You may have a new years resolution to start your own business, but as you know some of the forthcoming new years resolutions are easy to keep, some others are more challenging and most of them will be broken within the first month. So if you are thinking about starting a small business in the new year here is how I would go about it in five easy steps:
1. Define Your Goals:
When you get in your car you usually know where you want to go. It may be surprising to you to find out, that most businesses do not have a ‘formal’ goal. The problem with that is that you never arrive, because you don’t know where you want to go. What are typical goals to have?
- Make a certain amount of money a month!
- Have more time for your family and friends!
- Be at home when the children come home from school!
- Avoid travelling for hours each day!
- Have a better work/life balance!
- Be the biggest and best in you chosen field!
What ever it is, write it down and go back to it now and then, especially if your are not sure how to make a decision about a problem. Focusing on this goal is absolutely essential to your business success.
2. Get A Business Idea:
You may already have a business idea or you may be looking at something a little vague still. What ever your situation, make sure your business idea aligns well with your business goals.
It is no good to run a busy office if your aim is to be at home for your kids. If you have your heart set on a business idea but it does not align well with your goal, try thinking of variations, working with others by forming a virtual company or subcontract to someone else as a freelancer to achieve your goals. Stay focused on your goal.
3. Test Your Business Idea:
Once you have decided what to do you need to test the viability of your business idea. The way you do that is by doing a cash-flow plan. This is not an exact science, but it will show you what you have to do to achieve your business goal.
If for example you want to produce artificial flowers, working from home and your business goal is to make say £ 5,000.00 a month. You can work out how many artificial flower arrangements you will have to produce to make this money. It will give you an idea if that is possible, because you will know how long it is going to take you to make these flower arrangements and what their average sales price will be and what your raw-material cost and other business costs per month are.
If you have never done cash-flow planning then find an accountant or a bookkeeper who will show you how to do it. It’s easy and you can learn it in 30 minutes. Our OnlineOffice has a cash-flow tool you can use for free for 30 days. That is enough to test your idea. Our 24 hour live support staff can also help you to get started with cash-flow planning, it’s free.
One final word on cash-flow planning here. It is not about being right, it is about doing it and then analyzing why you were not right. I’ve been doing it for 30 years and I was never right, but I’m fairly good at it. It will allow you to see many problems arising before they are a big problem. In my opinion this is the most important business tool ever.
4. Bootstrap All The Way:
One simple rule to stay in business is not to spend any money you do not have. Bootstrapping is all about that, making money first then use it to establish a solid small business.
Given the current economic climate, borrowing money from a bank is very difficult and that may just be very good for anyone to start a business. It will teach you financial control and self-reliance. Here are some of the rules I have:
- Do Not borrow money from banks, they will want it back when you can least afford to pay them back. They do not care how your business is doing, good or bad, they just want their money back.
- Do Not put your house or any other valuables you have on the line until your business has proven itself. A good bootstrapped business will make money from day one, that will ensure the business idea is good too.
- Do Not fear failure or making mistakes. Because you will be making mistakes, I make them every day and you may very well fail with your business, I have in the past. The important part with bootstrapping is it will not hurt you, it will just be part of your learning process to be come successful. After a failure you can show your true ‘colors’, by getting up and starting your next business.
- Sell to your friends, family and your current employer first to get the first order and money into your business. You could even let them get involved into your business. as partners or investors.
- Every problem somehow hides an opportunity, you just need to think about the problem out of the box. Every time you overcome a problem you confidence will grow and it will make you a better and stronger business person.
- Outsource every non-essential business process, bookkeeping, call answering, credit control, website design and keep your business IT online, the most important resource is not money, but your time – do not waste it on non-essential tasks.
There are many more rules I have established over the years, many of which I have broken, but these are the ones I strictly stick too.
5. Stay Focused, Always!
If you want to do flower arrangements your business is flower arrangements and NOT:
- Installing an IT system or an SQL server;
- Setup your data security and internet security;
- do your accounting;
- do your web-site;
Remember it is easy to waste your most precious commodity ‘TIME’ and have nothing to show for it. You may say ‘I have no money to have someone else doing all these things’. Please remember there are always opportunities in every problem. Here are some:
- Barter for services with your flower arrangement, i.e. for one month bookkeeping, you may find a new customer this way, get mouth to mouth advertising and most of all you do what you do best – flower arrangements..
- Keep your IT online, it is very cheap, more secure, easy to use and more reliable, you can often get some time for free, maybe even a whole year.
- Depending on the services or products you supply you may be able to receive many other services and products in exchange for your services or products.
Whatever you do, don’t get side tracked from your business goal, ultimately this is the main reason for small business failure. Your business will look more professional if you outsource your non-core business needs to small businesses focused on those services.
As you may know I have set us a challenge to be ‘instrumental’ in helping to set up 1000 new businesses until October 31st, 2009 – so, if you are going to do it, please register with us and help me to win my challenge.
It has never been easier to start a business to supplement your income – 2009 is the year for you to do it. — ST.