5 Things You Need to Know About Starting a Business
An entrepreneur’s life is a windy, twisted road. Starting a business is exciting but for the less experienced entrepreneur, there can be traps and pitfalls. Here are five business success tips to keep your focused and give you hope.
1. The business plan is more important than you realize.
If outside funding is not a consideration, you will be tempted to skip the business plan. Writing one out formally when there is only an audience of one seems a bit like talking to yourself.
When you write out your business plan, it will include costs and sales forecasts and the very important marketing strategy. The business plan helps you to express and narrow your vision. Within the planning stages, be sure to include two important questions:
- How is my business meeting a specific need?
- Is the this need a major market opportunity?
No doubt, when in the beginning stages of planning, you are not thinking about how and when it will finish. Even so, the exit strategy will guide many other decisions and must be a consideration at the beginning.
- Will the business be passed on to your children?
- Will you be selling the business?
- Will you close the doors and walk away?
- Will you sell shares?
- Will you donate the business to a charity?
2. Focus on the future.
Your experience will have you forming opinions which may get you stuck. Markets change, culture evolves, people move and the nature of a successful business needs to be flexible. Your experience will help you minimize the risk but can also become an anchor which weighs you down. The competitors you might have worried about in the past no longer are a concern. New players you have overlooked in the past become your worst nightmare if you do not stay open.
The marketplace and your business plan are living entities; they’re continually in flux. Remember the five essentials to business success and: "Good enough today is not good enough tomorrow". How will you be good enough tomorrow?
3. Do NOT hire friends.
If you are one who is quick to connect and make friends, consider yourself lucky. This same benefit can become your undoing as the new friendships will sway your opinion in a manner which can hurt business. When it is time to terminate an employee, it is time. If you operate on the foundation of "firm, fair and consistent", not taking action by terminating the staff member can be the first of many steps to having the team lose faith in your leadership. Remember that it may be time to put feelings aside and know that the person will find a better opportunity.
Don't hire friends has been a rule for three decades now. The few exceptions to the rule had me facing the dilemma: If the friend is fired, they will no longer be a friend. You have to decide which is most important: Success for everyone or your friendship.
Face it, people are undependable. Stay objective when putting the team together. Some will stay and some will go.
4. Go for it but not without a calendar.
Similar to the business plan, it’s critical to have the calendar set up in advance. "Live to the calendar" or leave success to chance. It’s easy to get wrapped up with every new idea and every idea can become a good one. The heat of the moment during the start up process gets the adrenaline going and logic may be set on the shelf for later. Although energy is an asset, the lack of focus and loss of practical can mean your demise.
If you are constantly switching back and forth for every possible opportunity, there will be only confusion and no forward progress. Which brings us back to "live by the calendar".
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5. Don’t be the cheapest just to attract business.
"Any business is better than no business" can be heard from many new business owners. Starting with steeply discounted prices which can't be sustained long term is a road to failure from the very beginning.
Raising prices can be done but to go from a discount house to prices which are in the range of the marketplace forces you to change your business model and fix your reputation as customers drop off and share that your company uses "bait and switch".
Over the long term, focusing on how to bring more value to customers, rather than simply slashing your prices will keep the doors open much longer. (Which of course challenges you to understand your customer and the benefit your business brings to them.) For instance, you start a company which offers Seattle IT consulting, you will be assisting others to double sales and profits with technology. Discounts are not as important as creating business success.
Bonus Tip: Failure is an option and expected.
"Nobody succeeds in a big way except by risking failure." - William Feather
"Most barriers to your success are man-made. And most often, you're the man who made them." - Frank Tyger
An entrepreneur falls down so often along the way that they must almost think like an astronaut. Whether up or down; forward is the most important direction. Since the successful entrepreneur is blazing new trails and very few see the same vision, the entrepreneur in a business start up can feel alone, stressed and sure... have moments of anxiety. This does not deter from taking action.
For me failure is a checklist: More failures is a direct representation of wisdom. I know better than anyone what NOT to do. While it makes me look wise, in reality I have just fallen down more than most.
Your new business start up is a high risk venture and there are no guarantees other than you will learn much in the process. There are methods to gaining an advantage where others might fail. Stay alert, measure the success along the way and be ready to apologize with a smile as you get back up from falling and keep moving forward.
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