Steps To Starting A Business
 For most first-time entrepreneurs, there is a considerable lag of time between thinking
about starting a business and actually taking the first steps toward
turning a business idea into reality. This time is usually spent
rationalizing inaction — that is, thinking about all the reasons that
now is not the ideal time for a start up. For the most part, these justifications fall into one or more categories:
- Lack of Time
- Lack of Money
- Lack of Product or Service Idea
- Concerns About Security
- Concerns About Personality, Knowledge and Skills
- Not Knowing Where to Start
While these are all valid concerns, none are factors beyond your own
control. As one management expert once said, an entrepreneur “…doesn’t
see risks; he sees only factors he can control to his advantage.” Each
and every excuse you can think of to resist taking the plunge into
entrepreneurship is just that — an excuse. If you are serious about
working for yourself and building your idea into a successful company,
there is a way to start on that road immediately. Working obstacles into
opportunities is a basic skill of successful entrepreneurs, and now is a
good time to start honing those habits.
Time
Lack of time is a common reason for delaying the start up of a business idea. For some, there just isn’t any time today
to work on the business idea. For others, the thought of taking months,
or even a year, to start a business seems overwhelming and too far off.
Instead, many potential entrepreneurs put off planning their business
idea until they will have enough time. The problem is that life has a
funny way of never leaving us with enough time to do everything
we need to do! The trick to getting started with your business idea now
is to organize your time effectively.
Many potential entrepreneurs have a great business idea or two but
can’t find the time to develop these ideas into an actual business. This
is particularly true for those who work full-time for someone else and
have significant personal and family obligations. The reality is that
with a little effective time management and commitment you can
find at least a few hours per week to work on your start up. Many of you
are thinking, “Sure, I could find a few hours a week, but it would take a
year to get my business off the ground at that rate!”
The year will pass whether you work on your business idea or not, but by scheduling just 3
hours per week, you will have put in nearly ONE FULL MONTH of work
hours by the end of that year! For most business ideas, a full month of
work is enough time to complete just about everything that needs to be
done to launch!
The trick to getting started on your business idea with limited time
available is to organize your time and responsibilities effectively. Use
a daily planner to schedule all of your current commitments, along with
time dedicated to your start up. Plan for which part of your startup you
will work on during each work session, including clear objectives. That
is, identify the specific tasks you will accomplish during each start up
session and hold yourself accountable for getting those tasks completed
on schedule.
Try using a 90-day planning strategy for managing long-term goals.
For most people, it is difficult to accurately predict how much can be
accomplished within a full year from today. It is far easier to estimate
what can realistically be accomplished within a 90-day window. If you
can spare 3 hours per week to work on your business, a 90-day plan would
include the work you think you could accomplish in one full workweek (3
hours x 12.5 weeks = 37.5 hours).
Just remember, time will go by whether or not you move forward with
your business idea. Don’t wait any longer for your independence — get
started today!
Money
Lack of money is, by far, the most common argument for not starting a
business. Obviously, business ideas vary in the amount of capital
required to successfully launch, but most can be modified and
bootstrapped into manageable startup costs. Most first-time
entrepreneurs develop an “order of magnitude” estimate of how much they
think they need to start their business, based on nothing more than
general ideas of what the big things should cost. Without detailed
research and planning of your business idea, there is no way to gauge
whether the cost of start up is too much. In addition, it is far easier
to raise the capital you do need once you have thoroughly
planned all aspects of your idea. A well-thought out idea and accurate
financial projections will convince potential family and friend
investors that you are serious about succeeding.
Even if you work through your idea and find that you are unable to
finance the full start up, you will find it much easier to modify and
bootstrap your idea into smaller, less costly niches that you can
ultimately grow into the company you imagine. You can start out
part-time, barter with other small business owners for needed goods and
services, or pick up side consulting gigs to increase income during the
early stages. The internet provides significant opportunities for free
marketing and it takes a little more time and effort but can be
extremely effective over the long run in building your brand and
customer base. Once you know where you need to spend money to get your
business off the ground, it is far easier to find the places to
bootstrap.
A bootstrapped start up of $1,500. to $5,000 is very common, and most
people can raise 5K with a little motivation. Cut your spending, sell
some stuff on eBay, do some side jobs, whatever it takes, there is
always a way to get started without a major outside investment. By
starting your business with an eye toward conserving cash, you will
develop a culture of financial responsibility that will ensure your
business’s long-term growth and success.
