For star­tups, a re­al­ity check

The Washington Post Sunday - - BUSINESS - MICHELLE SIN­GLE­TARY

How many times have you dreamed of be­ing your own boss? I’ve cer­tainly been to my share of fi­nance con­fer­ences where busi­ness own­ers make the au­di­ence of wannabe en­trepreneurs long for the time when they can set their own hours and an­swer only to them­selves. They glo­rify busi­ness own­er­ship, mak­ing peo­ple rest­less to be­come rich.

Oh, there are cau­tion­ary tales ev­ery once in a while, but gen­er­ally the view is overly rosy. Peo­ple are led to be­lieve that if they don’t as­pire to start their own busi­ness, they are ei­ther a fail­ure or not liv­ing up to their en­tre­pre­neur­ial po­ten­tial.

But Melinda F. Emer­son, who started her own busi­ness af­ter a ca­reer as a pro­ducer with TV net­works ABC and NBC, is a small-busi­ness cheer­leader with less cheer and more re­al­ity.

Emer­son doesn’t push

en­trepreneur­ship like some­one hawk­ing an in­ven­tion on a latenight cable pro­gram. In­stead she’s a cau­tious coach for those who think they want to leave their 9-to-5 jobs and start their own en­ter­prise.

“If you think you work hard now, just wait un­til you be­come your own boss. You will come to know what the word ‘sac­ri­fice’ means,” Emer­son writes in her book “Be­come Your Own Boss in 12 Months: A Month-by-Month Guide to a Busi­ness That Works” (Adams Me­dia, $14.95).

I like her cau­tion­ary ad­vice, and it’s why her book is the Color of Money Book Club se­lec­tion for this month.

When jobs be­come scarce and lay­offs in­crease, there’s of­ten a rise in star­tups. Nearly 9 per­cent of job­seek­ers gain­ing em­ploy­ment in the sec­ond quar­ter of 2009 did so by start­ing their own busi­nesses, ac­cord­ing to a sur­vey by out­place­ment and ex­ec­u­tive coach­ing firm Chal­lenger, Gray & Christ­mas.

But as the cur­rent econ­omy has gained strength, busi­ness star­tups have de­clined. Ac­tiv­ity dropped sig­nif­i­cantly in the first half of last year as would-be en­trepreneurs found work or were scared off by the still-ten­u­ous eco­nomic con­di­tions.

Be­ing wary about start­ing a busi­ness is a good thing, says Emer­son, founder and chief ex­ec­u­tive of Quin­tes­sence Multimedia, a full-ser­vice pro­duc­tion firm.

“ Too many en­trepreneurs un­der­es­ti­mate and ro­man­ti­cize what is re­quired to run a small busi­ness,” she writes. “Be­cause start­ing your own busi­ness will mean such a rad­i­cal shift in your life­style, you need to think through what this will mean. Only then are you ready to get into the nit­tygritty of your busi­ness plan­ning.”

Al­though this book will cer­tainly help peo­ple al­ready run­ning a busi­ness, it’s best for those con­tem­plat­ing start­ing one. If you have the time — a year she rec­om­mends — take it to care­fully map out what it will take to make your startup a suc­cess.

To help you get started, Emer­son lays out a to-do list. In the first month she urges peo­ple to de­velop a life plan. And by that she means spend time fig­ur­ing out why you want to start a busi­ness. Among other things, think about whether you have the en­ergy for such an en­deavor. If you’re mar­ried, is your spouse fully sup­port­ive? Cal­cu­late how long your house­hold can op­er­ate with­out gen­er­at­ing any in­come.

This first phase isn’t the same as a busi­ness plan, but rather an ex­am­i­na­tion of how the busi­ness will af­fect your life.

“Ev­ery­one has tan­gi­ble skills,” she says, “ but not ev­ery­one has all the skills needed to run a busi­ness.”

The best ad­vice Emer­son gives is to rec­om­mend hav­ing lit­tle to no debt. She also sug­gests that you have:

Six months of emer­gency sav­ings.

Twelve months of liv­ing ex­penses (in ad­di­tion to the emer­gency sav­ings).

The first year of op­er­at­ing ex­penses for your busi­ness.

I know. That’s tough ad­vice to fol­low. But she’s right. So many small busi­nesses fail be­cause own­ers over­es­ti­mate the in­come their com­pany will gen­er­ate in the first year.

Through the months, Emer­son pro­vides ba­sic ad­vice on de­vel­op­ing a busi­ness plan, a mar­ket­ing strat­egy, hir­ing fi­nan­cial pro­fes­sion­als, and find­ing fi­nanc­ing if you need it.

Emer­son’s road to en­trepreneur­ship is full of en­cour­age­ment but also much-needed re­al­ity checks. I’ll be host­ing a live on­line chat about Emer­son’s book at noon East­ern Feb. 3 at wash­ing­ton­post.com/dis­cus­sions. Emer­son will join me to take your ques­tions. Ev­ery month I ran­domly se­lect read­ers who will re­ceive a copy of the fea­tured book, do­nated by the pub­lisher. For a chance to win a copy of “Be­come Your Own Boss In 12 Months,” e-mail col­o­rof­money@wash­post.com with your name and ad­dress.

BE­COME YOUR OWN BOSS IN 12 MONTHS A Month-by­Month Guide to a Busi­ness That Works Melinda F. Emer­son Adams Me­dia 272 pages, $14.95

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