I love going advice to others on how to start their own business.
Advice to New Entrepreneurs
Many young entrepreneurs are setting out on their first startup business. In fact, many older folks (including retirees) are moving into small startups as their lifestyle changes. I did just that. This article attempts to guide the new entrepreneurs through the process of planning a startup business. Much of the content is backed up by my own experience.
Planning a Business Startup
Things You Need To Do In Starting a Business
I have always found that when several thoughts are impacting my mind and I feel confused as a result, taking a firm decision about the situation brings clarity almost immediately. Raymond Charles Barker in his book The Power of Decision says, ”Decision is the most important function of the individual mind. No creative process can begin until a decision is made...Having made the decision, every right idea will flow...”
After determining the nature of the business, your decision must be to truly commit yourself to creating it. It is in fact a creation which will take time, funds, creative thinking, research, and an application of skill, knowledge, and experience. The decision should be accompanied by a clear outline or definition of what is entailed (i.e. included), what is the vision for the market, what is the appeal of product or service. For example, several years ago we setup an information systems consultancy at a time when most small and some medium companies were struggling with the conversion to an automated office. This became the definition of our business service. My advice is to articulate clearly what your business is about and write it down. It will become an entry into your business plan outlined below.
Do not try to cover every angle of the selected business area at the outset. At the best of times, it is difficult to be all things to all persons. Focus your efforts on those things in demand that you are good at doing or at getting done. I have some young friends who are creating their startups that are skilled at many things and try to combine them all into the business, but before long they are out seeking a job. Be smart, ask yourself if this is manageable. There are only 24 hours in a day and only about 12 can be productive over a sustained period.
Be Cost Conservative
Initially, do for yourself whatever you can and purchase only the exceptions. For instance, if you are reasonably good at creating your own website, then do the basic build and purchase web programing services for refining and adding operational features.
Partners and Associates in Your Startup Business
Seek Partner(s) Optionally
I like to have a business partner because I find it useful to draw on different points of view. To be honest, I wish to share the responsibilities and problems with one or two persons who have as much of a stake in the success of the business as I do. There are, however, many other people who are not so inclined. Selecting the wrong partner can be debilitating on you and on the business. You will have had school or college associates who you know very well and who are also business enthusiasts. Think about who might be a good partner.
Work Your Connections
Do you have friends who are artistic or creative? Do you have connections who are website developers? Do you have friends who can assist you to create a business plan? Make a list of the things you need to wok on—business plans, operation plans, budget, website, sales projections, business registrations, inventory—seek advice from your connections. Friends and family are usually happy to help. But be careful, getting too many people involved in helping could be overwhelming.
Get to Know the Business Environment for Your Startup
Do Your Research
The purpose is to obtain a rough assessment of the similar products or services on the market to assess demand, appeal, target audience, and size/location of the market. Use the Internet. Depending on the product or service, there may be NGOs and government departments from which information can be obtained. For instance, in developing countries, there is likely to be an agency which promotes business development and export of products. In Jamaica, there is JAMPRO, which promotes business opportunities between local and overseas investors. If you are entering a local market in a particular area, you may want to carry out a survey to determine people’s likes and dislikes, the potential of the market, and attributes. Before we setup our fashion boutique in Montego Bay, we created a two-page questionnaire to capture the essence of this bustling city. We hired two or three young people to go around and interview others as they traversed the area.
Discern the Competition
Find ways of observing how others in the industry operate and how successful they are. Some of your potential competitors will be willing to talk with you if you ask direct and discrete questions.
Create Your Market Edge
Your research data will give you information towards determining how to position your product or service. Create an attribute (or feature) that makes your business stand out.
Funding Your Startup Business
Plan your Budget
Not only do you need to plan your budget, you also need to operate within it. Consequently, make sure that your budget is true and can stand up to what you actually are going to do. Get assistance if you are in doubt—call on your friend who studied finance or hire someone who is in the business. There are small professional agencies offering this service. When we did a recent business startup, we hired a friend who offered this service as a freelance agent. We were lucky to have done this because a number of the details that we would not have considered were raised by her and thus gave us the opportunity to seek out the information and plan it in the budget.
Investigate Crowd Funding
This is a present and growing alternative for the funding of startup businesses and other undertakings. It is social funding. There is no dearth of information on the Internet about crowd funding, so further investigation is left up to you. I started a Google Community site to talk about the subject and to solicit information and personal report.
Investigate Family Funding
Family and friends provide an obvious source of support.
Create a Business Plan for Your Startup
At this point, you will have accumulated all or most of the information needed to construct your business plan. This is a very important process. Your business plan clarifies what you are setting out to do. It also is a requirement of any loan agency that you are thinking of tapping into. If you are relying on funds from friends and family, then your business plan will give them the understanding and comfort in what you are setting out to do and asking them to indulge in.
Here are the primary topics for your business plan. Sample plans and formats can be found plentifully on the Internet. Take them as good suggestions but customize as you see fit.
- Executive Summary: An overview of the information in the document, usually constructed at the end of the full compilation.
- Basic Company Description: Type of company, ownership structure etc.
- Products and Services: In-depth description with supporting specifications if necessary. What factors give the product a competitive advantage or disadvantage. Include pricing structure.
- Marketing and Promotion Plan: Marketing is critical to your success. In order to determine a marketing plan you need to know the market. Start with a careful systematic research of the intended market. Be as dispassionate as you can, not over /under stating advantages and disadvantages.
a. Assess the size, trend and growth potential of your market. What are the barriers to your entry?
b. Assess your customers, their demographics, their purchasing
potential if possible
c. Assess the competition: How do you measure up against them?
- Operational Plan (Overview) - How will the business operate i.e. the mechanics of the operation - hours of operation, staffing, technology to be employed...etc
- Management Plan - The structure, makeup, roles of the management team. The overall governance structure.
- Financial plan - Startup expenses, capitalization, monthly profit & loss projections for at least 2 years, opening day balance sheet.
- Projections - Projected cash flow, projected sales
This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.