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You wake up one day and decide you want to become a business owner. Great!
Welcome to the American dream of entrepreneurship. A growing number of
people want to eschew the corporate life and become their own boss.
But the question is – how do you become an entrepreneur? What exactly do
you need to start your own business? And succeed.
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Deciding on becoming an entrepreneur is only the first step of a long
journey. There are lots of planning involved, preparations, and in some
cases, even red tape. Here are ten things you need to know when starting
your own business:
1. Know what you will do.
When making the decision to start a home
business, the first question you need to ask is “What will I be doing?” Will
you start a pet sitting business, or do what everybody else is doing and
start selling on eBay? Will you open a physical store or will you be selling
on the Web? Will you buy into a business opportunity or join an MLM? Will
you go with something you love, or something you think could earn you money
(they don’t always come hand in hand)? There are so many options out there,
so many types of businesses that you can start that it is not easy to find
the right business to start.
Dan Ramsey in his book "101 Best Home Businesses" suggests these 10 steps
in deciding what business to start:
- List 5 things you do best
- List how others would benefit from what
you do best
- Find out how to give people what they want
- Learn the value
of your services to others
- Find out who else offers similar services
- Learn from the successes of others
- Learn from the failures of others
- Plan your own success
- Make low cost mistakes
- Enjoy what you do and
how you do it
2. What will you need to start?
After you’ve decided what to do, the next
step is to find out how to do it. Do you have the necessary skills required
by the business? If you want to start a catering business, for example, can you actually
cook or can you find someone to do the cooking for you? If you want to start
an event planning business, do you have certifications from any of the event
planning associations? If you want to start an online business, do you know
basic HTML?
Make a list of what you think the business needs and what you need to
have to achieve success. It may be knowledge about the business, skills
required, certifications needed, equipment and machineries you need to
purchase. Then check if you possess the knowledge, skills, etc. now; and if
not, plan on how you can get it.
3. What are the government regulations you need to follow?
One of the
first things you need to make sure when starting a business is that you have
all the government requirements you need to operate the business.
In the United States, you learn about the government requirements by
going to your County Courthouse/City Hall, and making inquiries on the
things you need to get your business going.
Online, you can check your Secretary of State’s website and look for
information on how to start a business in your state. You can also check if
your county/city has a website (some like Fairfax County in VA or the City
of Martinez in CA have their own websites), and find the information and contact
details for starting a business. Some states have better information on their
websites than others. California, for example, has a CALGold Database
http://www.calgold.ca.gov that provides information on permits, licenses and
regulations for starting a business in every county or city in California.
You can find information on how to start a business in your state,
including general guidelines, business permits and licenses, as well as tax
requirements in our
State-By-State Guide to Starting a Business
4. How much money do you need to start?
This is a basic question that could impact what business you can start. It is one thing
to want a particular business; and another to know whether you can actually afford
the business.
If you have been dreaming of starting a restaurant business but you only
have $5,000 in your bank account and you don’t think you can get a loan from
a bank, family member or investors, then you may want to downscale your
entrepreneurship ambitions until your financial situation improves.
So how do you find out exactly how much a particular business requires?
One way would be to find if any books have been written on how to start the
business you have in mind. Often, these books contain estimates and cost
descriptions required to start the business. Check your local library or
favorite bookstore for any books about your business.
You can also research the Internet if there are business plans available
about the business, or costing information. You can also check with a
current business owner – while they may not tell you how much they spent in
starting their business, they may be more open about possible cost items and
what to expect when starting a similar business.
5. How much money will you make?
The amount of revenue your business will
earn will depend on so many factors that it is really hard to predict how
much you can earn. The mileage often varies, and you can never tell until
you try it.
But having some idea of what the range of earnings can be can help push
you. The high estimate can motivate you to strive harder; while the low
estimate can give you some sense of acceptable income parameters.
General business idea books or books dealing with starting the particular
business often give income potential estimates. You can also check industry
associations for studies or papers showing income ranges of their members.
