People are always asking for a list of fundamentals, a checklist they can use to start their own businesses. From your business type to your business model to your physical location, there are so many variables it’s not easy to come up with a list that will work for everybody. The key, regardless of what type of business you’re starting, is to be flexible!
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1. Personal evaluation
“Know yourself, and work in a job that caters to your strengths. This knowledge will make you happier” – Sabrina Parsons
Begin by taking stock of yourself and your situation. Why do you want to start a business? Is it money, freedom, creativity, or some other reason? What skills do you have? What industries do you know about? Would you want to provide a service or a product? What do you like to do? How much capital do you have to risk? Will it be a full-time or a part-time venture? Your answers to these types of questions will help you narrow your focus.
This step is not supposed to dissuade you from starting your own business. Rather, it’s here to get you thinking and planning. In order to start a successful business, passion alone isn’t enough. You need to plan, set goals and above all, know yourself. What are your strengths? What are your weaknesses? How will these affect day-to-day operations?
All the better if you can enter a market you like and that you know well. As you get started, your business will likely dominate your life so make sure that what you’re doing is stimulating and not dull. You’re going to be in it for the long-haul. Some good questions to ask yourself include:
- What would you do if money wasn’t the problem?
- Is money really important? Or rather, is making a lot of it really important? If it is, you’re probably going to be cutting out a number of options.
- What things really matter to you?
- Do you have the support of your family, especially your immediate family? They may have to make sacrifices at the beginning, so it’s important to have them behind you.
- Who do you admire in business? Perhaps in the industry you’d like to go into. Why do you admire them? What are their likable traits? What can you learn from them?
Answering these questions and asking many more about yourself and your abilities isn’t necessarily going to ensure you’re successful but it will get you thinking about your goals and about what motivates and inspires you. Use this time to make sure that you are matching the business you want to start to your personal aspirations.
2. Analyze the industry
“The more you know about your industry, the more advantage and protection you will have” – Tim Berry
Once you decide on a business that fits your goals and lifestyle, you need to evaluate your idea. Who will buy your product or service? Who would be your competitors? You also need to figure out at this stage how much money you will need to get started.
Your ‘personal evaluation’ was as much a reality check as a prompt to get you thinking. The same thing applies when it comes to researching your business and the industry you’d like to go into.
There are a number of ways you can do this including performing general Google searches, going out and speaking to people already working in that industry, reading books by people from the industry, researching key people, reading relevant news sites and industry magazines and taking a class or two (if this is possible). If you don’t have time to perform the research or would like a second opinion, there are people you can go to for help – government departments and your local Small Business Association.
There are also a number of less traditional sources worth turning to:
- Advertising representatives for statistics and data on your competition or the industry in general
- List brokers (to get an idea of the number of prospects out there)
- Suppliers of your industry (again to get a sense of demand and for market information)
- Students who will likely be happy to perform research for you at an affordable fee.
Evaluating your market
In order to identify how attractive your prospective market really is (your own desires aside for the moment), there are a few things you should consider:
- How urgently do people need the thing you’re selling/offering right now?
- What’s the market size like? Are there already a lot of people paying for this thing? For example, the demand for ‘traditional signwriting classes’ is almost non-existent.
- How easy (and how much will it cost) to acquire a customer? If you’re a lead generation business, this may require a significantly larger investment that say a coffee shop.
- How much money and effort will it cost to deliver the value you would like to be offering?
- How long will it take to get to market? A month? A year? Three years?
- What size up-front investment will you need before you can begin?
- Will your business continue to be relevant as time passes? A business that repairs iPhone 5 screens will only remain relevant so long as the iPhone 5 sticks around. If your business is only relevant for a specific period of time, you will also want to consider your future plans.
If you like, you can even take things a step further and consider the consumer needs currently not being met by businesses in the industry. This is a good time to take a look at potential competitors. And remember, the presence of competitors is oftentimes a good sign! It means that the market for your product or service already exists, so you know that from the outset, you’re not flying entirely blind. While you’ve got the time, learn as much as you can about your competitors, about what they provide to their customers, how they attract attention and whether or not their customers are happy. If you can figure out what’s missing before you even get started, your job will be made that much easier when you do finally set up shop.
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