Taking the Plunge and Starting Your Own Business
Starting Your Own Business – are you ready to take the plunge? Before you do, lets take a look at some things you’ll need and some other things you’ll need to think about.
Starting your own business (company) is what capitalism is all about. Pride, potential, control, ownership – these are all words that come to mind when we think of starting a business of our own. The question is – why do so many businesses fail? Answer: Poor planning.
Answer These Questions Before You Start:
We will list some questions that are generic to most start-ups, the answers are critical to your success.
1) What is the product or service you’re providing?
Is it in demand? Will people pay for it? I watched a few episodes of Shark Tank and noticed a recurring theme. Each of the investors are interested in one thing – making money. Doesn’t matter how interesting or unique the product is. The bottom line is there has to be revenue.
2) Do you have a Reputable Supplier?
Your supplier is just as important as your customer. Here’s the definition of a good supplier “A good supplier is one who meets all customer expectations, with respect to delivery time, quality of goods and dependability.” Now you need some impartial information to find reputable suppliers. You’ll have to do some digging; check with the BBB, online complaint sites, public financial statements. The way to protect yourself, in case your main supplier goes bad, is to do business with at least three suppliers.
3) What about Fixed Expenses?
Forget about positive cash flow for the first several months. Your fixed expenses e.g., utilities, rent, inventory, insurance, need to be accurately accounted for, plus 20 percent for unexpected expenses.
4) Have you calculated Start-Up Costs?
Starting your own business isn’t cheap. Lease deposits, utility deposits, permits, business license, equipment, building modifications (if applicable), insurance – these will be your major upfront expenses.
5) Legal Setup: Paperwork in-order?
You’ll need to seek legal help to decide if your business will be a sole proprietorship, partnership, an LLC, or a corporation. A sole proprietorship business is fairly simple to set-up, and it may cost a few hundred dollars for the DBA (doing business as) paperwork. If you’re selling goods where a sales tax is collected, then you’ll have to get a resellers license from your state. You can try to do the paperwork yourself for the other legal options, but in reality it’s well worth the fee to pay a professional to do it right the first time.
6) Do you have the Capital and Resources?
As mentioned, you need to accurately project your start-up costs and monthly expenses. The experts suggest having 12 months of fixed expenses handy when starting your own business. This should be cash, credit line, or both.
7) Do you know your Competition?
We knew an independent pizza maker who started his own business – he invested $50,000.00. He used top of the line ingredients and charged $35.00 for his pizza. Pizzahut, down the street, were selling pizzas for $10.00. He knew the competition, he knew their pricing, but he misjudged the market and wouldn’t adjust his product to be competitive. He thought people would pay for quality in that area- he was wrong. He went out of business in 14 months; he lost his $50,000.00. Do you have the mindset and flexibility to adjust to your competition?
8) Is your Product in Demand?
Product demand is a formula consisting of: quality, price, competition, and need/want. Simply put – does the product you’re selling meet the needs/wants of the customer your selling to? And is the price competitive with your competition? If your product is unique enough, then price may not be an issue.
9) Did you forget Marketing?
There are “Free” online marketing strategies you can use right now: Facebook, Twitter, and Google. And we emphasize Right Now because the online landscape is constantly changing. Talking in a general sense – testing is your best marketing strategy. Take a small portion of your marketing budget and do sample tests in different advertising venues. Compare the results, and then allocate more money to those avenues that provided the best results.
10) Did you make a website for your online presence?
Everybody Needs an Online Presence These Days. When’s the last time you used the yellow pages? The Internet has made it very, very interesting for business start-ups. With an online presence the World Wide Web will market you across the world. Customers will come to you – All to your website. Here’s an interesting article from Entrepreneur.com on why even the smallest company should have an online presence.
Here’s another reason why – people can test their idea(s) out online, before they take it to as they say “a brick and mortar” level. There are various tools and resources out there to help you keep your online marketing costs as low as possible, for example you can make website for next to nothing. Many aspiring-to-be business owners have started online, found success, and then proceeded to open a store or company offline. If things didn’t workout, then the costs were significantly less compared to signing leases and contracts…not a bad plan.
Of course there are businesses that don’t fit the online mold, but this doesn’t mean they don’t need an online presence.
If you’re moving forward with taking the plunge and starting your own business keep these 10 tips in mind. They’ll help you succeed.
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