Points to Consider Before You Start Your Business

Points to Consider Before You Start Your Business

Before you open your doors, launch a website, or sign any lease, it helps to step back and look at the big picture. These points apply whether you’re starting a local shop, a service business, a professional practice, or an online business.

Think of this as an overview. You’re not working out every detail yet. You’re checking that you’re ready for what’s coming and that you’re moving in the right direction.

Some points will matter more to you than others, depending on the business you choose. Use this list to get clear, then move on to more detailed planning.

1. Is Owning and Running a Business Right for You?

Wanting your own business and being ready to run one are two different things.

Some people dream of “being the boss,” doing what they love, or making more money. Those can be good reasons, but if you only look at the upside, you’re missing half the picture. You’re trading a steady paycheck and clear boundaries for risk, responsibility, and uncertainty.

Owning a business means:

• You take full responsibility when things go wrong.
• You may work longer hours than you did at your job.
• You deal with problems that land on your desk first.
• Your income may go up, down, or stop for a while.

The risk is real and worth putting a number on. Based on Bureau of Labor Statistics data through March 2025, about 22% of new U.S. businesses close within their first year, nearly half close within five years, and roughly two-thirds close within ten years.

That’s not a reason to avoid starting a business, but it’s a reason to go in with your eyes open.

It can be rewarding and give you freedom, but it’s not a fit for everyone. It’s better to find out now than after you’ve invested time and money.

A quick self-check:

• Are you comfortable with income that isn’t guaranteed?
• Can you handle pressure and still think clearly?
• Are you willing to make tough decisions that affect others?
• Do you take ownership, or do you tend to blame others?
• Are you prepared to keep going when problems show up?

There are pros, cons, and valid reasons for running your own company. Make sure you’re starting for the right reasons and that this path is a good match for you.

For a deeper look, see:
The Reasons for Getting Into Your Own Business
The Pros and Cons of Running a Business

2. Are You Financially Ready to Start?

Many people focus on the business idea and skip this question. That’s risky.

Every new business goes through a ramp-up period. You have money going out before much money comes in. You may go months before you can pay yourself a steady income.

Consider:

• Do you have some savings or backup income while the business gets off the ground?
• Can you cover your personal essentials (housing, food, transportation, basic bills) without depending on the business right away?
• Are you using money you can afford to risk, or money you absolutely need to live on?
• Do you understand your basic startup costs and ongoing monthly expenses?

For a rough starting point, the Small Business Administration estimates that most microbusinesses (one to three employees) cost around $3,000 to launch, and home-based businesses typically run $2,000 to $5,000.

A common savings target is six months of expenses — either your personal living expenses or your business’s fixed costs, and ideally both — so the business has time to find its footing before it needs to support you.

You don’t need everything figured out on day one, but you do need to be honest with yourself. Starting a business with no financial cushion and no plan puts a lot of pressure on you and the business.

3. Do You Have (or Can You Build) What the Business Needs?

Next, look at what you bring to the table. You may know the work, but do you know how to run a business?

There are three main areas worth thinking through:

• Industry knowledge: Do you understand the actual work your business will do? For example, if you’re starting a home repair service, can you do the work safely and correctly or oversee those who do?
• Business skills: These include basic marketing, customer service, pricing, money management, and organizing day-to-day operations.
• Personal skills: Problem solving, communication, leadership, and the ability to stay calm under pressure.

If you’re missing something today, that’s okay. You can learn it, hire for it, or outsource it. But it’s much better when you understand the key parts of your business instead of depending completely on someone else to take the reins.

Even if you plan to hire a manager, you still want enough knowledge to step in if needed and to judge whether things are being handled properly.

For more, see our resource page: Essential Business Skills You Need To Succeed.

4. Decide What Type of Business You Want to Start

Now let’s look at the kind of business you want.

Choosing a field you’re passionate about is helpful, but passion alone is not enough. You need passion, demand, and a business model that fits your life.

Think about:

• Your interests and strengths: What do you enjoy? What are you good at?
• Customer demand: Are people actually willing to pay for what you want to offer?
• Lifestyle fit: Will this business demand late nights, weekends, physical labor, or travel? Does that work for you and your family?
• Business model:
  • Products or services?
  • Local, online, or a mix?
  • One-time sales or repeat/recurring revenue?

If you pick a business only because it “looks profitable” but you don’t care about the work and there’s little demand, you’ll be frustrated and quick to look for the exit when problems show up.

On the other hand, when you choose a business that fits your interests, strengths, and the market, you’ve given yourself a strong foundation.

For more help finding the right idea, see How To Find a Business That Is a Great Match for You.

5. Should You Start a Business or Buy One?

Another key decision is whether you should start from scratch or buy an existing business.

Both options can work. Each has pros and cons.

Starting from scratch:

• Pros:
  • You build your own systems, culture, and brand from day one.
  • You’re not stuck fixing someone else’s mistakes.
  • You can design the business around your vision and goals.
• Cons:
  • It can take time to get your first customers and reach steady income.
  • You may go through more trial and error.
  • You start with no history or track record.

Buying an existing business:

• Pros:
  • The business may already have customers, systems, and staff in place.
  • You can see some history of sales and expenses.
  • You may start earning sooner if the business is healthy.
• Cons:
  • You might be buying hidden problems, such as debts or a bad reputation.
  • It can be harder to change the direction or culture of an existing business.
  • You usually need more money upfront.

If you’re thinking about buying, proper research (due diligence) is critical. You want to understand the financials, the reasons the owner is selling, major customers, contracts, and any existing issues.

