Getting off the ground with your own small business
Considering the option of starting a small business? Here are a few key topics to think about before “jumping in.”
1. Don’t Jump Into a Partnership.
Many times people go into a partnership because they are afraid of the unknown and want to share their fear. That’s not a good reason for having partners. In a short time, you’ll overcome your fear because you’ll have experience in your business. But you are going to be stuck with your partners for a very long time.
The only time you should have a partner is when she provides something you don’t have. Even if you are thinking about buying and existing business, needing more cash is not a good reason to partner.
If you are going to have a partner make sure you each write down what it is you are prepared to give and what you want from the partnership. Each of you should write this up separately and then compare notes. If it looks like a fair exchange, go for it. If not, find other ways to obtain the missing links for your small business.
2. Cash Flow
Your business lives and dies with cash flow. Make conservative estimates about sales and costs. Know how much it will cost to start your business. This is no time to be optimistic. Make sure your estimates are based on your experience. While you’re at it, consider the hours you’ll be putting in to rack up those sales. Look at your personal budget and make sure you can survive on the projected income for at least 6 months. The number one killer of small business is negative cash flow. Don’t become a victim.
3. Know the market.
Don’t jump into a business just because the numbers look great. Work in the industry before you open your own shop. You might even realize what you thought would be a fun and exciting business for you, isn’t that fun once you are responsible for keeping it open.
In order to own a successful business you have to be comfortable with selling and with marketing – two different skill sets. Selling is basically finding out what your clients needs are and finding a solution. In my opinion, selling is not shoving some product down everyone’s throat. Even if your clients needs don’t include your products, by telling them that, you’ll convert customers into loyal clients and when they do need your services or products, they’ll be back. You might have the best products in the world but if people don’t know about it, you’ll never keep your doors open. How are you going to market your business? What’s your plan? Have you budgeted for marketing?
5. Reduce Risks
Some folks think that if you own a small business you are a big risk taker. Nothing could be further from the truth. A small business owner wants to control his/her future and not be dependent on some mid-level manager to determine his/her future. As a business owner, don’t think of yourself as a huge risk taker, consider yourself a person who likes to control his/her own destiny. That being the case, you owe it to yourself to reduce risk whenever possible. You accomplish that by really knowing your industry as described above and by being on top of your cash flow.
You also need to understand a little about law. Should you form as an S-Corp, C-Corp, LLC? Is a DBA certificate enough?? What is the best way to go? This is where having a good business attorney and CPA is smart.
Besides having this understanding, you need to reduce risk as much as possible by having the proper business insurance in place.
6. Your Plan
You business plan isn’t a guarantee of success but you can almost guarantee failure if you don’t have a plan. Ideas are wonderful but business is about execution. And proper execution demands that you have a good solid plan and that you understand all the details.
7. Be Flexible
It’s true that you need a good solid business plan but you also need to be flexible. Don’t be so fixated on your plan that you fail to recognize the facts on the ground. Nothing occurs exactly as planned. You have to be willing to go with the flow and be willing to upgrade your business plan as conditions change.
8. Focus on Your Goals
The reason you go into business is to have more control over your life. You can better control how much money you are going to make and what your life is going to look like if your business is successful. If your business is not successful, you will have less control over your life and how much money you make. Therefore, your goal should be to make your business a financial success. Pretty obvious.
While you certainly can use your business as an expression of your passions and values, your business must be profitable. If not, you won’t be able to serve your clients, your family or express yourself. Be mindful of how you spend your time, what clients you serve and what services and products you provide and make it a win-win for your customers and yourself. If you find yourself involved in activities that do not support the survivability of your business, stop those activities immediately.
Above are key elements to consider when thinking about starting a small business. Be prepared and research your ideas. The more prepared you are when the doors open, the better the chance you and your business will survive.