Friends and family are the second most popular source of funding for
start ups (after self-funding). In order to protect and separate the
business and personal relationship, it is important to follow basic
business principles in making deals with those close to you. Negotiate
all the terms, set a clear repayment schedule, and memorialize your
agreement in writing. There are companies available who will service
your family and friends loans, for a fee, which can be a great option if
you and your lender would prefer an intermediary to handle any
potential problems or disputes regarding the investment.
Another new avenue to raising capital for your start up is through
social lending websites. These sites allow you to post your request for
loans along with a description of the purpose and the interest rate you
are willing to pay. Interested users pledge their own funds toward your
loan in increments from $50 to your full requested amount. You repay
these lenders through the website. This can be a great option if you
have limited access to your own capital. Peer-to-peer lending is gaining
in popularity, which also means there are some kinks to work out. Be
sure to check into any lending site you consider before you commit. If
your start up expenses are relatively low, you may be better off scraping
together your own cash and looking to friends and family for the rest.
Whatever your start up plans, there is a way to get started, with or
without outside financing. It is critically important that you work
through your business idea in detail, including all planning and
financial projections, before you reject your idea because of lack of
money. The more you plan, the better able you are to see ways to
bootstrap by starting smaller, cutting expenses, and exploiting
opportunities that will allow your business to get off the ground.
Idea
Many potential entrepreneurs are excited by the idea of starting a
business, but do not have a particular product or service in mind on
which to base a business. Currently, the most popular advice is to
select something you are “passionate” about, and build a business around
that. The theory behind this advice is that you will be more dedicated
and committed to a business that involves something that you love. For
some, this choice is obvious, and you have probably considered turning
your hobby into a business for a long time. Consider the market you
are most interested in targeting — what do they do? How can it be done
better? What product or service do they need that they don’t even know
they need yet? Include ridiculous and impossible ideas. The act of
writing down even outrageous ideas can enhance creativity and
out-of-the-box thinking.
If you have trouble getting started, surf the web for lists of
business ideas, scan startup magazines at the grocery store, and talk to
your friends and neighbors about your desire to start your own
business. There are many, many business ideas that can be developed into
successful companies. If you are determined to work for yourself,
finding the right business idea is a minor obstacle. Of course, it’s
hard to argue with “doing what you love” — just remember that the
reality of owning your own business requires the bulk of your focus to
be on the business side. Most successful entrepreneurs will
tell you that the right set of business skills can make any business
idea enjoyable and profitable. As long as you are willing to put in the
time and commitment to learn everything you can about your business, you
will succeed.
Security
Many potential entrepreneurs who are on the fence about whether to
launch their own business are concerned about the perceived lack of
security and high risk involved in going out on their own. There is a
common belief that working for others is more secure than working for
yourself because of the “guaranteed” paycheck. As the recent economy is
showing us, working for others is no guarantee of job security! One in
ten of your peers are currently unemployed, and the job market is going
to get worse before it gets better.
Working for yourself is often considered “risky” by
non-entrepreneurs, but most business owners don’t see it that way.
Instead, entrepreneurs see every factor as within their control and as
an opportunity to build their business into a successful company. With
your own business, you are in complete control of the direction of your
business, you decide how and when to market, you manage all the
finances, and you make the final decisions about every aspect of growing
and developing your idea. While it’s true that any failures are your
responsibility, business ownership tends to drive entrepreneurs to pay
closer attention to the details and factors that drive success or
failure, and have far more incentive to pick themselves up when they
slip and try again.
The primary factors in reducing the risk in any start up are good
planning, efficient marketing, and solid financial management. Good
planning does not mean throwing together a basic business plan using a
ready-made outline. Rather, you need to completely flesh out your
business idea, considering all relevant factors from your business name
to target market to expenses. Efficient marketing begins with a complete
understanding of who you are trying to reach and how your product or
service will grab their attention.
With the ever-changing marketplace, it is more important than ever to
research and understand the various marketing options available and
establish procedures for ensuring your business is getting the best
return for your marketing dollar. Financial management of the business
is often a struggle for new entrepreneurs. Owning a business is all
about turning a profit, regardless of the type of business you choose.
It is critical for new business owners to select the right accounting
system (not necessarily the most popular) that will allow you to
accurately evaluate the financial health of your start up, and to
understand the basics of evaluating the numbers on a regular basis.
