Small businesses are the fastest-growing aspect of American industry. But what does it take to start a successful small business? It takes marketable skills, energy, confidence, and vision.
A successful entrepreneur must also have determination and tenacity, and of all the skills these two are perhaps the most important. An entrepreneur must know when something cannot be done. An entrepreneur never gives up after the first failure. If an entrepreneur doesn’t succeed one way, then he or she finds another way.
If you’re serious about starting your own business you have to ask yourself some very important questions. “What do you do best?" “What do you like to do?" What does the market want?" If you find one answer for all three, you are going to succeed.
However, it takes more than a good attitude and self-examination on which to build a business, you need to choose your business field carefully, taking advantage of all your personal skills and experience. You must have a strategic plan for the marketing and management of your business.
Certainly you’ve got to be a go-getter and you’ve got to be determined. But you’ve also got to take a business-like approach to starting your own business with good market research and a solid business plan.
Most successful businesses aren’t founded in a vacuum. They tend to be started by entrepreneurs who already have substantial experience in their fields. They know their customers and their needs and how to fill them. Finding the right niche is very important. The best way to find your niche is to draw from your personal experience in a specific field.
Once you know what to do, you’ve got to find customers who want to pay for your products and services. And that requires serious business research.
You need to analyze your customer base. Learn who they are and how they can be reached. Calculate how much it will cost to reach them to communicate your availability. You have to learn what the market will pay for what you have to sell. Under pricing your products or services is one of the biggest mistakes a new small business person can make.
Scout customers in the field, subscribe to trade magazines, gather catalogs from potential competitors, and most importantly spend time doing research on the Internet. Every small bit of market information can contribute to a larger portrait of the market and the customers that compromise it. This market information provides the nucleus of a formal business plan and marketing plan.
A good idea is simply not enough for business success. You need a plan for how to manage your business after you get started. You need to know what to do and when to do it. A business plan is important for any size business but it is particularly important for start-ups. Just having a plan gives your small business a leg up on the competition.
A business plan is your roadmap for success. Amazingly, less than half of all businesses have a formal plan and that in itself is a big reason why new businesses have such a high failure rate. You don’t need to hire an outside consultant to design your business plan, but you should take the discipline seriously if you prepare it yourself.
A business plan should include an executive summary that explains the business environment in which your company operates and how you plan to succeed in this environment. Your plan should include an industry analysis, market analysis, business description, and your competitive advantage.
Your plan should also explain how your company works with a discussion of both internal and external operations. You should include a marketing plan, organizational structure, operational plan, funding needs, and financial statements.
If you plan to see outside funding from investors or financial institutions, a formal business plan is essential. But even if you do not need start-up money, a sound financial analysis is still vital.
Many new companies fail because the owner has not carefully analyzed the businesses cash flow. To be a successful entrepreneur, you must know the cost of supplies, the expense of manufacture or service delivery and their profit margins. You need to define exactly how you plan to make money in your business.
Franchise companies can take some of the leg work out of starting a business by providing a proven business plan, local and national marketing support, and in some cases, business supplies and customer leads. But franchises can be expensive and difficult to evaluate.
On the positive side of a starting a franchise, you can often cut a better deal in terms of market information, access to training and market awareness. On the negative side, you pay a lot for everything you get. As a business owner, you need to decide whether what you get is worth what you pay for it.
You need to analyze the franchise’s disclosure information carefully, particularly the financial requirements. What are the total cash requirements? What do you pay in royalties, advertising contributions and supplies? Are you required to purchase supplies from the franchiser? If you are, analyze the pricing to make sure that you are not overpaying.
Before you start a franchise business you should contact present franchisees. Franchises companies are required to disclose the names and locations of previous purchasers and will often have interesting stories to tell. Checking references is obviously a very important but frequently overlooked step as well.
Before committing to a franchise purchase, you should also look at their own goals and attitudes. You have to be willing to accept that a franchise company will tell you how to run your business. If you want to follow your own plan, you probably shouldn’t buy a franchise.
Family matters don’t need to be included in your business plan, but they shouldn’t be overlooked. Starting a business can be a strain on family relations, particularly if the business begins in a home office. You’re going to be putting in long hours, particularly at the start. And for a while, family relations can be strained. So it helps if everyone is pulling for you.
Many entrepreneurs begin home-based small businesses for flexibility, as a way to spend more time with their families. But they quickly learn that they still have to be disciplined about their use of time for work and family.
You have to set limits for your family. If you are going to work at home, you have to make clear that there are times when you should not be disturbed. Your children have to be educated about what you do and why you cannot be distracted when you are working. And when your office moves from your kitchen table to another location, you have to learn how to come home and dedicate time to your family in return for their understanding during the work day.
Take time out to spend with your family, perhaps at the end of the day, to be with your children and then alone with your spouse after the kids are in bed. Give yourself permission to take some time off.
Being able to budget your time wisely between you business and your family will determine a large part of your success as a business owner. After all, even the most successful entrepreneurs need a life, too.
Copyright© 2005 by Joe Love and JLM & Associates, Inc. All rights reserved worldwide.
Joe Love draws on his 25 years of experience helping both individuals and companies build their businesses, increase profits, and achieve total success. He is the founder and CEO of JLM & Associates, a consulting and training organization, specializing in personal and business development. Through his seminars and lectures, Joe Love addresses thousands of men and women each year, including the executives and staffs of many of America’s largest corporations, on the subjects of leadership, self-esteem, goals, achievement, and success psychology.
Reach Joe at: firstname.lastname@example.org
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