How to Start a Small Business
Are you one of those who dream of owning your own business? You'll be your own boss, and the captain of your destiny—–maybe even a captain of industry. Is it hard? Without a doubt. Is it challenging? Absolutely. Do you have to be wealthy and well-educated with a lengthy resumé? Not at all! Can you do it? As the magic 8-ball says, "All signs point to yes!" So how do you do it, and make it work? Plan, plan, plan! There are some tried and true ways head down the path of creating your own business, and there is no time like the present to get started!
1. Have an idea. It might be a product you've always wanted to make, or a service you feel people need. It might even be something people don't know they need yet, because it hasn't been invented!
- It can be helpful—–and fun—–to have people who are bright and creative join you for a casual brainstorming session. Start with a simple question like: "what shall we build?". The idea is not to create a business plan, just to generate some ideas. Many of the ideas will be duds, and there will be quite a few ordinary ones, but a few will emerge that have real potential.
2. Define your goals.
Do you want financial independence, eventually selling your business to the highest bidder?
Do you want something small and sustainable, that you love doing and want to derive a steady income from? These are the things that are good to know very early on.
3. Create a working name. You could even do this before you have an idea for the business, and if the name is good, you may find it helps you define your business idea. As your plan grows, and things begin to take shape, the perfect name may come to you, but don't let that hinder you in the early phases—–create a name that you can use while you plan, and don't mind changing later.
- For a bit of fun, take a cue from the Beatles, who often use fun names for a song before it is finalized, like Yesterday, which had the working title of "Scrambled Eggs."
4 Define your team. Will you do this alone, or will you bring in one or two trusted friends to join you? This brings a lot of synergy to the table, as people bounce ideas off each other. Two people together can often create something that is greater than the sum of the two separate parts.
- Think of some of the biggest success stories in recent times include John Lennon and Paul McCartney; Bill Gates and Paul Allen; Steve Jobs and Steve Wozniak; and Larry Page and Sergey Brin. In every case, the partnership brought out the best in both sides of the equation, and every one of them became billionaires. Is a partnership a guarantee of being a billionaire? No, but it doesn't hurt!
5.Choose wisely. When choosing the person or people you're going to build the business with, be careful. Even if someone is your best friend, it doesn't mean that you will partner well in a business operation. Start it with a reliable person. Things to consider when choosing your co-leaders and support cast include:
- Does the other person complement your weaknesses? Or do both of you bring only one set of the same skills to the table? If the latter, be wary as you can have too many cooks doing the same thing while other things are left unattended.
- Do you see eye to eye on the big picture? Arguments about the details are a given, and are important for getting things right. But not seeing eye to eye on the big picture, the real purpose of your business can cause a split that may be irreparable. Be sure your team cares about the and buys into the purpose as much as you do.
- If interviewing people, do some reading on how to spot real talent beyond the certifications, degrees or lack thereof. People's innate talents can often be somewhat different from the conventional education streams they've pursued (or failed to) and it's important to look for "click" (you get along with them) and latent talents as much as paper credentials.
6.Create a business plan. A business plan helps to define what you think you need to launch your business, large or small. It summarizes the sense of your business in a single document. It also creates a map for investors, bankers, and other interested parties to use when determining how they can best help you and to help them decide whether or not your business is viable. There are seriously good books available on writing business plans that cover many chapters, and you should avail yourself of at least one of these as a guide (bookshops, libraries and online are good places to find these). In a nutshell, your business plan should consist of the following elements:
7.Come up with an executive summary. There will need to be several basic parts in your business plan. The first is the executive summary. Describe the overall business concept, how it will be monetized, how much funding you will need, where it stands currently, including its legal standing, people involved and a brief history, and anything else that makes your business look like a winning proposition.
8.Write your business description. Describe your business more specifically, and how it fits into the market in general. Who will you be selling to, and how will you deliver your product? If you are a corporation, LLC, or sole proprietor ship, state that, and why you chose to go that route. Describe your product, its big features, and why people will want it.
9.Come up with some marketing strategies. You must know your market if you are to be successful, so spend a great deal of time analyzing just who it is that will want your product, and how you plan on appealing to them to take cash out of their bank account and give it to you. What is the size of your market, will there be opportunities to expand the initial market, and what are your sales potentials? When you understand these variables, you want to sell them to the person reading your business plan.
10.Do a competitive analysis. As you develop the above sections, you will learn who your key competitors are. Find out who is doing something similar to what you are planning, and how have they been successful. Just as important is to find the failures, and what made their venture fall apart.
11.Write your development plan. How will you create your product? Is it a service that you are offering, or if it's more complex—software, a physical product like a toy or a toaster—whatever it is, how will it get built? Define the process, from sourcing raw materials to assembly to completion, packaging, warehousing, and shipping. Will you need additional people? Will there be unions involved? All of these things must be taken into account.
12.Plan your operations. Who will lead, and who will follow? Define your organization, from the receptionist up to the CEO, and what part each plays in both function and financials. Knowing your organizational structure will better help you plan your operating costs, and fine-tune how much capital you will need to function effectively. Keep in mind that your business will continue to evolve and that this will be a rough idea of who is needed to keep things functioning; as the business grows, you'll likely make changes to the hiring plans to fit what is happening at the time. Also, in a number of cases, the "staff" is you and whomever you can consult, such as your lawyer and accountant. This is fine, as long as you show that you're prepared to pay for external advice and help until your business is ready to take on staff.
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