How long does it really take to start a business? Our experts tell all.
Time is a fickle creature. Depending on the situation, the clock is either our friend or our enemy. As the modern world careens ahead at an ever-accelerating pace, however, one truism remains constant: Time waits for no one.
Consider the case of someone who has a sure-fire small-business idea, but not very much patience. Whatever the reason--our would-be entrepreneur may have recently retired, been downsized or even won millions in the lottery--he or she sincerely believes there's no time like the present and is determined to get the business off the ground and running in 30 days.
Possible or impossible? Not surprisingly, it depends on whom you ask. Someone like Bob Adams, who has started more than a dozen businesses throughout his career as an entrepreneur, gushes like a fountain with refreshingly positive thinking on the subject. In fact, he doesn't believe in waiting at all.
"If you don't set a date and start to do something, it's going to be really hard," says Adams, author of Adams Streetwise Small Business Start-Up (Adams Media Corp., $16.95, 800-USA-JOBS), a how-to guide that covers everything from marketing to money matters. "You have to do something that sets you in irreversible motion."
Adams speaks from considerable entrepreneurial experience: When he was still a college undergraduate, he successfully opened up several businesses with little or no capital, and usually in less than a week's time. He went on to graduate from Harvard Business School, but Adams says he has learned just as much in the "school of hard knocks." In 1980, he started Adams Media Corp. in his basement apartment with a $2,000 investment; today, it's a $10 million publishing company based in Holbrook, Massachusetts.
There are those, however, who react differently than Adams to the notion of starting a business in 30 days. These voices of caution say they have seen far too many start-ups crash back to earth rather than shoot into orbit, primarily because the owner or owners weren't fully prepared.
"I would quote Octavius, who once said, `Hasten slowly,' " advises Regina Tracy, executive director of the Research Institute for Small & Emerging Business, a think tank in Washington, DC, that studies the role and impact of small business on the American economy.
"Unless entrepreneurs have been thinking through their ideas for a long time and have an informal business plan in their heads, they need to manage their enthusiasm and their expectations," Tracy explains. Professional concerns aside, she concedes that she understands how some would-be business owners may prefer to throw caution to the wind. "I don't know that I'd go out and start a business tomorrow, but I have thought about doing it."
Clearly, certain types of businesses will lend themselves better to an accelerated start-up than others. For example, a "micro-enterprise" operated out of a home can, for obvious reasons, be up and running far sooner than one that requires a storefront or manufacturing space. Likewise, services--a catch-all term for a wide range of businesses from computer consulting to plumbing--will be far easier to start than any product sales operation, which must rely on a large inventory to meet anticipated customer demand.
From his desk in the Microenterprise Division of Boston's Jewish Vocational Service (JVS), a nonprofit, nonsectarian agency that provides small-business owners with training, technical assistance and access to capital, George Craddock offers a welcome to those seeking "micro loans" of $25,000 or less. In 1995, JVS was named sole micro-lender at the first U.S. One-Stop Capital Shop, a small-business lending program funded by the federal government's Small Business Administration (SBA) in conjunction with the city of Boston.
"My immediate reaction is, Tell me more, I'm all ears," Craddock explains. "I want to hear what analysis they've applied to the idea."
Craddock's reactions will vary according to the nature of the business proposal being presented, but would-be entrepreneurs rarely find him pessimistic. "We are so supportive of businesses, it's very rare that we do--or need to--discourage anyone," he says proudly. "Helping businesses to get started is what I love to do, but I want people to sit down and deal with reality. If someone wants to open a hair dressing salon, I have to ask, Have you figured out how many heads of hair you have to cut every month to pay for the rent and the electricity in the shop?"
Entrepreneurs in the first stages of starting a business need an ally, someone with whom to brainstorm. And while Craddock willingly plays that role, entrepreneurs may find a close friend or family member will do the same. To be worth much of anything, however, feedback should not always be what the prospective business-owner hopes to hear. Recently, for example, an inventor proudly told Craddock about a patent he had received. The inventor wanted a $7,000 loan to begin manufacturing the new device, but Craddock instead encouraged him to pursue licensing as a more viable option.
With everyone from pizza makers to sign painters, Craddock probes carefully to learn about their plans for marketing, packaging and pricing, as well as what they know about their competition. "Everyone thinks they're either the first or the best, but there is always competition out there," Craddock notes. "If entrepreneurs haven't given consideration to the competition, it's a red flag to say they need to take some time and snoop around in order to see how other companies in their field advertise or market the same sort of product."
Essentially, Craddock coaxes his applicants into articulating the outlines of a business plan, which they will eventually expand and commit to paper as part of their loan application. If that sounds like a guaranteed way to slow down the start-up process, the following case of Carnot Sylvestre illustrates that a little paperwork needn't kill a dream to open a business.
Sylvestre approached Craddock for a micro loan on a Friday, wrote up a business plan over the weekend and filed a completed loan application on Monday. Two weeks later, a JVS committee approved a loan for $15,000, and Sylvestre opened his business--a large-format graphics shop near Boston's Symphony Hall--just days later. Altogether, Sylvestre estimates, he invested $45,000 in his business.
"I was determined to open my business whether I got the loan or not," admits Sylvestre, who runs PosterGraphix with his wife, Sylvia. Before visiting the JVS Microenterprise Division, which he learned about at the local Department of Commerce office, he had already chosen his storefront space, and had received loans from family members to purchase the necessary operating equipment. Sylvestre had also applied for a loan from his local bank, but that application was declined. "I was very disappointed then, but I couldn't give up because I have two kids," he says. "I had to go on with my dream or else get a job."
