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So, You Want to Start a Business?
If you want to start a business, give some thought to a few of the most critical areas of building a successful business. Here’s a hint…. It’s not the product or service you plan to launch!
As reported by the Small Business Administration (SBA) there is currently 27 million small businesses in the US today. And although the failure rate is still unacceptably high at 51%, it has shown improvement over the last 10 years. Much of this improvement can be attributed to the availability of technology and marketing on the internet. So, the services available to help you get your business up and running are almost limitless but that’s not what enables small business owners to succeed.
The things that will ultimately position you for a successful business journey have to do with how prepared you are before you take the plunge. Here are some of the most critical areas based on my experience coaching and consulting with small business owners that have already started their businesses:
1. Incompatible state of mind
Much of your ability to go the distance until your business transitions from start up to a stable operation has to do with how you think about what you have chosen to do. If you left the employment world to start your business, you’ll need to shift your thinking from ‘I work for someone else who pays me’ to ‘I run the show, make all the decisions and generate my own pay’. It might sound subtle, but it’s what will keep you focused and support your desire to get through the usual ups and downs of starting a business.
The other mindset change that you’ll want to hone is thinking strategically vs. tactically. Much of getting a business off the ground involves knowing where you are going and what needs to be in place before you get there. It requires a level of foresight and confidence to take the necessary risks associated with getting your business to a sustainable level of revenue. Tactical activity is necessary for getting things done but too much tactics leads to a loss of focus and the feeling that your journey is just too much to handle.
2. Lack of planning
Most people who are bitten by the ‘I want to own my own business’ bug jump into their new venture because what got them to that point was driven by emotions. Take some time to think rationally about where you are going and what you will need to get there. First, do you have a plan? There are plenty of resources on line to help you with a business plan. Business plans need not be complicated; they just need to be specific and directional. This will be your roadmap for the near future. Second, research the market or industry you plan to enter. Allot can be learned by the people who are already there and what they focus on. If you know someone who is in this industry, pick their brain.
3. Financial Acuity
Unless you have investors to support your launch, you will need money! Trying to finance a business while you are working full time somewhere else will only prolong your ability to become self supported. If you have money in the bank or access to funds, you should think about having 18 months of capital to work with. This includes the cost of operating your business as well as money needed to live on. Once you have a budget, stick to it! Lack of financial discipline is one of the top reasons businesses don’t make it. In fact, it ranks #2 and #5 on the list of reasons identified by the SBA.
What makes this area so difficult for business owners is the need to balance their desire to grow with their ability to make sound decisions about what to invest in and when. Always remember, cash is king in small business and when you run short, you limit your ability to be flexible and take the appropriate actions.
4. Generating Revenue
A business that can’t generate revenue is a business that will soon close. That’s way focusing on marketing and sales is the most important thing you can do. Take inventory of your personal strengths and skills. If neither involves marketing and sales, get help early! You need to know who your ideal customers are and what they want before you can expect them to do business with you. Likewise- if they show interest and you can’t close the sale, you’ve not only lost revenue, you’ve wasted money generating the interest.
I’ve seen so many new business owners get completely wrapped up in the ‘genious’ of their product, service or business model and forget that if no one buys it, what you have is an expensive hobby! Learn to think like your customers because what’s important to them is what determines if they will purchase what you sell.
5. Successful management practices
Once you are up and running, things will be coming at you at an unbelievable pace. As I mentioned in the first point, you are not an employee anymore. You are the BOSS! You will be making all the decisions whether you understand what you are doing or not. Many people get so overwhelmed at this point that they go down under the weight of doing the wrong things, making poor decisions and staying frustrated the entire time.
The thing to remember is FOCUS. Staying aligned with your plan and concentrating on the most important areas of the business is your best bet for succeeding and becoming sustainable.
As you start making money, be thinking about bringing on help. It can be contract help or part time people but do it as soon as you can. If you get comfortable with your revenue and fill all your time working IN the business, it will be very difficult to get out of this situation later.
6. Find other people who think about business as you do and want the same things as you.
Preferrably, hang out with business owners who are further along so you can learn from them. Success is a journey, not an end destination so learning will continue as long as you continue to grow. When businesses fail or become stagnant, part of the problem is stagnant thinking. Relationships that challenge you and encourage you to keep going will fuel your desire to reach higher levels of accomplishment.
There are many more areas of successful business ownership that must be embraced but these 6 are the foundation for getting your new venture off the grown. Along the way, you’ll run into countless decisions that need to be made about what to do, what to invest in and how to make your business run better. If you need help with situations beyond your level of knowledge or experience, don’t let them fester. Making no decision is one of the worst decisions you can make and usually ends in unfortunate consequences.
Learn more about the author, Steve Smith.
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