By: Adam Colgate
On your mark, get ready, go! In the simplest of terms, that is how you start a business and then run like crazy to not only cross the finish line, but win the race. Starting your own business could be a life-long dream, a family endeavor, or even a short term experiment. Focusing and fine tuning that plan from a “cool idea” to an executable strategy requires honest views of oneself, skills, marketplace and resources. A few questions to get you started:
1) Why do you want your own business? Being a business owner sounds great, but it is not for everyone. Especially small businesses. The intimacy with customers and personal freedoms are often offset with low (initial) income, and very little free time.
2) What is the focus of the business? Is there a unique product? A service? A franchise? Unique website? Be very clear on what the purpose of the business is.
3) Who are your competitors and how will you compete? Designing a new type of bicycle may be revolutionary, but it still has to compete with Schwinn. Is there a competitive advantage or is the marketplace such that there is plenty of demand for you to meet.
4) What is the scale of your business idea? Do you need a garage, office building, or retail space? Does the scale of what you are envisioning sync up with the focus of the business? Many entrepreneurs suffer from the “if I build it, they will come” syndrome. Try to balance between business size, planned growth and scalability of the resources available. Starting a business
5) What does your end game look like? Do you plan on going public and being added to Forbes’ Billionaires list? Is your goal to have a sustaining business for your family legacy? Do you plan to build something up so it can be sold off? Different opportunities present themselves over time, but knowing where your intentions are for the future, guide the actions of today.
Now that you have a vision of what the business offers, what it will look like and the levels of progress toward an end state – time to figure out the logistics for execution.
Who else do you need? Do you need investors? Business partners? Staff? Very few business owners can claim to be good at everything in their business. A great product developer may not be the best person to deal with the accounting, or even direct sales.
7) What is the preparation to operate? What licensing do you need? What resources are needed? Suppliers? Service providers? What are the logistical steps to operate? Once you have a basic plan together it will be time to sort out the type of business entity that makes sense (Sole Proprietorship, LLP/LLC, S-Corp, C-Corp). Be sure to check out your states Secretary of Business Department.
8) How much money do you need to get started? Before discussing how much money can be made from sales – ask how much will you spend before you can make a single dollar? Don’t forget to factor in survival costs for you and your family while the business is building up. Be as accurate as possible – get real estimates and then add about 10% to them – just in case. Tips on social media
9) How will you get the money to get started and survive? Savings? Loans? Credit Cards? Family & Friends? Investors? All of the above. Be clear in your planning how those sources of funds will be managed, paid back, and when.
10) Now, how much are you going to make? Everyone has the potential to win the lottery, but realistically, know your price points, competition and costs at different stages. Remember that higher volumes usually mean there are increases in operations. As much as you are living the dream in planning out your own business, keep the finances grounded in good old fashioned number crunching.
11) What is the timing? Is there testing period for product and market? What about lead time for legal processing? Is there urgency to starting your business? Include lead times for everything and include extra for slippage. The worst scenario is having product and operations, but no channel of sales due to a missing permit.
Put all the answers together with an executive summary, financial projections and “go to market” plan; you have met your “mark”. Compile finances, team and product / service and you are “ready”. Now “go” start your business!