You're tired of being a cubicle dweller; the mere thought of punching someone else's time clock for another day is driving you insane. Or maybe you've just been laid off, and slipping back into the 8-to-5 world seems as appealing as surgery without anesthesia or as unlikely as snow in August. It's time to strike out with your own product or service. You're on the brink of being an entrepreneur, but then...
The thought of actually starting a company stops you. Even the most gung-ho entrepreneurial wannabes often step back from the edge when they realize everything they'll have to do. There are so many intimidating details--from cash flow and business plans to inventory management and finding your first customer--that it can be easy to put off being your own boss.
So how can you get a handle on your start-up "to do" list? We've taken the guesswork out of the process by listing the aspects of startup--from A through Z--with tips for maximizing your chances of success.
A = Advertising. You want to make a big splash, but advertising is expensive. When and where to advertise--and how much to spend--is a big decision. "Be careful how you're using your initial dollars to get the word out," says Sejal Desai, CEO of STARTech, a Richardson, Texas, high-tech business accelerator that helps early-stage startups with seed-stage funding and other startup issues.
Advertising salespeople will call you the minute you hang up your shingle. But don't make promises to customers you can't keep or reveal an idea in the marketplace that you haven't taken steps to protect. With advertising, "timing is everything," Desai says. Don't allocate a big ad budget until you can support it, don't be afraid to negotiate contract rates and ad positioning, and don't obligate yourself to an annual advertising contract before you're ready. Also consider advertising with a one-time cost, such as detailing and magnetic signage for your vehicle.
B = Business plan. Your business plan is your vision for the company. "It puts the prospective entrepreneur in a different league," says Ira Davidson, director of the Small Business Development Center at Pace University in New York City.
Investors prefer concise business plans that are 25 pages maximum and include an executive summary, market summary and projections. "Entrepreneurs spend a lot of time on financials," Desai says. "At such an early stage, that's not important because [a business idea] is based on assumptions." Explain who's on your management team, who your customers are and why your idea can be translated into a real business in the first two pages of your plan, and prepare a 30-second "elevator pitch."
The SBA provides a business plan outline here. Also, visit a local SCORE office for free business plan advice from a retired executive.
Learn More: Read How to Build a Business Plan for in-depth guidance on writing your business plan and to download two sample plans.
C = Cash flow. Cash flow is the lifeblood of any business, and it goes back to your business plan. Think about how you can incorporate your vendors and customers into your cash-flow projections. Persuading customers to pay in advance and talking vendors into giving you 30-day credit terms vs. cash-on-delivery can make a huge difference in your cash flow.
Learn More: Payables is an important part of your cash flow. To find out more about managing your payables, read "Cash In, Cash Out."
D = Distribution. Look for distribution partners, says Jeff Shuman, director of entrepreneurial studies at Bentley College in Waltham, Massachusetts, and co-founder of The Rhythm of Business Inc., a business-relationship consulting firm. "If you can find someone who has a customer-supplier relationship with the same people you want to sell to, you might be able to work a deal where they distribute your product to their customers," he explains. "This will get you to the end-customers faster than if you try to build your own distribution infrastructure."
Learn More: Before you partner up with a distributor, read more about the benefits of alliances in "Gold Bond."
E = Equipment. Don't spend a lot at first. One option is your state's surplus property office, which you should be able to find online. The federal government also lets the public bid on surplus office equipment.