For those just as firmly determined to start a business immediately, Adams counsels that they consider a part-time commitment. "It's psychologically easier that way," he explains. Many of his own business start-ups, says Adams, were seasonal, such as a bike-rental operation he started on Martha's Vineyard for a summer while still in college.
"If your involvement is only part-time, you can take your time and make small mistakes," says Adams. In addition, choosing to go part time may mean you can get started sooner than you could making a full-time commitment.
Entrepreneurs with a 30-day start-up goal may find that such businesses won't fit into so-called "incubation programs." Several incubation-program directors from around the United States who also serve on the board of the National Business Incubation Association express concern about moving so quickly. "Would you want your son or daughter to get married in 30 days? Starting a business is the same--it's not something you do lightly," says Della Clark, president of the Philadelphia Enterprise Center. "I don't even want to work with that kind of entrepreneur. That approach tells me they didn't do any strategic planning."
At Chicago's Southland Enterprise Center, Roberta DeYoung, the incubator's director, strongly agrees. "If I were drowning in my business after six months, I'd hate to find out that I could have gotten my supplies a lot cheaper," she notes. "My job is to see that people get off on the right foot and that they do their homework."
At the Chattanooga/Hamilton County Business Development Center, a business-incubation center jointly funded by River Valley Partners, the Tennessee Valley Authority and sevseveral area banks, executive director Joe Schultz practices what might be called "tough love" for small businesses.
"We expect our companies to grow and create jobs," says Schultz. "We're not looking for someone who just wants to create a job for himself." With the responsibility to serve as an engine of economic development, Schultz's agency expects applicants to come prepared with a serious business plan and realistic expectations. "A lot of people aren't ready for that. They think it's a nuisance or they think it's the runaround."
Of course, determined entrepreneurs will forge ahead. Those enrolled in the "sooner than later" school will be delighted to hear Adams cheering them on. "There's no secret or magic to starting a business," declares Adams. "Everything's simple when it comes right down to it--I'm convinced of it."
Indeed, any business who expects to open up shop in 30 days won't make it to the next month without enthusiasm, along with requisite amounts of capital and good business organization. "That's the small businessperson's gift: enthusiasm," says Tracy. "It's always important to temper it, but there are instances when enthusiasm will carry someone through."
When asked to explain the theory of relativity in a layperson's terms, Albert Einstein replied that if a man sits on a hot stove, a minute can seem like an hour. On the other hand, continued the pioneering physicist who lived in an age that had never heard of "political correctness," if a pretty woman sits on the man's lap, an hour will seem like a minute.
The theory of relativity applies equally as well to anyone choosing to start a new business. Every entrepreneur eventually discovers, for example, that bills from suppliers always arrive instantly, while payments from clients can seem to take forever to arrive. The time it takes to achieve success is relative, too. For some, it can happen in a month, while for others it may take a month of Sundays. In either case, the owner will need plenty of balance, forethought and enthusiasm.
Fast-Start Top 10 Questions
As part of a 12-week "Start Smart" seminar, Paula Mannillo of Boston's Jewish Vocational Service (JVS) outlines the basic steps to starting a business. Whether you can get it all done in 30 days or 30 weeks, she explains, you and your business will face these important questions before you ever make a dollar:
1. What kind of business are you starting? This question sounds obvious, maybe, but you must decide everything about your product or service in advance--from who will make it to who will buy it.
2. What's the business structure? If it's a sole proprietorship, you may need to register an assumed name (see #4). If it's a partnership, you will need a lawyer to prepare a written partnership agreement. If it's a corporation, you must file documents of incorporation with your state's secretary of state office.
3. Have you picked a location? Try to see your location through your customers' eyes. Depending on your business, location can be either absolutely critical or entirely unimportant. Where will your mail be sent?
4. Have you chosen a name? Every baby needs a name, as does every newborn business. If you are doing business under a name other than your own--for example, as "Smith's Designs" rather than simply "John Smith Designs"--you must file a business certificate or "doing business as" (d.b.a.) form.
5. What's your number? Will you have a business telephone number or will you use your home phone? Tip: Do not allow children to answer a business phone; instead, use either an answering service or an answering machine.
6. Have you unraveled the red tape? Check with your state's division of registration to determine its permit and license requirements. Also call your local licensing and zoning boards to learn what their requirements are.
7. Are you ready to pay your taxes? Alas, it's inevitable. Call the Internal Revenue Service (800-829-1040) for a free copy of their "Small Business Tax Kit" and Publication 334, The Tax Guide for Small Businesses.
8. Are you covered? Contact an insurance agent to find out what coverage you may need in the following areas: liability, casualty, workers' compensation, health and disability.
9. Do you know who your customers are? Define your marketing plan. Analyze the competition. Price your product. Determine distribution. Budget for advertising.
10. Do the numbers add up? Set up a bookkeeping system. Open a business checking account. Determine the capital necessary to open and operate your business in the initial stages--before you can count on profits.
Adams Media Corp., 260 Center St., Holbrook, MA 02343, (800) 872-5627.
Chicago Southland Enterprise Center, 1655 Union Ave., Chicago Heights, IL 60411, (708) 754-6960.
Jewish Vocational Service, 105 Chauncy St., Boston, MA 02111, (617) 451-8147.
Philadelphia Enterprise Center, 4548 Market St., Philadelphia, PA 19139, (215) 895-4000.
PosterGraphix, 334A Massachusetts Ave., Boston, MA 02115, (617) 425-0390.
Research Institute for Small & Emerging Business, 722 12th St. N.W., Washington, DC 20005, (202) 628-8382.