Getting Down To Business: Put your biz idea through its paces
Coming up with a business idea is simple. Coming up with a business idea that works--not so much. After all, 50% of new small businesses are no longer around after five years: poor management, lack of capital, and lack of devotion are the leading causes of business failure. It's important to think and plan ahead before jumping in, not just to make sure you have what it takes to get it started, but how to keep it going. Take your idea, grab a napkin and a cup of coffee, and start making some notes. You'll need them later.
Entrepreneurs need skills that will help them in whatever business they decide to tackle. As your own boss, you'll have to be comfortable making decisions and taking risks. It's also important to be able to confidently talk about yourself, your business, and its products. And you'll have to be creative: keeping the business fresh and relevant requires ongoing creation of new products and services.
Before committing yourself to the journey of entrepreneurship, figure out what you want to get out of this. Is it money? Or is it passion for something and eagerness to expand beyond the bounds of just having a job?
Passion is important. Everyone needs something to keep them motivated through the start-up trip-ups of paperwork, licensing and permits, and budgeting--not to mention getting through just the first year of your business, but also year two, year five, and hopefully even year ten. Making money may not motivate you like genuine devotion to your product or service can.
Every business needs to cater to some segment of the population, whether it's defined by geography or finances--or both. Many small business owners look for niche markets or underserved customers. Successful business owners find a niche and stick with it, solving problems others haven't tackled.
When considering what market to jump into, think about what you could do to enhance something useful or fix a recurring problem. Look at your existing competition. What good or service can you provide that no one else can, or provide better than the competition?
Do some preliminary market research. Check out bit.ly/mktrsrch01 to start scouting employment statistics, income and earnings, and competitors to see where you might fall in the mix. There might also be trade groups, magazines, or even academic institutions that have data that can help you.
Most businesses require some kind of start-up cash (called "capital") for things
like renting a storefront, designing a website, legal services, paying employees, and even office supplies. How much is needed to get started, and how are you going to get it? Consider tapping private investors, friends and family, government grants and loans, a Kickstarter fund, and your own piggy bank to get the necessary dough.
Does the business need a store or office space? Consider the physical space you
(and any products or merchandise) will need and where you can attract the most customers.
Think about whether customers will con-tact you in person or online (or both). It's important for any small business to have a website so that people can find out more about who you are and what you're selling, even if you're setting up an actual space to sell your goods or services.
If you've considered your proposed business from all angles and it still seems like a good idea, put all those notes together and write a business plan. The Small Business Administration (sba.gov) offers plan outlines and training. They can even hook you up with mentors that can help you plan and take the first steps.
Sources: sba.gov; inc.com; reuters.com; kickstarter.com; entrepreneur.com; businessweek.com; bls.gov; ritholtz.com