6. Where can you get help?
Sometimes, try as you might, there will be
moments when you feel you need to get some advice or help with regards to
strategies you want to pursue. Especially if you are a one-person business,
it can be easy to get overwhelmed by all the decisions you need to make as a
small business owner.
Having someone to guide you, give you counsel, even open doors for you
and introduce you to customers and financing resources is literally,
heaven-sent. A mentor can sometimes show you a proven roadmap to your
business success. Many studies have shown that business owners with mentors
to help them showed more growth in their businesses than those who do not
have. One caveat though – mentors are different from coaches in as much as
mentors generally provide their services and advice for free while coaches charges you
by the hour.
The question of course is: How and where can you find mentors to help
you? There are several places where you may be able to find a mentor:
7. How do you intend to reach your target market?
One of the worst
mistakes you can make when starting a business is to assume that customers
will flock to your business immediately. They won’t, and chances are, you
will have to work hard to find your customers and tell them about your
product. It’s a common story among small online entrepreneurs who launches a
website and expect to earn money the next day, only to be
disappointed when their first sale comes 6 months later.
When you start a business, it is crucial that you know your target market
and how you can reach them. A marketing plan can help you think through your
marketing strategies as it helps you create your positioning statement,
identify your target customers, and formulate strategies with corresponding
timelines on how to reach them. You can go to Mplans.com
http://www.mplans.com
for samples of marketing plans (many are paid, but there are several that
are free that you can look at).
8. How can you get started?
This is step where you actually plan out the
specific steps to start and operate your business. This stage includes
checking if you have everything the government requires for your business,
from licenses to permits to zoning approvals. If you are starting a daycare
business, check with the childcare licensing office in your county/city if
you have everything that you need.
You must have completed your business plan at this point. Even if you are
not applying for a loan, your business plan is crucial as it helps you think
through your business and what you actually need to do. It is your roadmap
to success, and without it, it is hard to navigate through all the ups and
downs of entrepreneurship.
This is also the stage where you finalize your pricing, making sure that
you are not overpricing yourself out of the market while covering all your
expenses.
9. What tools can you use to operate and improve your work?
Technology
should be your best friend. How can computers help you increase your
profits? What gadgets do you think can help you improve your productivity?
Are there any software or scripts that you can use to make business life
easier for you?
If you can automate routine practices, so much the better. Simple things
like a script to automatically update your website’s date and time can allow
you to work on more important things your business needs. Or if you can
automatically handle subscription requests for your email newsletter, the
time you save in manually doing the tasks can allow you to focus on
marketing or improving your products.
Be open to technological innovations, and find out how they can be used
for your own purposes.
10. Your exit strategy . I am a firm believer of the saying “You don’t
start out by giving up.” Having an exit strategy does not mean you are
giving up; you just need to know when to say goodbye, and under what
circumstances will you say goodbye. Thinking of an exit strategy while just
starting a business is not about pessimism, rather it is about smart
planning.
Your exit strategy ties well with your objectives for starting the
business. Are you thinking of developing the business to sell it off for a
sizeable sum, allowing you to retire early or start afresh with a new
business project? Are you envisioning that you will turn over the reins of
the business to your children? Or are you thinking of taking the business
public?
The problem is that many small business owners do not have an exit
strategy. As a result, they are unable to plan exactly how to reach the
goals they have set out for themselves when they started. They are not able
to maximize the sale value of the business and ensure that it is attractive
to buyers. Or they have not been able to create a business that investors
would want.
They have no succession planning in place. I have seen many entrepreneurs
who wanted their children to run the business eventually, but since this was
not planned out at the very beginning, they were not able to build interest
for the business among their children, or their children were not properly
trained to run the business.
A realistic and tangible exit strategy should be a critical component of
your business plan.
About The Author:
George Rodriguez is a writer for PowerHomeBiz.com. For information on
starting a
home business
visit PowerHomeBiz.com and
http://www.WomenHomeBusiness.com
May 2006
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