The Top Ten Things You Must Know Before Starting A New Business! By Tom Egelhoff & L.J. Lary ------------------------------------------------------------------------- There is nothing more fun and exciting than finally opening the doors on your business. However, there are a lot of things that have to happen behind the scenes before that day arrives. There are many facets to owning and running a business that many people don't realize until it's too late. I know many woodworkers who can make me the most beautiful chairs and tables I've ever seen but don't know the first thing about accounting or marketing or even how to find their target market. So here are my top ten tips for things you must do before you even remotely consider opening the doors to any business foo: --------------------------------------------------------------------------------- Tip # One: You must have a good realistic idea! And just because you think it's a good idea doesn't mean it is. A good idea is one that many many people also think is a good idea. I've always thought a Rent-A-Cat store was a good idea. You know for those times when you need a cat for just a few days.. not permanently. But some of my friends disagree. They think it's a really dumb idea. So I'm going to research it a little further. Good ideas often turn into good businesses. Just be sure there are enough people who want your good idea and are willing to pay for it. The best idea for a business? Author Joe Carbo had the eloquently simple answer: "Find a need and fill it." --------------------------------------------------------------------------------- Tip # Two: Create a first class business plan! This is your true road map to success. A good business plan will force you to think about aspects of a business that you probably wouldn't consider. Sales Forecasting, cash flow, operating capital, return on investment, inventory control, advertising expenses, rent, utilities, taxes are just a few things a business plan will cover. --------------------------------------------------------------------------------- Tip # Three: Is there truly a market for your product or service? Do large companies just send out a product without making sure you're going to like it? Of course not. First they do market research on the most likely people who will want the product and see if they respond favorably to it. --------------------------------------------------------------------------------- Tip # 4: Money, your own or someone else's! If you use your own, guess what? You don't have to pay it back unless you want to. But most of us don't have the money necessary to start our own business. So where can you find money. Well to start with go back and contact your local Small Business Administration office. They have a wide variety of plans for borrowing anywhere from $500.00 or so to several million. They can also advise you on what grants are available and how you can qualify for them. And best of all they are a service you have already paid for with your tax dollars so why not take advantage of that. --------------------------------------------------------------------------------- Tip #5: Location, location, location (but that's not certain; people move, neighbourhoods change, e.g. Gary, IN -LJL)! For years that was the battle cry of a successful location. I don't think it is a true today as it once was. Today a business is as close as a mouse click or an 800 number. With credit cards and the internet we can shop and buy virtually anywhere (no pun intended), except if one wants to buy something on the spot. But before I dismiss location completely out of hand, let me say this. A business that relies on walk-in traffic should be located where people are going to walk past it. A business that works by appointment such as a mechanic or some other service business can be located anywhere. So access your business type and get your local traffic studies from the city planning department and see what the traffic past your location is and if it's acceptable to your needs. Also, are you on the going to work side of the street or the going home side. It may make a tremendous difference. Most Important Things To Know When Starting a Home Business: At the root of every home business is the notion that there is a better way of doing business or a better product than what you can buy elsewhere. Sadly, many home businesses fail & not because their owners lacked zeal and dedication, but simply because there were some things they did not know about, some facts they did not think of until it was too late. Here is a list of the top things you should know about setting up a home business: Do you have something to sell that other wish to buy? For example, you might be a talented hair dresser and you want to get out of the salon you are working at to start up your own business from home, yet how many other hair dressers are there in your area? If you are just two doors down from another hairdresser, and perhaps just a block away from the big salon, what would cause a customer to enter your house rather than the other establishments? It is important to check for market saturation of any product or service you are going to sell. Is your home suitable for the business? Let’s say you want to set up a catering business from home, and let’s assume you have a good-sized kitchen to accommodate it. The question now comes in whether or not you also have the accoutrements you need not to get shut down by the health inspector. Are your drains up to code? Are you able to properly store your food items? What about transportation of your dishes to and from the location of