So You Want to Start Your Own Business?
If you have always dreamt of owning a small business, the recent economic downturn may have caused you to rethink the idea. Before you give up on your dream, remember many successful businesses (e.g FedEx, IHOP, CNN, Microsoft) began in poor economies. The reason for each company’s success was simple. They saw an unmet need in the marketplace and developed a solution to address it.
Do Not Ignore The Signs
Each small business begins as a labor of love. So when it is unsuccessful, the outcome can be disheartening. After investing a great deal of time, effort and money, it is not easy to walk away. But if the small business owner takes an honest look at his or her failed venture, they will find indications that trouble existed well before the business closed its doors.
So how can you avoid becoming one of these failed businesses?
Ask Yourself This
Before you quit your job and sink your life savings into a new business, consider the following:
What makes your business special?
In a nutshell, why would a consumer buy your product or service instead of John Doe’s around the corner? Will you have better service? Are your prices going to be lower? Will you focus on a niche market (e.g. high end dog collars)?
Do I understand what it will take to run a business?
The Small Business Administration (SBA) offers free online and in person classes, podcasts and videos via their website. Utilize these tools to learn what it will take to run your business. There are also lots of books, magazines and websites which offer advice and insights from successful entrepreneurs.
Your first stop should be your local library – either online or in person. Why pay for a popular business book if you can either borrow it or download it from the comfort of your home? Your tax dollars are paying for the library’s resources, so use them!
Why is a plan important?
When you are visiting a place for the first time, do you drive around aimlessly hoping to find it? Or do you ask for directions so you can plan your trip?
It is amazing how many people open a business with no clear plan in mind. They just assume everyone will love their idea, buy their product or service and they will become rich in the process. No thought is given to how the business should be organized, where it should be housed, or how much capital it will take to run it. So when things don’t go as planned, the business owner is not sure what to do.
To be prepared for unexpected events, take the time to plan. You can find business plan outlines, with detailed instructions and samples, at the SBA web site. This is a valuable exercise which will help you to develop a roadmap for your initial startup and future growth.
How will I track my progress?
If you want to stay in business, you have to pay your bills. At a minimum, this means you need to make enough profit to cover your expenses. If you can’t pay your bills, your business will close. It is that simple.
To track your business’ progress, do regular finanical checkups. If the cost of running your business is higher than you expected, take a critical look at how you are spending your money. Determine if you need to raise the cost of your products and services, expand your existing offerings, or find now vendors and suppliers.
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