First Steps to Starting a Business
You have a can't-miss business idea and you're ready to become an entrepreneur. So, now what?
OK, you've got your business idea. You're fired up-ready to quit the rat race and be your own boss. What do you do now?
The first thing you need to do is decide on the goals for your business. What do you personally want to get out of it? How many hours do you want to work? How many employees do you want to have? How much money do you want to make? The idea here is to get as clear a vision as possible of what your business will look like when it is established so you'll know what needs to be done to get there. For a very clear step-by-step method to do this, I highly recommend a program called E-Myth.
Next, do the math. So many people-including me-have learned the hard way that the business they created is not capable of meeting the goals they set for themselves. To help avoid this problem, do some market research to determine how much you'll be able to charge for your product or service and what volume you'll be able to sell. Think about how many hours you'll be able to work in a day and get a rough idea of the maximum amount you could make. Once you have rough estimates for those figures, you can decide if the money you could make or the time you need to put in will be worth the effort. You'd be surprised at how many people spend years working in a business that is just not capable of becoming what they hoped it would, even if everything went perfectly.
Many new entrepreneurs think success is all about developing a great product or service, but actually it's all about selling it. Before you spend tons of time and money developing your product, make a prototype or develop a clear and concise description of what it will be, and do some market research. Figure out who your prospective customers will be, and go talk to them! Ask questions. Find out what they'll pay. Consider their feedback and modify your design accordingly. Look at other companies that are selling similar products or services. Find out what they charge, how they market and what their competitive advantage is. Go into their stores and watch their customers. Find out what they are doing and why, and how customers respond. Once you think you have a clear understanding of what the market wants, then move ahead with your product or develop your service.
You'll also need to decide what kind of company structure will best fit your plans (S Corp., LLC, sole proprietorship and so on). Read "Choosing a Business Structure" for more information.
If possible, work out of your home for awhile or rent the minimum space and equipment necessary to run your business. It's important to keep your overhead as low as possible, at least until things start to take off. Resist the temptation to rent a nice office and fill it with furniture and equipment. I used to think that was impressive, but I came to realize it was just expensive.
From the start, it's critical that you communicate a consistent message to potential customers. Start with the following:
- Business cards. Get plenty and hand them out at every opportunity. A good place to get professional-looking but inexpensive cards is www.vistaprint.com.
- A website. Why do you need one? Read this article to find out why it's so crucial.
- A simple one-page flier. Create something that explains clearly what you offer and why someone should buy it from you. Customers want information to help them make buying decisions, and often just knowing what you sell will get them to buy from you. It's very hard to figure out what some businesses are selling or why you would want to buy from them-don't let this be your problem.
Starting a new business is scary, exhilarating, challenging and at times downright confusing. It's easy to get overwhelmed by the huge number of tasks in front of you. When you get in that state, step back and think, "What can I do today that will get my message in front of my customers?" If you're thinking about this all the time, the other details will fall into place.
Keith Lowe is an experienced entrepreneur who is a founder and investor in companies in several industries. Lowe also mentors new entrepreneurs; serves as past chairman of the board for Biztech, a nonprofit high-tech business incubator; and is a co-founder and officer for the Alabama Information Technology Association.
The opinions expressed in this column are those of the author, not of Entrepreneur.com. All answers are intended to be general in nature, without regard to specific geographical areas or circumstances, and should only be relied upon after consulting an appropriate expert, such as an attorney or accountant.