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?
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 “https://www.amazon.com/gp/product/156414531X/ref=as_li_ss_tl?ie=UTF8&linkCode=ll1&tag=powerhomebizguid-20&linkId=f8b7cfd6342a1fbc4af8d24a1b4fd620101 Best Home Businesses, 2nd ed.” 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 machinery 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 are 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:
- Government Mentoring Programs such as SBDCs, which works with community colleges and local business development councils to offer mentoring programs http://www.sba.gov/sbdc/sbdcnear.html
- Volunteer programs such as SCORE http://www.score.org which is composed of mostly retired executives and entrepreneurs
- Formal mentoring programs such as Clinton Foundation’s Entrepreneurship Mentoring Program (in partnership with Inc. Magazine), Helzberg Entrepreneurial Mentoring Program , or The Aspen Institute MicroMentor Program
- Industry and trade associations
- Local business groups, such as the chamber of commerce
- Local chapters of business groups
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 a 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 child care 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 plugin 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.
Recommended Books on Starting a Home Business:
- The Work-at-Home Success…Starting Your Own Home Business (Home Business 101)
- Start Your Own Business, 5th Edition: The Only Start-Up Book You’ll Ever Need
- How To Start a Business From Home
- Work at Home Now: The No-nonsense Guide to Finding Your Perfect Home-based Job, Avoiding Scams, and Making a Great Living
- The Work-at-Home Success Bible: A Complete Guide for Women: Start Your Own Business; Balance Work and Home Life; Develop Telecommuting Strategies
- Top 10 Ways to Earn Money at Home
- 10 Common Home Office Mistakes
- How to Raise Money to Finance a Franchise
- Pros and Cons of Financing a Business
- Book: The Last Chance Millionaire