The Basics of Starting a Business : Youíve made the huge decision to start a business. As you probably know, most efforts to start a business end in failure. Fortunately, there are things you can do to guard against wasting time and money and improve your odds. While every business is unique and comes with its own set of problems and opportunities, there are some basic steps ó writing a business plan, proving the concept, raising capital, choosing a legal structure ó to consider when getting started. Letís take a look:
The Business Plan : Writing a business plan seems like a chore, but itís critical. It doesnít have to be formal or long ó just a few pages is fine. But try to cover the basic sections, especially if you expect to make a pitch to investors or lenders. These sections should include an overview of the business, industry background, the product or service, the business model (how will you make money?), the strategy and the team. For guidance, take a look at Scoreís business plan template.
Think of the process as a way to better understand the opportunity and the risks. It may even show you that the business is too tough. If thatís the case, you want to know it as soon as possible.
Try to answer the following in the business plan:
1) Who is the customer? Try to focus on a defined market segment. In some cases, it should be easy. Perhaps you are aiming at lawyers. But if your product applies to virtually anybody, you need to narrow things. Look at Amazon. At first, the Web company focused on books. Once it built a strong business there, it moved into other categories. So, where to start? Try to find the customer segment that is experiencing the most pain or is willing to bet on new ideas.
2) Whatís happening with your market? Immerse yourself in the market. What are the major trends? How will they help or hurt your venture? Along with doing Google searches, you should also check out trade publications and association Web sites. If your business is in retail, look at ZoomProspector, which provides helpful information on local economic trends (population, income and demographics). Visit Yelp.com and see how many competing retail outlets youíll be facing. Is the market too crowded? Finally, make a list of your competitors and update it regularly.
3) What are the start-up costs? Be realistic. Entrepreneurs often underestimate the time and expense of starting and operating a company. Put together a detailed start-up budget as well as a forecast (Scoreís template offers a worksheet). As you put things together, look for ways to minimize costs. Some ideas: shopping for used equipment on Craigslist, bartering your services, using free or inexpensive online applications like Skype (for free calling), Web.com (to setup a Web site) and VistaPrint (for printing business cards and brochures). Always ask for discounts. At the same time, think of creative ways to increase revenue. Maybe you can mount an online marketing campaign through Google Adwords or use VerticalResponse for an e-mail newsletter. O.K., youíve got a plan.