So, you want to succeed in business ...
By Jennie L. Phipps • Bankrate.com

The economy stinks, which is probably why record numbers of optimistic entrepreneurs, many of them fresh from the world of salaried employment, are contemplating a new business venture.

If you're one of the millions of people eyeing a business startup, be careful. It's tough out there.

Bill Madway, director of research for the Network of City Business Journals and a former small-business owner, has been researching what he calls the "Super Stars" of small business: 700 owners, presidents, CEOs and other top-level executives of companies with one to 99 full-time employees, including the owner.

Here, extrapolated from his findings, are 10 soul-searching questions anyone considering a business launch should first answer.

1. Whose goals are these anyway?
Are you opening a business because your spouse, parents or good buddy from school is pressuring you? Are you making decisions based on somebody else's expectations? If you are, you're in trouble.

2. How important is it for you to be in control of your time?
If losing control over your life is going to make you miserable, don't start a 24-hour answering service or any other business where you can't tell customers "we're closed." The more successful you are, the more quickly you'll be sick of the whole deal.

3. Are you sure you have enough money?
Here's the dilemma. You're successful; you sell a lot of widgets. Yippee! But it takes you 30 days or 60 days or, worse yet, 90 days to collect payment. In the meantime, you run out of widgets, and you can't afford to make more. You're not doing any business, but you still have overhead. Moreover, you're disappointing your enthusiastic, new customers who will shop elsewhere. Next stop, bankruptcy. So scare up lots of working capital, and get that home-equity line of credit in advance -- just in case.

4. Are you certain you're charging enough to make a profit?
If you offer cut-rate prices, you can be really, really busy digging yourself into a hole out of which you simply can't climb. Without proper pricing, the more customers you get, the more money you lose.

5. Are you relying too heavily on word of mouth?
All your friends are telling their friends about your new business. That's great. But just talking up the business isn't good enough. If you don't spend money and energy marketing steadily and intelligently, you won't have customers over the long haul.

6. Have you lined up customers who are willing to pay in advance?
Otherwise, you're going to find yourself financing your customers. And trust us, you can't afford that.

7. Are you making smart hiring decisions?
Just because your best friend's husband is out of work, doesn't mean he'll make a great sales manager. Here are two rules of thumb: Hire people who are good at what you're not, and hire people who are just as smart as you are.

8. Can you bite your tongue?
Don't dis your ex- (or soon to be ex-) employer. In times like this, you need all the friends you can get, so don't make them the enemy. If you haven't left yet, don't make your departure an unpleasant surprise. If you're already unemployed, give your former boss an opportunity to be your first paying customer. After all, you understand his business, and in your new role, you might be able to offer him a deal he can't resist.

9. Have you considered a partner?
Look for someone who shares your ideas and whose talents complement yours. A partner can give your company more resources and abilities and reduce your personal financial risk.

10. Can you let your head, not your heart, rule?
When it comes to business, don't fall in love with your new company. Keep some perspective on your operation's strengths and shortcomings. Be realistic enough to recognize the signs of real trouble in time to bail.

Jennie L. Phipps is a contributing editor based in Michigan.

-- Posted: Jan. 11, 2002