F = Financing. Financing takes many forms, from bootstrapping to venture capital. But in this market, bank loans and venture capital are harder to come by if you don't have a business track record. Convincing the right people to fund your idea is key. Ask for more money than you'll need, because new entrepreneurs can underestimate how much it takes to get to the next step, Desai says. It's best to aim for "smart money"--funds from investors who also bring their knowledge and connections to the table.
If all you need is an equity line of credit, look to the banking industry, says David Spann, an entrepreneur and director of the MBA program at the Bill and Vieve Gore School of Business at Westminster Collegein Salt Lake City.
And beware a game banks play, warns Davidson: They assume your business will be profitable from day one, even though they know profitability is a year away. In business plans, entrepreneurs "may be so conservative that they make it impossible to get a loan," says Davidson. "Show the ability to repay [a loan] within the first year, even if you won't."
G = Getting insurance. Look into such areas as property, workers' compensation and commercial insurance policies that protect the company if someone is harmed after using your product or service. As you grow, consider directors and officers insurance and employment practice insurance policies that protect you against lawsuits by investors and employees. Talk to established entrepreneurs to see what coverage they have. You'll also find tips here. Asking insurance agents to throw some extras into an insurance package doesn't hurt, either.
Learn More: Visit our Insurance Centerto learn what you need to properly insure your business and how to purchase it without breaking the bank.
H = Hiring. Early on, you might want to outsource projects instead of hiring employees, which can create large payroll expenses and responsibilities you may not be ready for in your first few years of business.
To avoid paperwork, some small employers classify on-site employees as 1099s (independent contractors). But this creates problems if such an employee files for workers' compensation and the IRS finds out and charges you in back taxes and fines because the person is really a W-2 employee.
A Google search can help you tell the difference between a contractor and an employee, and the IRS offers a report here. See your state's home page for regulations on hiring, minimum wage and workers' compensation.
I = Inventory management. Depending on your business model, you'll either order inventory or create it. Many entrepreneurs think of inventory as an asset rather than a cost. Don't make this mistake. "If you're not selling it, you're not making money," Spann says.
Learn to love markdowns, Davidson advises. Otherwise, you're not taking enough risks in your purchasing. "If you've made the wrong purchasing decision, acknowledge it right away or you make matters worse," he says. "It no longer matters what you paid for it. All that matters is what your customer is willing to pay for it."
J = Joining a networking group. There are so many groups to join--from a local chamber of commerce to entrepreneurial associations--that networking can quickly add up to beaucoup bucks in annual dues and monthly meeting fees. "You can get yourself networked out because there's so much going on," Desai says.
Allocate your funds wisely. Are there one or two networking groups that will give you the most bang for your buck? Find entrepreneurs who have joined networking groups, and ask them if a particular networking group is worth the investment. What are they getting out of their memberships? Will they re-up next year?
Also, look for people in your industry who lunch on a regular basis, and ask to join them. Or organize a small lunch group yourself. Ask each "member" to invite a business acquaintance. You'll expand your circle, which could lead to new clients who didn't cost a lot in membership fees to land.
K = Knowing your target market. Many new entrepreneurs work on the "if I build it, they will come" philosophy. You perceive value in your product or service, but will customers? "It's not the fact that you built the better mousetrap; it's that [customers] will buy it," Spann says. "This is the biggest hang-up for entrepreneurs."
Defining your target market is a part of your business plan, and it requires research. Who is your customer? Who are your competitors? What's your competitive advantage? Are there barriers to entry, and if so, how will you overcome them? Try surveying potential customers about your idea. Knowing your target market "will lead you to money, to great opportunities with customers and to greater success as an entrepreneur," Spann says.
Chris Penttila is a Washington, DC-based freelance journalist who covers workplace issues on her blog, Workplacediva.blogspot.com.