[This post originally appeared on Entrepreneur.com.]
Today, I want to say something a little controversial: The business you are building may be the wrong one.
Yes, I know you’ve spent hundreds or thousands of hours on it. But, I’m here to tell you that it might be the wrong business for you. As the famous quote from Stephen Covey goes, “If the ladder is not leaning against the right wall, every step we take just gets us to the wrong place faster.” So, how do you know if your idea is heading up the ladder on the right wall?
Do you simply start climbing and see what happens? I don’t believe so. Not only will you be wasting years of your life that way, but you’ll wear yourself out in the process.
So, here are the three vital questions every entrepreneur should ask about the business he or she is trying to build. If you ask them of yourself, and then answer them honestly, you’ll be sure that you’re climbing the right ladder.
Download Your FREE copy of ‘How to Rent Your House!’
Renting your house is a great way to enter the world of real estate investing, but most first-timers (understandably) have a lot of questions. Fortunately, the experts at BiggerPockets have put together a complimentary guide on ‘How to Rent Your House’. All the skills, tools, and confidence you need to successfully rent your house are just a mouse-click away.
1. Do I want to be doing this in ten years?
Remember the first few months of your last girlfriend or boyfriend? The fun, the excitement, the giggles? This is often known as the “honeymoon phase” and it’s great but it’s not real.
What’s real is the life that comes after the honeymoon phase, when emotion is not the driving force that makes or breaks the relationship. The same is true for business ventures. Every business is exciting in the beginning, but let’s be honest: None of it is real. The feeling won’t last.
Many people start businesses because they believe they’ll become rich. And, truth be told, many businesses do make their owners wealthy. But what most wannabe entrepreneurs fail to grasp is the absurd amount of time between starting a business and exiting that business. It’s usually not six months or a year. It’s more like a decade, or longer.
I recently wrote a book on investing in rental properties — and as much as it pains me, I know that most of the people who buy this book won’t be “in the game” next month or next year. They are in the honeymoon phase, and soon it will be gone when the illusion of “easy money” is gone and they realize this is a long-term business and not a quick way to get rich.
For those who stick it out past the emotion, however, an incredible life can be made.
So, ask yourself: Is your love for your business idea stronger than the honeymoon phase? If you contemplated being forced to stick with this business for the next 20 years, would it still be something you would want to do?
2. Does this actually accomplish my life’s goal?
What is your ultimate goal in life? Is it one of the following options?
- More time with the kids
- More trips to Europe, whenever you want
- A million dollars in the bank
- Fulfillment from your day-to-day work life
Next, ask yourself: Does your current business model lead you toward that personal end goal in the most efficient way possible? Many people start businesses because they are trying to accomplish some kind of goal, but quickly lose focus of it. The business then becomes more about the money than the final destination.
For example, in my real estate investing world, I see many people get into the game because they want to generate passive income, spend less time working and more time enjoying life. Somewhere along the road, though, they end up working 100 hours a week trying to hold on to their real estate empire, thereby accomplishing the exact opposite of what they set out to do.
Take a look at your business and follow it out ten years: Is it really helping you accomplish your life’s goal? If not, change how your business operates or change your business entirely. There is no sense waiting 20 years to find out you never left the starting line.
3. Have I run the numbers?
Remember that honeymoon phase I mentioned earlier? Let’s revisit the analogy: During that honeymoon phase, it’s easy to overlook some of your significant other’s flaws. You see his or her nagging as affection, those annoying quirks as cute nuances, that explosive anger as passion.
In business, entrepreneurs put on the same blinders. To overcome this tendency, it’s essential to take a good, hard look at the math behind your business. Does your business funnel really support the kind of success you hope to achieve? Is your cost to acquire a customer realistic? Is there enough demand in the marketplace?
What’s amazing is the number of entrepreneurs who knowingly refuse to run the numbers on their business, instead believing that hard work and passion will get them to their destination.
So, ask yourself: Have you honestly examined the numbers behind your business model and determined that, yes, indeed, you can achieve every goal you’ve set?
If you’ve asked yourself these questions and can’t answer with a resounding “yes” to these three questions, your business likely won’t survive. You’ll be part of the vast majority of businesses that fail, and you’ll never accomplish the goals you set. So, before you take another step in your business journey, sit back and ponder those questions.
The answers will tell you a lot.
Entrepreneurs: How would you answer these questions? Any other questions that are vital to ask?
Let me know with a comment!