4 Steps To Starting Your Own Business
Owning a business is a dream shared by many. The dream of an independent professional lifestyle, self-made financial success, and “being the boss” is not uncommon. Unfortunately, the proportion of those entrepreneurs who have invested valuable time, money, and heart-felt emotions in search of the independent “being the boss” lifestyle have fallen short of the mark. Also unfortunate is how the pain and suffering endured throughout the effort of trying to start one’s own business is not confined to just the individual investor but also to the rest of the family. The impact of the effort is not just financial, but it is also translated into late nights, foregone vacations, missed graduations, etc.
A huge investment is thus made by everyone involved, in other words.
In fact, it’s not unreasonable to say that there seems to be more entrepreneurs who have pursued starting their own business but have unfortunately failed in the endeavor, for whatever reason, than there are who have achieved success.
One trait shared by most successful entrepreneurs, however, is that they not give up trying to be successful in the face of challenges. Furthermore, there seems to be no better elixir for a happy spouse than a successful start-up business, which might explain why there are so many start-up family businesses.
But just “wanting to start a business” is not good enough. Starting one’s own business is essentially the combination of goals, a plan (including “mini-plans”) with a business strategy. Starting a successful business involves settings goals and milestones, and then achieving those milestones and goals. The startup process requires an understanding of why goals and milestones are achieved just as much as an understanding of why goals were not met and efforts failed.
One of the keys to a start-up’s success is to define at the outset a systematic, and logical—that is, not emotional—approach of identifying and analyzing key “actuators of success.” This means getting to know the key performance triggers (operational, financial, etc.) that should be in place if the business is to be a resounding success. This article attempts to define popular approaches to logically planning for a successful start-up business.
One popular approach is to work with an outline of steps similar to the following steps shown below. These steps identify a logical and systematic approach toward starting your own business:
1. What’s The Idea?
“A journey of a thousand miles begins with a single step” (author unknown).” The point of this quote is that you’ve taken the single step of acknowledging that you desire to start-up your own business. You don’t know what the idea of the business is, but you have determined that you want to start your own business.
Before you can get much further, however, you need to determine the idea behind the business. What’s the idea? The answer to this question is basically what is the unsatisfied need that your new business is going to satisfy? Is it a completely new idea? Is it a better way of satisfying a pre-existing need? Whatever it’s going to be you need to know what it is so that you can have a firm idea of what your product will or will not be. Without “the idea”—and without a firm understanding of “the problem” that “the idea” solves for people—it won’t be possible to ascertain the profitability of the product and be able to determine whether your efforts are going to be worth the trouble.
2. Make A Business Plan
Once you think you’ve locked down the idea it’s time to figure out the dollars and cents of taking the product to market and realizing a reasonable profit from being in business for yourself. This step requires creating a business plan. A business plan is basically a financial statement depiction of revenue (or cash) and expenses (cash out). Too often the revenue and expense assumptions are too “pie in the sky” because the entrepreneur at this stage is typically very reluctant to accept assumptions that cast a shadow of doubt concerning his/her dream. Having an outside third party to either create the business plan or review the business plan for reasonableness is highly recommended because the independent review adds credibility to the numbers in the business plan. Credibility in the numbers is imperative if the business plan is going to have any weight in front of potential investors or lenders.
3. Make A Marketing Plan
Crucial to any business, whether a start-up or even an up and running business, is the marketing plan. The marketing plan should be integrated into the overall business plan so the financial impact of the marketing plan is taken into account when evaluating the future profitability of the business. The marketing plan is based on market research and helps to determine not only how much money is available for advertising but also how, or in what ways, marketing funds will be spent. Spending money on marketing is not a waste of money. Spending money on advertising or other marketing strategies (i.e. outbound and inbound marketing) is essential to the process of informing the marketplace that you’re a player who is in the business of satisfying a much needed product.
4. Get Financing
“It takes money to make money,” and, “It’s better to use someone else’s money than it is to use your own money,” are two popular sayings that apply here. There are a variety of sources of capital available to help start-up businesses at their inception. They differ primarily in terms of what they charge (interest) cost and how viable your new business appears to be. One of the key things that most potential lenders are impressed with is a professionally done business plan (previously discussed) including pro forma financial statements and cash flow. What is even more impressive to many lenders is if you have already delivered or sold some limited amount of product. More traditional sources of financing can take the form of the following:
- Traditional Lenders (Banks)
- Venture Capital/Angel Financing
- Friends And Family
- Crowdfunding
The general principles above give you a blueprint for the steps involved in starting your own business. As exciting as starting a business can be, overall it’s crucial to approach the planning process with as little emotional sway as possible and to check your subjective view points with objective third party input. As it says in the Book of Proverbs: “Plans fail for lack of counsel, but with many advisers they succeed” (Prov. 15:22).
