Steps to Starting a Business

Have you ever thought you'd things differently after a 12 hour workday if you owned your own company? Have you always wanted to see if your idea for a portable icemaker or an inflatable computer or a chain of chocolate mousse shops could achieve commercial success?  Then you've probably thought about starting your own business. There are some basic steps to starting a business that you should consider before jumping into the process.

Many people who own their own operations can have a lot of fun. Before you order the phones, though, here are some things to think about.

Money
Many advisers to entrepreneurs tell you to have enough in the bank to live on for a year.

You won't need as much capital for a consulting firm as you will for a manufacturing operation, but whatever you do, the income won't come in right away. Startup expenses like computers, phones and office furniture can creep up on you. Starting a new company means selling yourself to investors and prospective customers, which may call for air travel and entertainment expense. There are services-insurance, delivery, brochures, tech support and more.

You'll have to hire people. Among those people is yourself. You'll have to pay yourself an amount close to what you're used to, and pay it regularly. Apart from assuring your own sanity and your spouse's or partner's cooperation, customers and lenders don't like to see hints of poverty. Unless you're lucky enough to be married to a good health plan, you'll have to pay for benefits.

Unless you've inherited a diamond mine, you'll have to borrow money for all this. Think hard before urging your relatives and friends to get in on the next big thing. If things go wrong, so does the relationship. On the other hand, banks can be demanding in their requirements. They'll undoubtedly ask you, and perhaps your spouse as well, to guarantee any loans. They may expect you to invest your own money in your venture. They'll want regular reports on your progress. Venture capitalists tend to be even more demanding.

The worst shock may be that if you don't work, you don't get paid. You don't get vacation days and sick days and holidays. It takes discipline to give those days to yourself, but it can be worthwhile.

Time
It would be great if you could spend your time designing prototypes or testing recipes, but it's not likely to happen. Apart from the time you'll spend with those lenders, you'll have to start selling your product or service right away. Entrepreneurs can spend at least half of their time on marketing. You can build it, but they won't come unless they know it's there.

Then there's the extra time you'll be spending to run to the neighborhood copy shop because your copier can't handle a big job, or to the library because your computer is down, or on the web making plane reservations, or finding office staff.

Lifestyle
It's lonely at the top. When you're working alone or everyone working with you is reporting to you. You don't get the casual companionship you get in an office. If you want to see a former colleague, you have to make a lunch date. That's one reason why there are lots of small business networking groups. You may want to make time for them.

It's hard to discipline yourself when you're not on a schedule set by someone else. Increased freedom is one of the fun parts of entrepreneurship, but some people find they need a routine.

That's one reason why even a solo operation often does well to rent an office instead of operating out of the house, especially if the house has children in it. You'll save on rent and maybe get a home office deduction, but you'll still have to have the dedicated computers and phones lines and supplies. And you'll have to keep a wall between your office and home operations. Meeting with clients, surprisingly, isn't usually a problem. If you can't go to their offices, you can rent space. Nearly every business service is available from someone, for a price.

Making it Work
You have to be very careful before you take the big step. You'll want to do a lot of research on your customers, your competition and your suppliers. You'll need to know how others in your field succeeded or failed, and what kind of market you're going into.

Most lenders and investors require business plans that address these questions. Developing one-which you can do with the aid of sources like Business Plans for Dummies-will give you a chance to do a thorough assessment of your position. This may be some of the hardest work you do, but it'll be worth it. If it shows promising prospects, go for it.

Article provided by Homesteader.