If you are working a full-time job now and are reticent to give up
that steady paycheck, consider starting your business part-time. As
mentioned in the earlier, working on your idea just three hours per week
for one year is equivalent to taking one full work month to focus on
your start up. In addition, starting your business while still employed
eases the financial pressures inherent in start ups. By tightening up
your personal expenses, many entrepreneurs may be able to launch their
business without any outside investment. At a minimum, completing all of
your business planning while working will make it clear whether working
for yourself will be successful enough to support you financially and
how much capital you will need on hand to survive those first few
months.
The slow economy and tight job market make this an excellent time to
start up your own business. By planning your company conservatively
enough to survive this economy, you will develop a culture of careful
spending, efficient marketing, and consistent oversight that will
prepare your company for explosive growth once the economy bounces back.
Personality, Knowledge & Skills
Some potential entrepreneurs worry that they do not have the right
personality, knowledge, or skills to successfully launch and run their
own business. While certain traits are generally associated with the
entrepreneurial spirit, there is nothing magic about owning a business —
anyone with the desire can learn what they need to know.
The personality traits that non-entrepreneurs generally associate
with entrepreneurs are that they are extreme risk-takers, are very
outgoing, have no fear of failure, and have a high tolerance for
uncertainty. While it seems, at first consideration, that these traits
might be required for taking the chance on your own start up, they are
not. All different types of people have successful companies, the trick
is to use your own traits to your advantage. If you do not see yourself
as a risk-taker, you are likely to put more time and effort into
planning each facet of your business idea, researching and comparing
options to find the best avenue to reach your business goals. If you are
an introvert, you can choose a business model that allows you to work
independently and practice your networking skills in smaller, controlled
environments.
A healthy fear of failure is an excellent motivator, as long as you
don’t allow yourself knee-jerk reactions to setbacks. For many
successful entrepreneurs, the fear of failure translates into the drive
to succeed. Changing your mind about how you channel your fears can be a
critical factor in the success of your business idea. A low tolerance
for uncertainty is often reflected, again, in careful planning as well
as close attention to the financial management of the start up. In
reality, some of these presumed “entrepreneurial traits” can be a real
disadvantage to a new business owner. If you have no fear of risk or
failure, you are far more likely to take uncalculated risks that are far more likely to put your success in jeopardy.
Most business responsibilities fall into two broad categories —
operations and business. Operations refers to what your business
actually does — makes and delivers pizza, trains construction managers,
publishes a sports magazine, etc. The business side refers to the tasks
that must be handled for all businesses — accounting, marketing,
customer service, etc. Entrepreneurs tend to be very strong in one area
or the other, but often not both. Those who choose a business idea
because it is something they are passionate about usually have the
operations under control but worry about handling the business side of
the equation. Even if you are “doing what you love,” the whole point of
business ownership is to turn a profit. It is critical to understand how
to handle the money and to equip yourself with the right tools to make
financial management of your start up as accurate and straightforward as
possible.
In addition to basic accounting skills, an entrepreneur must be
familiar with research and planning, marketing, and dealing with
customers. None of these skills are particularly difficult, but those
with little or no experience will need to take the time to understand
and master these areas in order to drive their business to success. For
those who have a particular business idea but have limited knowledge of
the actual operations, you can take course to study the skill in depth.
Whatever skills you lack to successfully start up your dream business, a
little time and dedicated effort can get you where you need to be.
Where to Start?
Congratulations! You have eliminated all the usual excuses for not
getting started on your new business…..now what? Figuring out where to
start in developing your business idea is a major stumbling block for
most first-time entrepreneurs. The available advice is all over the
place and often lists “business requirements” without telling you how,
when, or why to do them. Simply registering your business and posting a
website is not enough, and the available fill-in-the-blank business plan
templates do not tell you how to dig into the details of your startup
or what you should be looking for.
Quite a bit of effort goes in to a well-developed plan, but the
experience will leave you completely prepared for managing your business
once it is up, running, and making money. Your well-developed plan will
provide you a road map for where your business is going and how to get
there. In addition, if you will need outside investment to launch your
start up, all of this research will easily develop into your formal
business plan and will clearly show that you have done your homework and
know your business inside and out.
There is a lot to starting your own business, but the independence
and flexibility that comes with entrepreneurship is well worth the
effort. The process is not as complex as it seems, and the keys to
success are easy to remember — Planning, Marketing and Financial
Management. If you begin your business with these factors in mind, you
will greatly reduce your risk and greatly increase your odds of success.
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