“I’ve decided to start my own business”
These are words I hear frequently. I help dozens of entrepreneurs every year start a business. When I ask them what they would share with a new entrepreneur, they respond with the following.
Have a Business Plan
When you think, I’m going to start my own business, you will either create and implement a solid business plan, or throw a bunch of stuff at the wall and hope some of it sticks. Review your plan and your financials frequently to stay on top of why you started this business in the first place.
Don’t Launch Too Quickly
“I’ve got a great business idea that I just know will be successful. I’m going to start my own business.” Before you jump in with both feet, take a step back and make sure everything is ready to go. This way you will provide an extraordinary experience for your customer. It takes time to build a good reputation, but no time at all to build a bad one. Use a Business Start-up Checklist such as the one available here to ensure you have completed all of the tasks that are required to run a successful business.
Understand Your Financials
An unfortunately high number of business owners start a business based on unrealistic sales forecasts. Be conservative in your forecasts. Underestimate sales and overestimate your expenses. Remember that you are probably not going to be at your sales capacity in the first year and that it will take time to make a profit.
Whether you do your books yourself or hire a bookkeeper, it is your responsibility to understand what all the numbers mean and how they impact your business. In order to make a decision on a capital purchase, you need to know what your cash flow looks like so you can determine if you have the cash available. Understanding your cash flow can also help with decisions around staffing, investments in inventory and many other things.
Don’t Underestimate the Capital Required to Get Started
When you are creating that long list of start-up costs, it is easy to overlook things. Make sure you include everything from equipment to software, initial inventory to start-up marketing, and so on. Rack your brain until you have thought of every last thing, then add 10% for the things you may have missed. Don’t forget to add 3 to 6 months’ of working capital to weather the launch period. Sadly I see too many people say I want to start my own business, then start it only to find out they don’t have enough money to keep it going.
Do Your Market Research
Start a business based on solid research. Market research will tell you if you have a viable business idea and who your target market is. Ask questions, do surveys, know your competition inside and out. Research your industry and any current trends. Check out what is happening in other countries where they may be years ahead of us.
Define Your Ideal Client
Be absolutely clear on who your ideal client is as you will hopefully do about 80% of your business with them. When you think about Ideal Client, describe the people or businesses who are most profitable. Create a Customer Persona for each so that you know exactly who you want your message to go to.
Lose Your Ego and Learn to Ask For Help
Entrepreneurship is never a one-person journey. You will lose time and money, while increasing stress levels, while you try to figure everything out for yourself. Find a mentor who will help you stay on track and who you can bounce things off of. Outsource your weaknesses. Think about it…your business provides a solution for other peoples’ problem/want/need; other businesses provide solutions for you.
Believe in the Value You Bring to the Table
You don’t have to be the cheapest out there. As a new business owner, it is easy to be tempted into granting a discount in order to make the sale. If you have a strong differentiator, you should never apologize for the price you are charging for your product or service. Many people price as the technician (what they are trained in or have experience in) and forget that their former employer was not just covering their wage, but all of the other expenses associated with being in business. They were taking on the risk of owning or running their business.
Now it’s your turn. Not only do you have to pay yourself and other employees, but you also have to pay all of your other operating expenses and cost of goods sold. In the beginning, you will be developing or outsourcing the skills to run a successful business. In fact, it is incumbent on you to be profitable in order to keep people employed and provide the product and service levels your customers expect. At the end of the day, if you don’t value what your business is providing, no one else will either.
The above are just some of the tips that my clients have for new business owners. The have already suffered the growing pains of starting a business, hopefully, you can learn from them. Read more from Business News Daily’s article “12 Things to do Before Starting a Business” and our blog post “Business Planning Essentials”
To your profitable journey,