3 questions every entrepreneur must ask before launching a new business

Being an entrepreneur is not easy work. Twenty percent of small businesses fail after just one year; that number climbs to 50% after five, according to a recent report by the Bureau of Labor Statistics. So before you even lay out your business plan, Tara Falcone, a certified financial planner and founder of Reis Up, a company dedicated to increasing financial education and access for all generations, says it’s best to ask yourself these three important questions to see if you are ready for the challenge.

How much is in my savings?

First, Falcone says an aspiring entrepreneur must ask how much they have saved to live off of. The simple fact is that most companies are not profitable when they are founded. Entrepreneurs should never overlook their living costs when they start a new business.

How big of a risk is it to leave my current job?

Falcone says a budding entrepreneur must also calculate the opportunity cost of starting a business. If they are in a high-paying job, they should determine how big of a risk it is to leave that job for their new endeavor.

How much of my own personal capital am I willing to invest?

A final consideration entrepreneurs must make is to establish how much of their own personal capital they are willing to put into the venture, according to Falcone. Entrepreneurs should calculate how much they are able to give and how much they will need from outside investors.

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