The 7 Basic Rules Business Start-Up Tool Kit
The 7 Basic Rules Business Start-Up Tool Kit
Starting a business? Here is a short list of the kind of questions that you need to ask yourself before setting out on starting up your own business.
Nobody starts out a new business venture with the aim of being unsuccessful. And yet:
It has been statistically proven that four out of five business start-ups will close their doors within five years time. Yet every year hundreds of thousands of individuals venture out to do “their own thing”
The short list of questions below will prepare you for what’s awaiting you around the corner when you set out on your own.
Rule 1: Business owners must chose the right business, right from the start. Otherwise you will spend valuable time and money trying to figure out what business is right for you.
The most important question is “who are you and what can you do?”
A man weighing 300 pounds cannot run a hundred yards faster than a 150 pound man can.
A 150 pound man cannot lift as heavy as a 300 pound man can.
A 60 year old cannot climb a tree as well as a 12 year old, and a 12 year old cannot solve cross word puzzles as well as a 60 year old.
So “who are you and what can you do?”
Please be honest with yourself. The more honest you are with yourself at this stage, the easier it will be to be chose the right kind of business and increase your chances of success.
An accountant might not be as good in changing oil as a former machine tools worker would be.
The former machine tool worker might not be as good with numbers as the accountant would be.
Rule 2: The truth is, we all have certain capabilities and learnt skills. If we concentrate on what we know best, do best, and what we like to do best, we have already come very close to succeeding.
Find out who you are and what you can do. The best way is to start asking people who know you well. They usually will tell you all about your good sides. Next, talk to somebody whom you don’t know, like a business adviser or a management consultant. Tell them about your plans, your background and your business experience. Ask them to do strengths and weakness analysis about you and your planned business to determine a “fit” and possible opportunities and threats to your business.
Clarify the following questions, before starting your formal business planning process
1. Product or Service
• Have you clearly defined your business?
• What differentiates your product or service from your competitors?
2. Your Personal Needs
• How long can you survive financially?
• Are you ready to work long hours and weekends?
• Will your family support your decision?
3. Your Business’s Industry
• Do you know the cyclical/seasonal nature of the economy, the industry and your market and how these things can affect your business?
4. Marketing Issues
• Are there buyers out there who would be willing to part with their money to purchase your product/service?
• What do buyers pay for in your market: price, quality, or convenience levels?
5. The Competition
• Do you know who your competitors are?
• How does your business measure against the competition?
6. Your Finances?
• Where will your start-up funding come from?
• Are you aware of how much time it will take before you start to turn a profit?
• Are you aware of how your business structure is taxed?
7. Employment Issues
• Will you need to hire employees?
• Have you written a clear set of company policy and procedures for your employees?
• Do you know what kind of property coverage your business will need?
• Does your product or service require specific location needs?
• Can the area support a business like the one you propose?
Rule 3: If you can’t answer the questions above, don’t start your business. Find somebody that can help you answer these questions.
Rule 4: Just don’t ask one person. There are lots of people out there who can’t tell right from wrong. Talk to your banker, talk to somebody at the SBA, talk to SCORE advisers.
All of this advice is free.
Rule 5: Do research on the internet. Use search engines like Google and Yahoo to look for free online articles about setting up a business, and how to write business plans.
You might have heard of the term “paralysis by analyses”. Don’t overdo it. There is no need to for you to prepare an overly detailed business plan and over commit on time and money.
But a business plan will be necessary, especially if you will need to bring in outside investors or get financing from a bank.
Rule 6: Unless you really want to, don’t go splurging on expensive business planning software. They are costly; you will need to spend time to learn how to use the software and most of them just do what spreadsheet programs like Microsoft Excel do.
Rule 7: The final and most important rule! Be realistic. Downsize your business success expectations by at least a half. After you have sold to your family, friends, relatives, colleagues, you will need to sell to total strangers that could care less with whom they do business. Unless you are able to sell and generate repeat sales from total strangers, your business will not make it. That means the following:
Rule 7.5: Your business concept, whether it is selling goods or services has to be sound. You need to do whatever you are doing in the most competitive way that you are capable of. If your capabilities compare to the present market contenders you will be moderately successful. If you can surpass the present market contenders based on how you do things,
and if there is a market for what you are doing, you will be successful. Its that simple.
Rule 7.75: Simple is good. Don’t complicate things. Simple is good.
Have a question for Jim? Ask or leave a comment below!