So you have been thinking about this great idea/project for a long time, and you think it could be a winner. But where do you start?
Refine your idea
The first step to realizing your goal is refining your idea, shave it back to the bare basics. Will it work? Will people pay for my product/service? Is someone already doing something similar that may affect your business and potential earnings? Will the business idea require the assistance of another person or business? How likely are they to continue helping/stay in business themselves? All of these are valid and probing questions, take your time and answer them honestly. There is no point in embellishing the truth as the only person you will hurt in the long run is you.
You and your friends may think that your new business idea is a winner, but let’s be honest, they are your friends. How honest do you think they are going to be? One of the best ways to be sure that you are going in the right direction is to do a focus group. At its core, a focus group can be an expensive thing. If it is done in the traditional sense, you will hire out a room or venue. Invite members of the public into your venue, these can be at random or if you know that your target audience is single moms aged 19-30 you can be a little more selective. Provide some minor food and drink and then run your ideas past them and see what response you get.
It is worth bearing in mind that sometimes a focus group can be a little swayed. Often there will be a very prominent member of the group who will make their voice heard over the rest of the people and will often influence the views of the group. Another way of running the group is to take the people individually into a room. Now run through your product, the idea, potential pricing, etc. and then hand them a ballot card so they can fill in their thoughts and feelings. Sometimes another great strategy is to promise some incentive or monetary payment if they provide contact details. You can then chase up on their comments after the research be they positive or negative.
If you and your friends run the focus group yourselves by getting the people off the street and running the presentations yourself, you can save a whole lot of money. You may also get a good deal on a venue, for example, a church hall or an unused classroom for an hour.
At this stage, it is easier to pull out than when you have secured financing and owe a load of people money. Don’t be disheartened though as many people with your new found skills do very well for themselves. Check out typical salaries of business administration pros, this can be achieved by changing your path at college.
Now you know that your business idea is a go, and you have all that great feedback from the focus group its time to move onto the planning stage. Your business plan is one of the most important documents in the whole process – try turning up at the bank asking for a loan without one.
Find and register a name. Take your time and plan thoroughly, it would be very easy at this point to get carried away especially on the back of your research and plow through at lightening speed. Look at every avenue, research every pitfall and above all look for new opportunities.
Many small businesses are in such a rush to get launched that they forgo the plan and head into business. This flaw leads to many businesses failing as they are so focused on three months, six months and twelve months down the line. They just don’t see the bigger problems that are just around the corner.
Make contingency plans, yes the guy around the corner who makes parts for your business is there now, but what if he closes up next month. Where are you going to source parts and what will be the cost to your business in terms of money and time?
You will require a formal business plan also. This will form the basis of your business plan, and you will need to take it to the bank or investors to secure help and finance. Comprehensive guides to doing this correctly can be found on various resources online.
Starting a business doesn’t have to cost the earth depending on the type of business you had in mind. Many first-time entrepreneurs begin their careers with savings and money borrowed from friends and family. Bootstrapping is becoming more and more popular in which an owner uses their own limited supply of money to start the business, market it and buy resources. This type of business is self-sustaining but can be quite a challenge unless you are really committed.
Banks and investors are another way to go and offer the traditional style way of raising capital by paying them back in cash or stock dependent on your business.
Get a partner to help, not only can they halve the financing with you but they are also another set of hands who can help to get the business off the ground. Crowdfunding is another way to go, depending on your potential business and the demand for it. Sites like Kickstarter can generate capital from the general public in return you can offer perks or discounts to people who donate once your business is of the ground.
Regardless of the business you want to run, there are a plethora of permits and licenses you will need to get started. Check out with your local state which ones you are required to have.
Accounting is an important part of keeping your business running. Keeping an eye on costs and filing taxes. You can do this yourself, but I would recommend an accountant at this early stage to take the pressure off.
Now your business is underway you can sit back and reap the rewards of being a small business owner.