So You’re Thinking of Starting a Business

Let me get this straight. I’m not going to discourage you in the least. I strongly believe that new small businesses are what are going to save our economy.

Written Jan 13, 2012, read 2075 times since then.

Let me get this straight. I’m not going to discourage you in the least. I strongly believe that new small businesses are what are going to save our economy. What I am going to do is encourage you to slow down, think it through, and make some wise decisions. Most small business failures occur before they even open the doors. Poor planning, or worse, no planning can cause a premature demise of your new baby. Here are some key points:

Start with a business plan. Utilize the SBA, SCORE or your local not for profit small business development center and pick their brains. They can be a wealth of information and usually it’s free. Here locally in Johnson County we have the Kansas Small Business Development Center. The service is free. Let them help you develop a sound business plan.

Make sure you’re plan includes branding. You need to think of branding right up front. How do you want the public, you’re potential customers, to see you. As a small business owner you are your brand. You are whom the customer will rely on for a good experience with your company. Branding is not just a well-designed logo, signs, or stationery. It’s how you perform customer service, how you train your staff, even how clean you keep the place. Think McDonald’s. They have branding down pat. When you put branding at the top of the list and make it a priority you also need to figure it in to the budget. Your brand must be in place before you even open the doors. Without it you will have no direction on how you plan on marketing your new enterprise.

Have a marketing plan. A marketing plan will be well thought out. You will know who your target market is, who your customer is. By knowing the nuts and bolts of whom you want as a customer you will then begin to know how to get you message to them. Do they read newspapers, watch TV, or sit in front of a computer a lot? Do they like informational advertising or humorous? These and many questions must be answered before you buy your first ad or place a commercial on TV. Long before you open your doors this homework must be well on its way to completion and the HOW of you marketing must be in place.

Make sure you are funded. Every new businessman thinks he can start a business on a shoestring. Truth is you don’t need millions but having enough money to keep the doors open until your profitable is a goal you should shoot for. Will it take 6 months, 12 months, or 2 years to become profitable? If so you will need operating expenses to get you through. Otherwise you may be tempted to not spend money on your brand and marketing. Without these you won’t last long.

Remember this one thing: Branding and Marketing aren’t expenses but investments. By investing in them you ensure your success over the long haul.

Learn more about the author, Michael Irvin.

Posted by Laurel Kaufman, Santa Clarita, California | Jan 15, 2012

As a branding/marketing expert I truly appreciate your article...It's amazing how many people forego branding and marketing because for some reason they don't see the value...hello, it's how your brand is seen by the world, could anything else be MORE important?
Posted by Fernandez G, Bangalore, Karnataka India | Jan 16, 2012

Thanks for your education.
Posted by Elvis Arias, Jersey City, New Jersey | Jan 16, 2012

Good advice. Thanks for sharing your thinking.,
Posted by Hollie Bourne, Wheaton, Illinois | Jan 16, 2012

Small business growth is truly the only way our economy will be saved. Starting and expanding existing businesses will be the key - I definitely agree. I also agree with your emphasis on planning. plan plan plan PLAN! No lender or investor is going to give a second thought to your idea without a respectable business plan. Make the investment with your time and money, and get a business plan!

One more thing I wanted to touch on is that many do not realize - if you are not going to invest in your business, no one else will! Many of my clients think someone is going to just give them $1mil to start without them offering anything up themselves - YEAH RIGHT! Using your own money is the best way to get additional funding. Period!

Thanks for the post!
Posted by Matt Brennan, Aurora, Illinois | Jan 17, 2012

It is the best way to get our economy going again for sure. People need to understand the rules are changing. If they market their business right, they can succeed!
Posted by Michael Irvin, Overland Park, Kansas | Jan 17, 2012

Thanks for all the great input. I really appreciate your thoughts.
Posted by Lynne Brisdon, Bellingham, Washington | Jan 19, 2012

Really sound advice Michael. As a business Coach working with startups I whole-heartedly agree with having a plan and accessing local business resources. Where I live in Bellingham Wa. we have the SBA, SCORE, lots of Biznik events and Meetup groups to support start ups as well as established (and sometimes struggling) businesses.

One of those resources is an informal business coaching clinic I host weekly...
http://www.meetup.com/Bellingham-Entrepreneur-Coffee/
Posted by Chris Lona, bellevue, Washington | Jan 19, 2012

I come from a background of 20 years of branding and multimedia design. One of our taglines is "credibility through design" and the business card that goes with it has a professional layout on one side and a scan of a napkin with my name and information hand written on it with a sharpie, all accompanied by a coffee cup ring. When I meet someone I give them my card and say, "We enhance credibility through design. This side gives us credibility, this side does not." Guess which side is which… This touches on the importance of a solid brand identity which Michael mentioned. However, it's' up to you to maintain the intent and integrity of the overall brand; what do you think of when I say ""ENRON"? The tilted ""E" turned into a crooked "E"…

Also one thing I wish someone had told me was no matter how much value you offer, ALWAYS show how what you provide will affect a client's bottom line. Include this with solving their pains and problems and you will be much better off.
Posted by Thomas Adair, Keystone Heights, Florida | Jan 19, 2012

Developed a business arbitrage model.

