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Start-Up Guide: The Thinking Phase
Much like a game of chess, the first few moves you make in your business can have a powerful impact on your overall success, so those early choices require thoughtful planning. One of the initial steps you should take towards starting a new venture is to evaluate the feasibility of your idea. During this evaluation period, there are three main areas you should review: your personal goals, your market, and your idea. Answering the questions below will help you determine if you should move forward with launching a business at this time.
Your Personal Goals
Do you have what it takes?
Entrepreneurship is a very demanding career path, and requires that you continuously push your limits. Being your own boss means you that you will carry the brunt of the responsibility in your business. The role of an entrepreneur can be stressful, lonely and frustrating.
Besides your time commitments, you will also have financial obligations towards your business. Your business may not be profitable for an extended period of time, will you be able to endure the lack of income?
Successful entrepreneurs are flexible, hard-working, persistent, high achieving, and are in good health. In addition to having a product or service that people will actually buy, you should also make plans to weather emotionally and financially difficult periods during the life of your business.
What’s in it for you?
Many individuals start their businesses with grand illusions of freedom, wealth and power. What do you hope to attain from your business? Are you starting this business to earn extra money, to replace your current job, or to fulfill a life dream? Specify all the reasons why you are starting your business on a sheet of paper. Review your responses and measure them up against the goals you have for your business. Are your personal goals in sync with those of your business? Will your business be able to help give you the life you are seeking?
Do you have the skill-set and experience to successfully run this type of business?
One of the biggest factors you should consider is whether or not you have prior experience in the type of business you are wanting to start. Relevant experience will help you avoid making costly mistakes. If you don’t have the experience you need, then work with individuals that do have a background in your industry. If you don’t have the aptitude for running a business, then you may also want to consider working with a consultant or a business-savvy individual to close the knowledge gap.
What are your strengths and weaknesses?
Take time to analyze your own strengths and weaknesses regarding starting your business. After you’ve identified your weaknesses, then think about action steps you can take to turn your weakness into strengths.
Your Market
Who are your customers?
You need to define a select group of people as your customers. Trying to serve everyone will spread you out too thin, and you won’t be able to effectively serve anyone to the best of your ability. If you are having difficulty pinpointing your customer base, then start by thinking about the type of people you don’t want to serve. Once you begin weeding out undesirables, you will see your ideal customer begin to take form. Write down characteristics, demographics and any other details you wish to describe your perfect customer.
With a crystal clear description of your ideal customer fleshed out, you can now offer a collection of products and services catered especially for this group of individuals.
Who are your competitors, and what are their strengths and weaknesses?
Find out who you are competing against and determine what they do well, and what areas they could improve upon. Those weak areas could provide your business with an opportunity to fill a gap in the marketplace. After you’ve drafted a short list of competitors, visit their websites, call their phone numbers or drive to their physical locations and evaluate their business practices. Write down your findings and search for possible improvements that you would make to these businesses, and determine how you can integrate those improvements into your own business.
What will you do to differentiate yourself from competitors?
Why should a customer leave their current solution provider to switch to you? What will give you a competitive advantage over the other companies in your field? Common ways to differentiate yourself would include: price, quality, convenience, customer service, delivery, performance or technology.
Your Idea
How will you earn money?
Will you be selling products or services? Will you be selling online, in a physical location or through mail order? Describe the general methods you intend to generate income.
What products or services do you intend to sell?
Select products and services that your specific customer type needs and would most likely buy. How will this product improve their lives, and is there a large enough demand to make a profit?
What will be your monthly costs to operate the business?
You should estimate your costs to start-up and maintain the business. How many products or services will you have to sell in order to break-even or make a profit? Will you be able to sell enough of your products and services to stay in business? Reviewing your costs will help you determine the feasibility of your business idea.
Do you have the money you need to start a business?
Starting a new company can be expensive. Do you have the funds you need to launch the business? Will you have enough personal income to support you and your family as well? If not, then perhaps you should consider either applying for a business loan, scaling down your business idea, or postponing the launch of your business until you have the necessary funding. Keep in mind that after you launch, you will also have ongoing bills and debts that you will have to continuously pay each month.
Next Steps
If you’ve reviewed the questions above and feel confident in moving forward with starting your company, then your next step in the process is developing a business plan. Writing a business a plan can seem intimidating, and you may want to consider reading a reputable book, attending a seminar, or working with a consultant to complete your business plan. Soak up as much information as you can during the planning process, and remember to always think ahead.
Ready to start developing your business plan? Contact the Northeast/Texarkana Small Business Development Center (SBDC) for a confidential business consultation at no charge to you. Call (903) 434-8237 to set up an appointment.
