Entrepreneur Quiz

See if you have what it takes

Original article written by Kelly Spors of the Wall Street Journal

Adapted and edited by Jeffrey Taylor

Thinking about starting a business? Make sure you're cut out for it first.

In this bleak economy, lots of people are contemplating striking out on their own -- whether they're frustrated job seekers or people who are already employed but getting antsy about their company's prospects.

For some people, entrepreneurship is the best option around, a way to build wealth and do something you love without answering to somebody else. But it's also a huge financial gamble -- and some people, unfortunately, will discover too late that it's not the right fit for them.

Building a successful business can take years filled with setbacks, long hours and little reward. Certain personalities thrive on the challenge and embrace the sacrifices. But it can be a hard switch for someone who has spent years sitting in a cubicle with a steady paycheck.

So, how can you figure out whether you're suited for self-employment? We spoke with entrepreneurship researchers, academics and psychologists to come up with a list of questions you should ask yourself before making a big leap. Entrepreneurs, of course, come from all sorts of backgrounds, with all sorts of personalities. But our experts agreed that certain attributes improve the odds people will be successful and happy about their decision.

Keep in mind that any self-analysis is only as useful as the truthfulness of the answers -- and most people aren't exactly the best judges of their own character. Here, then, are 10 questions to ask to see whether you're up for the challenge of entrepreneurship.

1. Are you willing and able to bear great financial risk?

Roughly half of all start-ups close within five years, so you must be realistic about the financial risks that come with owning a business -- and realize that you could very well lose a sizable chunk of your net worth.

Consider how much you'll have to ante up and how losing it would affect your other financial goals, such as having a sound retirement or paying your kids' college tuition. Weigh the importance of starting a business against the sacrifices you might face.

Entrepreneurs should be sure that if they lose this capital, it either won't destroy their financial situation, or they can accept the concept of bankruptcy. Some people thrive on the financial risk; others are devastated by the thought of losing even $10,000.

And don't assume you'll be able to lower your risk substantially by finding investors. Less than 10% of start-up financing comes from venture capitalists, angel investors and loans from friends and family combined. And that's true even in good economic times. Banks, meanwhile, often won't lend to start-up founders without a proven track record. When they do, they generally require the founders to guarantee the loan or credit line with their personal savings or home -- an incredibly risky proposition.

2. Are you willing to sacrifice your lifestyle for potentially many years?

If you're used to steady paychecks, four weeks' paid vacation and employer-sponsored health benefits, you might be in for an unpleasant surprise.

Creating a successful start-up often entails putting in workweeks of 60 hours or more and funneling any revenue you can spare back into the business. Entrepreneurs frequently won't pay themselves a livable salary in the early years and will forgo real vacations until their business is financially sound, which can take eight years or longer.

Even if you can steal away, it's hard to find somebody who can fill in for you. Many entrepreneurs must tow along their cellphone and laptop, so they can be available to answer questions from clients or employees.

3. Is your significant other on board?

Don't ignore the toll running a business will take on your loved ones. Failed ventures frequently break up marriages, and even successful ones can cause lots of stress, because entrepreneurs devote so much time and money to the business.

You can avoid the heartache by talking at length with your spouse and family about how the business will affect home life, including the time commitment, changes in daily schedules and chores, financial risks and sacrifices. They must also understand the huge financial gamble they're making with you.

4. Do you like all aspects of running a business?

You better. In the early stages of a business, founders are often expected to handle everything from billing customers to hiring employees to writing marketing materials. Some new entrepreneurs become annoyed that they're spending the majority of their time on administration when they'd rather be focused on the part of the job they enjoy.

Some entrepreneurs assume their passion will rub off on employees and that they will do their jobs as enthusiastically as you do. Experience says that some clients will start to call you directly, complaining that your employees are not returning phone calls or that projects are behind schedule.

5. Are you comfortable making decisions on the fly with no playbook?

With a new business, you're calling all the shots -- and there are a lot of decisions to be made without any guidance. You might not be used to that if you've spent years working in corporate America.

For most entrepreneurial ventures, there's no structure. You're going into a business, and nobody has told you how to be successful.

6. What's your track record of executing your ideas?

One of the biggest differences between successful entrepreneurs and everyone else is their ability to implement their ideas. You might have a wonderful concept, but that doesn't mean you possess that special mix of drive, persuasiveness, leadership skills and keen intuition to actually turn the idea into a lucrative business.

So, examine your past objectively to see whether you have assumed leadership roles or initiated solo projects -- anything that might suggest you're good at executing ideas.

7. How persuasive and well-spoken are you?

Nearly every step of the way, entrepreneurship relies on selling. You'll have to sell your idea to lenders or investors. You must sell your mission and vision to your employees. And you'll ultimately have to sell your product or service to your customers. You'll need strong communication and interpersonal skills so you can get people to believe in your vision as much as you do.

If you don't think you're very convincing or have difficulty communicating your ideas, you might want to reconsider starting your own company -- or think about getting some help.

There's a big difference in waiting for the phone to ring and getting an assignment and having to make the phone ring.

8. Do you have a concept you're passionate about?

Every morning you want to jump out of bed eager to get to work. If you're not that exuberant about how you'll be spending your time -- or the business concept itself -- running a business is going to be a rough ride.

Ask yourself why you're doing it. If you think it's mostly about making a lot of money or because you're tired of working for someone else, steer yourself towards something more in line with your own interests.

It's usually wise to find a business in an industry you are very familiar with; it will be much harder to succeed if you know little about the field.

9. Are you a self-starter?

Entrepreneurs face lots of discouragement. Potential buyers don't return calls, business sours or you face repeated rejection. It takes willpower and an almost unwavering optimism to overcome these constant obstacles.

John Gartner, an assistant clinical-psychiatry professor at Johns Hopkins University, theorizes that many well-known entrepreneurs have a temperament called hypomania. They're highly creative, energetic, impatient and very persistent -- traits that help them persevere even when others lose faith.

One of the things about having this kind of confidence is they're kind of risk-blind because they don't think they could fail. If they fail, they're not down for that long, and after a while they're energized by a whole new idea.

10. Do you have a business partner?

If you don't have all the traits you need to run the show, it's not necessarily a hopeless endeavor. Finding a business partner who compensates for your shortcomings -- and has equal enthusiasm for the business concept -- can help mitigate the risks and even boost the odds of success.

The key is finding a partner who prefers handling different aspects of the business, so you're complementing each other -- and not constantly at each other's throats.

Someone who likes to take risks and be in the spotlight, for instance, might choose a cautious partner who prefers to work in the back room.

But taking on a partner isn't a light decision. Many partnerships split due to conflicts over everything from attitudes about money to miscommunication and contrasting work ethics.

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