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Many people dream of quitting their jobs and starting their own businesses. But in a time when only half of new small businesses survive five years or more, according to the U.S. Small Business Administration, how do you know if you have what it takes to withstand a competitive market?

“Entrepreneurship is a lifestyle choice. It is not for everyone and it doesn’t come easy. Even with a great idea you need intelligence and drive to make it happen,” says Michael J. Palumbo, author of “Calculated Risk: The Modern Entrepreneur’s Handbook.”

Palumbo, a highly successful entrepreneur, has built multiple businesses from the ground up, including Third Millennium Trading, which grew from initial capital of $250,000 to over $100 million. And now, as a venture capitalist and real estate investor, he’s invested in multi-billion dollar enterprises, including GETCO, a financial services company that was sold at a valuation of $1.7 billion in 2007, and a medical business with a current valuation of over $100 million.

With his track record in identifying what makes a winning business, Palumbo, who has offered business advice on Voice of America, WBBM-AM in Chicago and WOR-AM in New York, is sharing insights into identifying whether your great idea is solid enough to quit the day job and start your own company.

Is There a Need?

A truly great business idea takes into account where the marketplace is heading and anticipates technological innovations. Moreover, a great idea usually gives the world something it didn’t know it needed. Once deployed, though, the world cannot live without it.

Also, you need to assess where technology is going to be five years from now when your company is launched. Will your idea still be relevant?

The Geography Test

Is your idea relevant on a mass scale? Is it not only timely and relevant, but hugely needed and scalable?

The Feasibility Test

When the idea is great, but revenue, or some other growth-related metric is not there, something under the hood is likely broken. Unfortunately, it often isn’t the idea, it is management. Investors and venture capitalists aren’t always looking for profitability. Sometimes they are looking for traction: increasing revenue, rising subscriber-bases, organic user-growth; these are all things that offset profitability.

Another aspect of the Feasibility Test is determining whether adequate technology infrastructure exists, while questioning whether the world is ready for the concept, points out Palumbo, who has been quoted about business growth by Forbes, The Wall Street Journal and TheStreet.com.

The Competency Test

Ask yourself: “Am I the right person to make this happen?” This is crucial and should be answered with complete honesty. Evaluate your skills, passion, and level of competency for this task. The hardest person to criticize and evaluate will always be yourself, and those who truly understand themselves and their skills are some of the wisest people.

For more entrepreneurial tips and information about the new book, “Calculated Risk,” visit www.michaeljpalumbo.com.

“Starting a company is one of the most challenging things you can do,” says Palumbo. “If successfully done, it can also be one of the most rewarding.”