Stop Before You Startup

Why Most “Entrepreneurs” Are Underpaid, Overworked Employees Who Work for Themselves
November 15, 2024 by
Stop Before You Startup
Micro Mutiny Inc., Tera Warner

It’s time to crush those entrepreneurial yearnings for success and hose down your inner fire! There’s no point starting a business unless you can confirm it’s going to be a money-making, profit-generating, viable, expanding, transparent, and scalable venture. This article will walk you through a rigorous set of questions to assess if your business has what it takes to survive liftoff and overcome the brutal obstacles that send 90% of startups back to the job market.



"Most entrepreneurs are merely technicians 
with an entrepreneurial seizure."


Michael Gerber


You’ve got a great idea—maybe it’s a cookie recipe your friends rave about, or a gadget you’re itching to put to market. I’ll be the first to applaud your entrepreneurial spirit, but I’ll also be the loudest to yell, “STOP!” if that great idea isn’t backed by a clear structure. Great ideas alone don’t build businesses. Without a clear business management strategy and solid financial planning that accounts for the actual costs of time and resources, you're setting yourself up to fail.

If your business isn’t making money, it’s not a business—it’s a charity or a hobby. Even if people like your product, even if they'd be willing to pay for it. So before you dive head, let’s peel back the layers to see if your business is worth launching in the first place.

Can You Actually Turn a Profit?

Let’s start with a few key questions about the business you’ve been thinking of getting off the ground. If you can’t confidently answer YES to these questions, you may be better off curling up with those homemade pickles you were going to sell at the county fair while watching Dragon’s Den and brainstorming a new, more profitable idea!

Let’s Look at Your Income Potential

  1. What’s the selling price of your product? 
  2. Can you confidently say that people will pay that price?
  3. How many units can you realistically sell each month?

Multiply the price by the expected sales volume.
That’s your Total Monthly Income.

Understanding Your Costs

  1. What’s the cost per unit for your materials or ingredients?
  2. Are there packaging or labeling costs per unit?
  3. Do you pay for shipping or bulk order fees for your supplies?

Add these up and multiply by your expected sales volume. 
That’s how to calculate your Monthly Cost of Goods Sold (COGS).

Operating Expenses

  1. What percentage of your phone, home, car, or travel expenses goes toward running this business? Estimate a portion of each and add it to your monthly costs.

Add this to your COGS for the month, and you’ve got your Total Monthly Expenses.

Time, Attention, and Labor

What you don’t often see on paper is  where your profit drains away. Answer these:

  1. How much time goes into producing each unit? Include prep, production, and cleanup.
  2. How many hours a week are spent planning, researching suppliers, or organizing inventory?
  3. How much time do you spend on marketing, including creating social media content and engaging with followers?
  4. Do you travel to markets, fairs, or client meetings? How much time does it take for setup, takedown, and commuting?
  5. Who’s handling administrative work like bookkeeping, invoicing, and customer service? Are you following up with customers for feedback or planning future products?

Estimate your Total Monthly Time Investment in Hours based on your answers above. Now we get to the reality check.

Crunching the Numbers

  • Take Your Total Monthly Income.
  • Subtract Your Total Monthly Expenses (COGS + Operating Expenses).
  • Divide by Your Monthly Time Investment in Hours.

Write that number down. That’s your Hourly Pay—Before Taxes.

For a clearer picture of your after-tax earnings, adjust for taxes based on your income bracket.

Reality Check

Unless you’ve done the math on these questions, there’s a good chance you’re working for less than minimum wage. WAY less. Only 20% of new businesses make it through the first year, and only half of those are still standing after five. If your numbers don’t add up, it’s time to step back and re-strategize.

But don’t despair. You can still make donuts, knit sweaters, or sell trinkets—just do it for fun or charity. If you want a business that stands the test of time, you need to build systems that buffer against the actual costs. If any of these questions reveal a weak spot, use it as an opportunity to refine your plan.

This is the list of things most people forget to consider when starting a passion or craft-based “business”:

Time and Labor Costs

  • How much time does it take to produce each unit from start to finish?
  • Have you accounted for research and development time for new products?
  • Who’s handling invoicing, bookkeeping, and taxes? 

Marketing and Promotion

  • Are you creating social media content, taking photos, and engaging with followers?
  • Do you budget for paid ads like Facebook or Google?
  • Who’s updating your website and SEO, or creating blogs?

Sales and Customer Service

  • How much time goes into handling customer questions or complaints?
  • Do you have automated email sequences or sales funnels in place?

Supply Chain and Inventory

  • How often do you spend time ordering and organizing inventory?
  • Do you have shipping or delivery costs for materials?

Event and Travel Expenses

  • Have you included costs for travel, parking, and event fees?

Professional Fees and Subscriptions

  • Are you using paid tools like accounting software or graphic design programs?
  • Are there fees for email marketing platforms or payment processing?

Legal, Insurance, and Compliance

  • Do you have business insurance? Trademark or IP fees?

Operational and Facility Costs

  • Are you paying rent, utilities, or facility maintenance costs?

Training and Education

  • How much are you investing in courses, certifications, or mentorships?

Employee and Contractor Costs (If Applicable)

  • Are you covering payroll, benefits, and recruitment costs for contractors or employees?

Feeling Discouraged? Create a Bigger Game!

I’m not trying to beat you down with these points of reflection. I’m trying to pull you up higher, so you can really see what it’s going to take to create a viable, scalable business.

Most businesses fail, not because the idea isn’t good, but because the owner wasn’t prepared for the actual costs of keeping the business alive. Start with a high bar, and you’ll think the right thoughts, get creative, and find solutions that let you create profit margins and scalability from the very beginning.

Next Steps

Next week, we’ll share ten practical steps to get your startup running fast—and built to last. From automating workflows to optimizing demand forecasting, these tips will help you transform your idea into a sustainable, profitable business!

In the meantime, explore our cheat sheet on creating a strategic plan, and blogs on Odoo ERP tools for businesses that want to learn more about building scalable, profitable systems.