For more on this topic, see Buy a Business or Build One From Scratch.

6. Should You Consider a Franchise?

A franchise is a business where you buy the right to use a proven system, brand, and support from the franchisor. It can be a faster way into business, but it comes with rules and fees.

Some advantages of a franchise:

• A proven business model.
• Training and support from the franchisor.
• Brand recognition and marketing systems that are already in place.

Some disadvantages:

• Franchise fees and ongoing royalties.
• Rules and restrictions on how you operate, what you sell, and how your business looks.
• Less freedom to change products, services, or marketing to match your ideas.

Costs vary widely by concept. Based on 2026 industry estimates, the one-time franchise fee typically runs $20,000 to $50,000, and total initial investment (including build-out, equipment, and working capital) usually falls between $50,000 and $200,000.

Home-based or mobile franchises can start near $10,000, while full-service restaurants, childcare centers, and hotels can run well past $1 million. Get the exact numbers from a franchise’s Franchise Disclosure Document before you commit to anything.

A franchise can increase your chances of success if you follow the system and choose a solid brand in a good location. But it’s still a business. You still carry risk and responsibility, and you still need to manage your finances and operations.

For more, see Here’s What You Need to Know About Owning a Franchise.

Once you’re more confident about these big-picture decisions, you’ll be in a better position to dive into the practical details like startup costs, licensing, marketing, and daily operations. The more prepared you are before you start, the better your chances of building a business that fits your life and can grow over time.

Key Points and Facts About Starting a Business

• Owning a business trades a steady paycheck for risk, responsibility, and uncertainty — make sure that trade fits your life before you commit.
• About 22% of new U.S. businesses close in the first year, and roughly two-thirds close within ten years, so a financial cushion matters.
• A common savings target is six months of expenses — personal living costs, business costs, or ideally both — before you rely on the business for income.
• You don’t need every skill on day one — you can learn, hire, or outsource — but you should understand the key parts of your business.
• Passion alone isn’t enough. You also need real customer demand and a business model that fits your life.
• Starting from scratch, buying an existing business, and buying a franchise each carry different costs, risks, and tradeoffs — there’s no universally “right” path.

Action Steps for Deciding If You’re Ready to Start a Business

Assess Your Personal Readiness

• Work through the self-check questions on risk tolerance, pressure, and accountability.
• Talk honestly with people close to you about the hours and stress a new business could bring.

Build Your Financial Cushion

• Estimate your startup costs and monthly operating expenses.
• Set a savings target, using six months of expenses as a starting benchmark.
• Separate money you can afford to risk from money you need to live on.

Audit Your Skills

• List out your industry knowledge, business skills, and personal skills.
• Identify gaps and decide whether you’ll learn, hire, or outsource to fill them.

Choose Your Business Type and Model

• Match your interests and strengths against real customer demand.
• Decide on products vs. services, local vs. online, and one-time vs. recurring revenue.

Decide Whether to Build, Buy, or Franchise

• Weigh the pros and cons of starting from scratch against buying an existing business.
• If considering a franchise, review the Franchise Disclosure Document and get a clear total investment figure before signing anything.

Get Feedback Before You Commit

• Talk to people already running the type of business you’re considering.
• Go back through any section where you’re still unsure and strengthen it before moving to detailed planning.

Checklist for Starting a Business

1. Personal readiness confirmed
   • You’ve answered the self-check questions honestly.
   • You understand the hours and responsibility involved.
2. Financial cushion in place
   • You know your rough startup costs.
   • You have savings or backup income to cover several months of expenses.
3. Skills identified
   • You know your strengths in industry knowledge, business skills, and personal skills.
   • You have a plan for any gaps — learn, hire, or outsource.
4. Business type and model chosen
   • You’ve matched your interests to real customer demand.
   • You’ve picked a lifestyle-compatible business model.
5. Path decided: build, buy, or franchise
   • You’ve weighed the tradeoffs of each path.
   • If buying or franchising, you’ve started due diligence or reviewed a Franchise Disclosure Document.
6. Support network engaged
   • You’ve talked to people already in the type of business you’re considering.
   • You have someone to talk through big decisions with as you move forward.

FAQ: Starting a Business

How much money do I need to start a business?

• It depends heavily on the type of business. The SBA estimates most microbusinesses cost around $3,000 to start, and home-based businesses typically run $2,000 to $5,000. A common guideline is to also have six months of expenses saved — personal, business, or ideally both — before you rely on the business for income.

What percentage of businesses fail?

• Based on Bureau of Labor Statistics data through March 2025, about 22% of new U.S. businesses close within their first year, nearly half close within five years, and roughly two-thirds close within ten years.

Is it better to start a business from scratch or buy an existing one?

• Neither is universally better. Starting from scratch gives you full control but usually takes longer to reach steady income. Buying an existing business can get you earning sooner, but it carries the risk of inheriting hidden problems, so due diligence is essential.

Is franchising a safer option than starting from scratch?

• A franchise gives you a proven system, training, and brand recognition, which can lower some of the uncertainty of starting from scratch. But it still requires real investment (commonly a $20,000–$50,000 franchise fee and $50,000–$200,000+ in total investment as of 2026, depending on the concept), and you still carry business risk and ongoing fees.

What if I don’t have all the skills I need to run a business?

• That’s common. You can learn what you’re missing, hire someone with the expertise, or outsource the work. What matters most is understanding the key parts of your business well enough to make good decisions and judge whether things are being handled properly.

References:

• LendingTree — 22.1% of New US Businesses Close Within a Year
• GrowthFactor — Average Cost to Buy a Franchise: 2026 Investment Guide