There are always things you can do better in starting a business, aspects of your company that you should put a little more time into to avoid problems down the line. Here are a few:
- Researching your business idea: Scan background research reports and market forecasts, but don't rely on them solely. Go to meetings, forums, symposiums and trade shows, pound the pavement and, most important, listen. Think about your competition and the type of consumer who would want your product or service the most. "Talk to real customers. Make sure your product or service has value to them," says Tim Petersen, managing director of the Samuel Zell and Robert H. Lurie Institute for Entrepreneurial Studies at the University of Michigan at Ann Arbor. See our Starting a Business section for a host of tips on doing your diligence.
- Writing your business plan: "Everyone teaches people to write a business plan to raise money," says Jerry Mitchell, founder and president of the Midwest Entrepreneur's Forum in Chicago. "That's wrong. Write a business plan for how you're going to stay in business for 90 days." Short business plans are all the rage right now. That means a four- or five-page summary accompanied by a 20-page (maximum) overview of your product and market segment. There are tons of pointers online to help you write a better business plan. You can also check out bplans.com, which offers a lot of helpful tips, and of course, don't miss our Startup How-to Guides for a quick how-to.
- Setting up your accounting procedures: "People do things backward," says Philip Goldfarb, a partner with accounting firm Weisberg, Mol, Krantz & Goldfarb LLP in Long Island, New York. First, he says, hire an accountant who knows your industry and has time to dedicate to you. Second, decide on your entity type (partnership, corporation and so on), and have an attorney draw up your organization papers. Next, buy accounting software that fits your business model. The last step is putting your controls in place.
- Bootstrapping: You're sinking your own money into a new business without the help of outside investors. If you're lucky, your friends and family will advance you some cash, too. This is how the majority of U.S. businesses get started, but unfortunately, as every beginning entrepreneur knows, this seed capital is very limited. The trick is getting the most bang for your buck out of this bootstrapped cash. "You have to guard cash like it's king," Mitchell says. Of course, it's easier said than done. Luckily, you can bootstrap better with a variety of creative methods that keep your overhead low and improve your cash flow.
- Creating a budget: The success of your business depends on how well you budget. "Once you have a feel for what your revenues are going to be and how much business you're going to do, from that you should be able to design a budget," Goldfarb says.
- Setting up your management team: You need proven rainmakers to get your company off the ground. But you want to make sure you're selecting the right people for your business and product. Entreworld.org has many tips in its "Start-Up Resources" section, and don't forget to check out our article "Creating a Management Team."
- Keeping customers: Who wants a bunch of one-time customers? Keeping customers is something that any business can do better. Pick up some great techniques and tips at www.businesstown.com/internet/marketing-life.asp and www.wellsfargo.com/biz/bustips/tip/mktgsalesresults.html.
Chris Penttila is a Washington, DC-based freelance journalist who covers workplace issues on her blog, Workplacediva.blogspot.com.