an event? And last but not least, do you have pets that may be allowed into your kitchen, but which could seriously harm your chances with the health inspector or prospective clients who do not relish the idea of seeing Fido or Kitty up on the counter? If your home will also be your business address, it needs to look the part. Do you have all the permits and licenses you need to do business? For example, if you wish to open a home day care business, you will need to complete a set of classes, and prepare your home to be suitable for children. While your own kids may have grown up in the home and turned out just fine, there are stringent rules you must observe that probably go far above and beyond what you used to do for your own kids. Make sure that you are in compliance with ordinances, licensing requirementss, and any other legal restrictions that may govern the kind of business you wish to run. Nothing is more disappointing than opening your doors for business only to be shut down a week later because of your failure to observe legality. Speaking of legalities, is your home zoned for operating a business? Did you know that many homeowner associations prohibit the operation of a business from your home as part of their by-laws? Make sure you know what you are permitted to do! Money, of course, is another important factor when it comes to setting up your home business. Do you have enough funds to not only get it off the ground but to also sustain it until the revenue will fund it? It has been said that you will need the amount of start up costs as well as your projected first year revenues in savings before you can open the doors for business. Failure to provide adequate funding for your business may result in your losing your own assets as you desperately attempt to keep the business afloat, and might end up in bankruptcy court after you extended yourself too much to do so. As you can see, there is much more to setting up a home business than simply having a great idea, throwing open your doors, and waiting for customers and clients to walk in. You will need to plan long and hard before even being able to announce your business. So take it slow, think it through, and then give it all you've got. --------------------------------------------------------------------------------- Tip #6: Electronics! Computerize or not computerize? Website? I think even the smallest business can benefit from the computer for inventory control. Maintaining a customer mailing list. Sales projections can all be done and show you how your business is really doing and not how you think it's doing. I guarantee your bookkeeping will be much easier on the computer than doing it by hand. --------------------------------------------------------------------------------- Tip #7: Build a strong customer base! Successful businesses rise and fall on repeat business. And repeat business is generated by satisfied customers. --------------------------------------------------------------------------------- Tip # 8 Make sure you're ready to open, no wavering -LJL! I hate to fly but I get to do it a lot. One of the things that comforts me about flying is that the pilot and co-pilot go over a checklist before take off. It's the same list they go over a thousand times but they must complete it before each flight. So shouldn't you also have a check list before your business takes off? What are you going to do that first day you're open? Who will be working? Do you have all the necessary supplies? Forms? Order sheets? Make a list of what you need to do a normal days business. Everything from what time the doors open to what time they close and everything in between. --------------------------------------------------------------------------------- Tip #9 Fire, flood, robbery, economic downturns! We insure our lives and homes doesn't it just make good sense to plan for the worst and expect the best. I'm the most optimistic person I know but there are going to be times when something bad will happen and I know I need to be ready to weather that storm when it comes. Create a plan to start putting a little something aside each month to get you through those tough months. --------------------------------------------------------------------------------- Tip #10 Knowledge is power, wisdom could be even better -LJL! Read about your industry as much as you can. I try to set aside at least 20 minutes of quiet time to read each day. If you do that I guarantee that in one year you'll know more about your industry than 75% of the people in it. How will you know you're reading enough? You'll start finding it more and more of a challenge to find things you don't already know. --------------------------------------------------------------------------------- Tip # 11 Whoa! Tip 11? I thought this was The Top "Ten" Things You Must Know Before Starting A New Business? Well, tip 11 is always give people a little more than they expect. That doesn't mean you give them the store but give them your best effort that you consistently can. That's all any customer can ask of any business. Do your best all the time, but what is best, that's silly saying, like I wish you best, then walk away. --------------------------------------------------------------------------------- The last word on the top ten: Going into business is exciting, scary, and stressful. It's all rolled into one hole. But it's also very serious because it's how you feed your family. That is the one thing I would suggest you keep in the front of your mind. A business can take a tremendous toll on your family life if you let it. Schedule your time in proper order.