We have seen people go into the business with both feet and succeeded. However, for those with little capital, coupled with a lot of financial obligations (just like everyone else), the best way to start a business is to go slowly.
Many people falsely think that starting a business will give them immediate success, one reason why many also suddenly find that entrepreneurship is a hard road to climb. Without a sufficient financial cushion to support the business operation for at least a year, it is better to consider starting up on a part-time basis. If you don’t have a full-time job, you may get one while you are developing your new business on the sides. If you are married, one of you should be working for someone else. It will help ease your way into the business and help you maintain interest and momentum.
Whether good times or bad, the best advice we can offer on starting your business and maintaining momentum is:
1. Start small.
Start your business in accordance to the resources that you presently have right now. You may have a grand idea for the business that you want. However, if you have minimal capital and little business experience, it may be best to begin a smaller, less elaborate operation at first.
For example, you are envisioning an upscale home décor retail store with a tea room for buyers, yet you do not have the capital to create the store of your dreams. Perhaps, you can start selling on the Internet where overhead expenses can be minimal. Just make sure that the design of the site is consistent with the upscale look that you want for the retail store. This way when you are ready to move into a brick-and-mortar setting, you have already established an upscale image for your business. In the Internet, it can be done.
By starting small, you will require less “seed money.” More importantly, you will be in a low risk position where it is much easier to quit the business if the idea proves to be a dud. If the business is proving to be financially viable, the profits you gain from this smaller venture can be used to expand or invest in bigger business ideas.
One important bonus: when you are ready to approach investors or lending institutions, you will be able to show them that you already have a solid track record and working knowledge of business procedures.
2. Go slow.
When you start a business, remember that you can always do it slowly. Quitting a 9-to-5 job one day and starting a business the next would give anyone nightmares. Don’t rush, especially if you are not prepared for it.
There is no hard and fast rule that only those who open a new business full-time with a whole complement of employees and neat office space will succeed. And starting with a “fat” bank account is not a guarantee of success either. You can opt to do it slowly and make a gradual transition of being an employee to becoming your own boss. Going slow gives you time to think, plan and work on potential problems, which should help lessen your anxiety.
Charlotte Fowkes, owner of Baby-Cakes (http://www.baby-cakes.com), have been doing “baby cakes,” a combination of diapers and baby products artfully arranged to look like a cake since early 1980s. She decided to turn her hobby into a business in 1989 by opening an online store. After four years of slowly growing and expanding her business on the Internet, her efforts have finally paid off and she has recently opened her first traditional gift store selling her “baby cakes.” Her “slow growth” strategy has allowed her to steer her business in the direction that she wants, without the pressure synonymous with fast growing businesses.
3. Grow Slow.
According to the book by Bob Adams entitled “Streetwise Small Business Start-Up,” you may be able to sustain the demands of fast growth if your business offers very standard products serving large national or international markets. However, small businesses that target niche markets, which are often smaller, will find it harder to pursue a fast growth strategy.
If you are offering nonstandard or customized products, then it will be harder for you to pursue a fast growth strategy. For one, it is harder to maintain a consistent level of quality and service for custom or special products. Charlotte Fowkes of Baby-Cakes.com spends about twenty minutes assembling her diaper cakes. If she pursues a fast-growth strategy, either she cuts down her assembly time and risk lowering the quality of her products; or hire more workers to help speed up the production process. Both these courses of action will mean increased cost for Charlotte.
Most home-based businesses are serving niche markets, which may be harder to cultivate and develop. If you want to grow fast, the alternative is to expand into additional markets by offering new product lines or finding ways to tap into different markets.
Remember, however, that high growth companies that produce standard products for large domestic or international markets are more likely to attract well-financed national or international competitors.
4. Learn Fast.
Even if you are trying to start, grow and build your business slowly, you need to be able to learn fast. An understanding of the business that you plan to start is crucial to its eventual success.
If you want to quickly learn more about a business, read everything you can about your business. Monitor trade journals, industry web sites and other references constantly. Talk to other business owners; some may be willing to share to you their experiences.
You can also check out if there are seminars being offered in your area on how to run a small business. Trade associations often have information packets about getting started in that particular business. It may cost a bit, but the information that you can get from these resources will be immensely helpful to your business.
However, there is no substitute for getting first-hand knowledge by working on the business first. By working for others in the same business, you can get a much better grasp of how that business works than you would through reading or research. This is particularly helpful if you plan to start a business where you’ve got zero knowledge. You can work for a very short period of time in an entry level capacity. Some apprentice for a while just to develop a clear understanding of the business and create contacts. You will be able to observe first-hand how it is to work in that kind of business, hence allowing you to have a working knowledge base.
As you begin to operate your business, learn the operations of the business and seeing if you can handle all the variables of business ownership while making it grow. Smaller businesses have proven to be a great way to learn successful methods, as well as a vehicle for ironing out the many small, often overlooked, details.
Recommended Books on Building Your Business:
- Grow to Greatness: Smart Growth for Entrepreneurial Businesses
- Leap!: 101 Ways to Grow Your Business
- Entrepreneur’s Toolkit: Tools and Techniques to Launch and Grow Your New Business (Harvard Business Essentials)