few businesses generate much cash and it's rarely reliable. Being your own boss could just be draw enough; but having a wider incentive can help to guide you.
  2. How much capital can you access? Starting a business needn't be expensive - a freelance writer, for example, can pretty much set up shop with a laptop, their brain and a place to write - however, the capital required depends on a huge number of factors. Do you need to make anything in order for the business to start, in which case do you have enough money to purchase the materials and the equipment necessary? Are you able to start the business alone, or will you need to hire other people? Have you got the cash available to pay these other people, and equally importantly, do you have the cash available to pay yourself? You might be working towards a dream, but you still need to eat. What marketing resources will you need, and how will you fund them? Where will you work, do you need specialist premises? If you don't have a cash cow available for milking, there are of course other options, such as small business loans, but that brings another question - are you confident enough about your business to go into debt for it before you begin?
  3. Is this the right time? When you come up with a burning idea, all you really want is to get going, but sometimes it really does pay to rest on your laurels and think through all the options. Your idea may be fabulous, but is now the right time? Do you have the resources - not just money, but time, energy, equipment - to make it a success? Are the market conditions right? Are you working with or against the zeitgeist? Can you get the people you need right now? Can you afford to quit your existing job? Is your family life in the right place? If you or your partner is pregnant, then your life is going to be changing enough, do you really want to add the extra pressure?
  4. Do you know what you are doing? Running a business requires multiple skills: financial management; decision making; the actual business of your business; people management; web-building (a website will inevitably become a part of your business, regardless of what you do); and a whole host of other things. You don't necessarily need to know how to do all of these things before you start, but you do need know what is required and to have a plan to help you gain those skills. Mentoring can really help with this.
  5. Can you cope with failure? You obviously never embark on a new business venture with failure in mind, but you do need to understand that it will always be an option. If failure is going to leave you bankrupt - either financially or emotionally - it's probably not a good idea to begin. Sometimes we fail even when all the odds appear to be in our favour - look at Nokia; they were riding high, dominating the mobile phone market, then Apple came along and everything went sour. Nokia didn't actually do anything wrong, they just failed to do everything right. In business nothing is a given, so if you can't afford to lose, then you can't afford to start.

Going into business requires careful and meaningful consideration. There are far more questions than we've covered here, but at least this gives you somewhere to begin. The more time you spend preparing, the more chance you will have to succeed.