The model can rebate 100% to the buyer, on any product/service.

The model can make the financed payments for the buyer.

A for profit model, that needs a partner to help implement and run.

Thomas thomasadair@live.com
Posted by Michael Irvin, Overland Park, Kansas | Jan 19, 2012

Lynne & Chris, Thanks for your professional input and comments. I appreciate you taking the time to weigh in.
Posted by Armin Laidre, Viimsi, Harju Estonia | Jan 19, 2012

I would recommend to start from entrepreneural qualities. Read more (I just wrote an article on that topic): /business-financial/online/how-to-articles.aspx?article_id=entrepreneur-characteristics
Posted by marina de martino, naples, italy Italy | Jan 19, 2012

I agree with you even if in Italy is very difficult to break or to get in the 'casta' lobby.Now for istance there is a fight for the liberalization of some professions as taxi driver, notary, chemists .Everybody in Rome to react against what the new government , more techical decided.The globalization should have been approved after razionalization . Anyway I share your thoughts marina de martino naples italy
Posted by Tresa Leftenant, Kirkland, Washington | Jan 19, 2012

I've owned an independent financial planning practice for 8 years and I'm just starting a new training company. Your advice is right on . . . and I appreciate the reminder as I prioritize the many details of starting a new business. Business plan and marketing plan first!
Posted by Scott Fasser, Seattle, Washington | Jan 19, 2012

Good conversation starter. There are a slew of other resources to help as well including the business school at the local university, college, community college - interns, student projects and advising from professors are great. Local organizations of entrepreneurs including meetup.com meetings (Lynn mentioned this above). Websites and online groups dedicated to Entrepreneurship - LinkIn and Biznik are good places to start :-). Plus local venture capital companies/angel investors/Karetzu Forum type organizations.
Posted by Steven J Fromm, Philadelphia, Pennsylvania | Jan 19, 2012

Hey Mike. This is a great post. One area that is oftentimes overlooked is the choice of entity conundrum. There are many entity options, such as a C corporation, S corporation, LLC, family limited partnership, partnerships, etc.
For more insight into LLC your readers may be interested in the following article: /LLC_PA_formation_taxation.html. For a discussion of S corporations please see /s_corporations.html. And for other legal and practical issues please have readers review Choice of Business Entity: Legal, Financial and Other Non-Tax Concerns at /Choice_Business_Entity_Legal_Financial_Non-Tax_Concerns.html The point of all this is that this part of the business plan also needs to be thought through at inception. Finally, having good corporate and tax counsel both at inception and for ongoing guidance, suport and business and financial planning would be prudent if not essential.
Posted by Kimberly Gauthier, Marysville, Washington | Jan 19, 2012

The trouble I found was writing a business plan (the people at SCORE didn't know what blogging was) and getting funding.

I was finally able to write a business plan - I found a great site that gets you started and before I knew it, I had a clear idea of what I needed to do to turn my blogging into a profitable business.

The funding is tough, because, again, people don't know what blogging is so they don't want to invest. It's fine, I still work full time so I fund my own business and it has low costs, most of which is covered by my blog revenue.

Thanks for this post. I would love to learn more about possible funding, but I may be a little ahead of the game at this point.
Posted by Audra Gerger, Conyers, Georgia | Jan 19, 2012

Thanks for the post. In today's economy, I agree that anyone considering starting a business should begin at the "slow down, think it through, and make some wise decisions." For those wanting to start a business, be honest and realistic with yourself if this is really an entrepreneur risk you are willing to take and that you want to be in it for the long term. A business takes a lot of work to get it going. Think again if you are just looking to squeak by until you get a job. There are a lot of people trying to act as contractors or consultants that you might be competing with. Then once you are clear that you have the entrepreneur bug, ask yourself the hard questions about experience, marketing research, funding, customers, etc.
Posted by Salar Salahshoor, Portland, Oregon | Jan 19, 2012

Depending on your business "concept", I would argue that a formal business plan is overkill (definitely as a first step). Time is such a precious resource, and writing a business plan (especially if it is your first) is a time consuming activity. I have seen many aspiring entrepreneurs get stuck at the very early stages trying to put together a comprehensive plan (often due to advice from consultants, coaches and academics). Traditional business plans can have an effect of inaction. You spend so much time trying to perfect this document and thinking through all the hypothetical circumstances of a small business operation and it can be paralyzing.

I think your time would be better spent validating your idea through market research and prototyping. Figure out the business "model" first. Don't worry about a SWOT analysis, operations plan, marketing road map and table of contents when you don't even know what the hell you are building yet. After you understand the economics of your business, through the process of actually executing, you will quickly realize what you need, what you lack, and who you need help from. I think you'll be in a better position to write a plan (if you decide it is worth your time at that point). I think some element of planning is good, for instance, it is good to develop a real basic set of pro forma financial statements and a budget, so you can understand the financial resources you'll need to make your business work, but the rest of the fluff you can do without at this point.

