“Why do you want to start a business?”
“To make money, of course,” goes the response.
On the face of it, people start businesses to make money but, as with everything else, it’s a little more complicated than that.
Lots of people get into business because they can’t find jobs. Self-employment seems like a good idea instead of idly sitting at home with no money. Self-employment is not only for the unemployed; people already in jobs are running businesses to generate extra income.
For a job seeker, starting a business is a great way to gain work experience. For the already employed, the extra skills gained from a business could open up more career opportunities. Employees about to retire from formal employment often start businesses with the expectation of having a regular income during old age.
Other reasons for starting businesses include meeting a growing need for money (such as school fees, family emergencies, car loans and mortgages) or saving for a particular goal, such as travelling abroad.
People seeking a career change have been known to start businesses, too. Think of a lawyer who gets into large-scale, commercial farming, or an accountant who starts a school and hence becomes a business manager. Starting a business to see for oneself what business is all about is a valid reason, too.
John Msafari, a 39-year-old marketing professional, left a white-collar job to get into the rough and tumble of the second-hand clothes business. Five years down the line, he regrets getting into a business he knew nothing about because he failed to understand his own motivation for leaving employment.
“In hindsight, all I needed was a long break from my regular job instead of getting into a completely new line of business," Msafari says. "If I could go back in time, I would use my savings from employment to do a Master’s degree full-time and then look for a higher-paying job upon graduating.”
Being honest about your reasons for getting into business can help you better choose an enterprise that best suits the amount of time, effort and money you are willing to put into it. For example, if you are already employed and are looking for a side hustle, consider a gig economy job, such as online freelancing, instead of starting a brick-and-mortar business.
Understanding your reasons for starting a business will help you choose partners who match your intentions. Perhaps you are just trying out a business idea, and making a profit is not a priority. If you choose a business partner who wants to make money immediately, you will get into conflict because your goals would not be compatible.
After you have adequately explored why you are getting into business, it is worth subjecting your idea to impartial market research. How many people are willing to spend money on your products or services? Is your business concept profitable? Who are your competitors? What would be the best location for your business? These are very important questions whose answers will determine whether to invest in that business and how to do it.