You have your million-dollar idea for a new business. Maybe it flows from your passions. Maybe you’ve spotted a need or a pain point that the marketplace just wasn’t addressing.
Whatever the genesis of your idea, it’s only the first step in a long process. Coming up with the big idea for a business is the easy part. Making it successful for the long run takes careful planning at the outset, smart choices along the way and the commitment to see it through.
7 Things to Consider Before Starting a Business
Here are some elements to keep in mind when you’re getting ready to make your great idea into a great business.
Write a business plan
You should spend time thinking about who, what, where, when and why. Who are your customers? Who is your competition? What is your product or service and what differentiates it in the marketplace? Where will you locate your business? When is your target launch date?
And the most important aspect: Why are you doing this? What are your end goals? A well-researched and written business plan is your guidebook. It’s also the key to securing possible funding. If you need a small business loan, for example, you will have trouble securing it without doing your homework first on a solid business plan.
Do market research
You’ve thought about your consumers when compiling your business plan. Now think deeper.
Do some market research (hire a firm if necessary) to find things like demographics of your target customer, their needs, preferences, buying habits, and more.
The Small Business Administration is a great resource for compiling demographics for small businesses, so you can get a clear picture of how you’ll fit into the marketplace.
Get your finances in order …
Don’t proceed if you don’t know what this venture is going to cost. What will the startup costs be? What’s it going to take to make a profit, and how long will you be ramping up until you get there? How will you keep the lights on until you do?
A word to the wise: You can’t overestimate the amount of working capital you’ll need. One potential place to start is by tapping into your self-directed retirement account (if you meet certain guidelines). It’s a great way to fund your passions and still retire in style.
Alternatively, you can look into a small business loan from the Small Business Association or another lender (potentially funded by their self-directed retirement account).
Some small business owners look for investors to secure funding, but remember the Shark Tank effect. Investors may be willing to front you working capital, but in return they’ll want a stake in your business. A popular option now is crowdfunding, where you solicit smaller amounts of funds from multiple people.
… but don’t overspend
It’s very easy for zealous entrepreneurs to get that chic office in the trendy part of town and outfit it with the latest technology and a beer fridge for the break room.
Hold on, there.
You’re not ready for all of that yet. Bill Gates started Microsoft in his garage. Don’t invest in an office for 20 employees when it’s just you and your spouse. Don’t buy more technology that you need to get things going. That fancy printer can wait if you’ve got one that works right now.
Start with the bare minimum you need to get up and running and build from there.
Be ready to wear all the hats
Small businesses typically start out as one-person operations. That means you’ll be responsible for it all, from the time you turn on the lights in the morning until you turn them off in the evening. It also means long hours, commitment, drive, and the passion to do what’s necessary to get your business off the ground.
Many self-employed people don’t know they should, or even can, open a retirement plan. If you’re self-employed, a sole proprietor, or the owner of a small business with 100 or fewer employees, there are some excellent plans out there tailored for your needs.
Know when to call in the pros
Accounting, insurance, and taxes require professionals. Getting these things wrong can doom your business before it even begins.
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