Once you get real about your business by actually doing the work, you'll have more valuable information than writing a hypothetical sequence of events that is unlikely to happen. Once you decide to formalize everything into a working plan, I would only advocate a plan that is less than 10 pages long, otherwise you risk wasting time that could be spent actually making things happen for yourself and your business.

In reality, unless you are already earning money doing what your business plan would state, or have a working prototype (or some sort of solid traction), don't waste your time trying to raise money from the bank or investors. If you are a genius, however, with a proven track record and a business idea that has potential to change the world, then a well written plan might be worthwhile, although a PPT deck is usually the better first step when you're that person.

This has been my experience with business plans, having started several companies and competing in various business plan competitions in the past.

I would recommend Guy Kawakaki's book, "The Art of the Start" for any aspiring entrepreneurs wondering about business plans. He has a good blog too, if you google his name you'll find it. Peace be with you.
Posted by Alison Gilbert, Rockville Centre, New York | Jan 19, 2012

Mike, I completely agree with your premise about small biz saving the economy. In fact so much so that I have dedicated my own business to serving local/small biz and starting a facebook group about this http://www.facebook.com/groups/solution4biz I'd really enjoy see you visit us, join and participate. Sincerely, Alison Gilbert
Posted by Steve Handwerker, Highland Park, Illinois | Jan 25, 2012

In both of my lines of work -- sports marketing & PR, and professional photography -- I find it hard to believe I could ever realistically get funding. Do you agree, or have a different (realistic) perspective?

Any recommendations for smart, not-ridiculously-long business plan templates or learning modules to learn how to do it?

THANKS!
Posted by Michael Irvin, Overland Park, Kansas | Jan 25, 2012

Steve, There are so many variables connected with a business loan that I can't hazard a guess on your chances. I'd check with your local SBA office and talk about your chances of getting a loan. They are in the business of helping small businesses be successful.

As to a business plan it depends. You may need a very detailed one for a bank or lender they can give you advice. If you just need one for yourself it can be fairly simple. The value of a business plan is in the exercise of putting your goals, strategies and thoughts down on paper. By getting them out of your brain and in black and white you can begin to visualize your business. It will begin to take shape right before you eyes. Writing things down triggers a thought process that leads to solutions.

Michael
Posted by Steve Handwerker, Highland Park, Illinois | Jan 26, 2012

Hi, Michael, This was great advice, and so well put! I really do appreciate it and you've inspired me. Steve
Posted by Salar Salahshoor, Portland, Oregon | Jan 26, 2012

@Steve Handwerker, like Michael said, there are many factors that will determine your eligibility for a loan. It's hard for me to imagine what you need "funding" for in your fields of expertise. If you already have a thriving business, it's fairly easy to get funding because you have collateral and a proven business model. The basic rule is, when you don't need money, bankers are happy to lend it to you. If you are just starting out in your different ventures, I think bootstrapping is the way to go.

However, if you own a home with equity or some other assets that a bank would find useful, they may consider you at the very early stages, pre-revenue, but that would be extremely risky for you and the bank, so it's not going to be easy to get money in that scenario. If you just need a few thousand dollars, you can use credit cards or apply for a small line of credit. A second mortgage is a good option if you are in that position and feel comfortable with the risks.

Individual investors are usually looking for 10x returns on their investment, so unless you are building a potentially large business, don't bother talking to Angels or VCs.

It sounds like your creative, so you might get a lot of value from these two websites:

www.kickstarter.com and www.lendingclub.com. It's a different model, peer-to-peer funding, but I've seen it work wonders. Good luck!
Posted by Michael Irvin, Overland Park, Kansas | Jan 26, 2012

Steve, You're welcome and I hope that I've been helpful. Salar also makes some good points to consider. Peer-to-peer funding is an up and coming thing and might be a good fit for you. I really like the business model of entrepreneur helping entrepreneur.

Here's to your success!
Posted by Michael Hartzell, Seattle, Washington | Jan 28, 2012

Funding: http://www.bizloanlink.com

The business plan? hmmm.... If someone feels like they don't know exactly where they are going to end up, and all they have is a starting point....

they head west knowing that sooner or later they will come to the ocean. That is unless they have never seen an ocean and only heard rumors.

Trail blazers... with a big dream may decide their business plan is to simply keep getting bigger by ten percent every month. Everyone else will say no way because no one else has done it yet.

Big dreamers lock themselves in garages and invent computers. Their business plan is "make something cool".

istockphoto started as a personal website to store photos online and then allowed others to do so as well. Then over time the shared community turned into more.

Maybe the start up is just to do one thing well, be sure to offer value and win-win and then see if others are interested.

thanks for the article.

Guerrilla Marketing Ideas that Rock!
Posted by Michael Irvin, Overland Park, Kansas | Jan 28, 2012

Michael H., Thanks for your thoughts. I appreciate them.

Michael