Starting a Business: Early Considerations
It’s a common dream—ditch traditional employment and start your own business. However, in deciding to start your own business, be careful that you are not just attempting to run away from present difficulties that might have simpler remedies. Your evaluation should include an appreciation for the personal qualities known to increase an entrepreneur’s chances of success as well as an objective evaluation of your business idea. Below are some considerations to think about as you contemplate starting your own business.
1: Successful entrepreneurs have a competitive spirit. They are often innovators seeking to provide a product or service that is different from what currently exists. They believe in their abilities and have very positive attitudes. Where others see obstacles, they see opportunities.
2: Starting a business takes a tremendous amount of time and effort. Successful entrepreneurs exude self-discipline. They are extremely hard-working people-giving their ventures everything they have, 24/7.
3: Building a business requires patience. It can take a year to organize and start a new business, up to three years for that business to become profitable, and up to five years for it to become self-sustaining.
4: Planning is critical. It is essential to properly estimate the amount of capital needed to operate the business, including sufficient sustainable income for the owner for at least six months. Most experts consider writing a business plan to be an essential ingredient for success. In addition to helping you manage your cash flow by creating a budget, the business plan will serve to crystallize the concept of the business, helping you define how you will stand out from the crowd and find customers for your product or service.
5: All the bases need to be covered with players in every position. Before starting a business, determine who is going to be the salesperson…the bookkeeper…the marketing expert…the customer service manager…the computer wiz… (you get the picture). Chances are you will not be interested in, nor good at, wearing all of these hats. That’s okay, just figure it out before it becomes a problem.
6: Seek out as much professional advice as you can get.
Analyze Your Business Idea
Before setting up a company, an aspiring entrepreneur should do a little reality testing. To fully analyze a business idea, it is important to ensure that this particular business idea is the right business for you and that there is a strong market for your product or service.
Is This Business Idea Right for You?
In consideration of the first question, you must evaluate both your desire and your knowledge. Since starting and growing a business is tough work, an entrepreneur should love the business they launch. So, if you are leaving your present job to start your own business offering the same type of service or product, you need to ask yourself if you have enjoyed your work enough to want to continue in the very same industry.
Assuming you are excited about the idea you have, the next question becomes, do you know enough? Most successful start-ups are led by individuals who are already experienced in their industry, or a very closely related one. That knowledge gives them an edge in creating or supplying a product or service that is of better quality, lower cost, or enhanced in some other unique way.
Will There be a Big Enough Market?
Once you are confident that this particular business idea is right for you, you will need to evaluate whether customers will materialize. Is there a sufficient market for your products or services? Who exactly are your buyers? How much will they buy?…How often?…At what price?
Other necessary research is to learn what the competition is doing. How many companies are serving the market? What is their reputation? What are they charging?
You will also want to assess the five-year and ten-year outlook for your business. Is it a growing, mature, or declining industry? Even if your business idea is a great one, deciding to enter a market that is saturated or declining is probably unwise. Recognizing a rising market and jumping in without the required skills or capital is equally problematic.
All of this information will help you develop a competitive business strategy where you will define, in detail, what you are selling, whom you are selling it to, what you will charge, and most importantly, how you are going to differentiate yourself from other businesses.
Leaving traditional employment to start a business can be a wonderful choice for the right person with the right business idea. If you would like a sounding board such a venture, I welcome you make an appointment to discuss your options in detail. Send me an email, give me a call, or use the contact us page to get started.