Written by Maridel Reyes
People dream of being their own boss and having a career they truly love. And with the economy still in recovery, the best job just might be the one you create for yourself. Starting your own business can be daunting and overwhelming. Follow these expert-approved tips below to turn your business dream into a money-making reality:
Come up with a concept. Don’t quit your day job just yet. Before you take the plunge, really think through your business idea. Start with areas you already are passionate about, and for which you have equipment and materials. This will help cut down on the startup costs for your company. You also will need an idea of the prospects for the potential business. Are you filling a void in the market? Can you make money doing it? This will require some research into the marketplace and how other similar businesses have fared. Also, consider the real reason why you’re striking out your own. Don't start a business because you've run out of options.
Find your niche. You don’t have to reinvent the wheel. There are many ways a single idea can be executed, whether it’s a cupcake shop, a dog-grooming service or shoe repair. You just have to execute your version in a unique, memorable way. So make sure you can explain in one sentence (consider this your elevator pitch) why your company is different and why it’s exactly what people are looking for. Keep in mind that a service business is much less expensive to get off the ground than a product business where you must create a tangible good.
Figure out your customer. Determine exactly who your customers are. If you're creating a face wash, don't say you’re selling to "all women.” Is it targeted to women who get monthly facials or those who mainly buy cosmetics from the drugstore? Your ingredients, process, packaging and pricing will all determine who the customer is. Be specific.
Plan to win. Entrepreneurship professor William B. Gartner of Clemson University in South Carolina found that writing a business plan greatly increased the chances a person would actually go into business. "You're two and a half times more likely to get into business," Gartner has said. "People who write business plans also do more stuff." And if you want to get funding from banks, VCs or government agencies, a business plan is usually required. In your business plan, it’s important to mention how much you’ll charge for your services—and how you plan to become profitable. Don't undervalue your time and talent. How do you figure out exactly how much to charge? Work backwards. Ask yourself what you want to make annually, and then break down that figure monthly and weekly. From there, you can figure out how many products you must sell or how many clients you will need to meet those numbers. Also take into account the costs associated with delivering that product or service. Plan with these numbers in mind and revisit your figures monthly.
Grab start-up cash. Most businesses need startup income. This investment will hopefully help you break even after a year, but keep in mind that even successful businesses can remain in the red for the first few years. Because of this, you will want to tap into a few different sources of funding, including a small-business loan, personal savings, money generated from other investments, family and friends who can act as investors, and crowdsourcing sites like Kickstarter.
Poll your customers. Your first customers are key. They provide you with revenue, legitimize your idea, and they’re also a source of valuable feedback that will help improve your business so more customers keep coming in.
Build a safety net. One of the best things you can do before you take the leap is to build an emergency fund to tap into if your company doesn't break even for a few months. Three months of living expenses is a minimum goal for a new business owner, but even more will help take the stress off of you and let you spend your energy on your company.
TELL US: What advice would you give first-time entrepreneurs about starting their own business? What lessons have you learned as a small business owner?