Be sure to do all your homework before you take the plunge and start your own business.
By Max Berry.
So you want to start your own business? Maybe you have an idea you think is so good, you believe it will be a sure-fire hit. Or perhaps you are simply sick of working for someone else and just want to strike out on your own. The first step in founding a business is to define exactly what your new business will do, in as specific terms as possible.
If you don’t have a specific idea for a business of your own, you might want to consider buying a franchise—that is, opening an outlet of an existing successful business. If you have your own idea for a business, the first thing you should do is to write that idea down on paper. You can start by writing down a general idea, and then develop it, narrowing its focus. “Too often,” says management consultant C. Davis Fogg, “people have too vague an idea about what they want to do. Just saying ‘I want to open a store,’ or ‘I want to build computers’ isn’t enough. A small business can’t be General Motors—it needs a tight focus in order to distinguish itself from the competition.”
Putting your idea on paper makes it easier to focus on the details. “There is no substitute for writing it down,” say Martin Lehman, counselor at the Service Corps for Retired Executives (score.org), which helps small business owners get their businesses off the ground. “Write down your idea, and then break it down to the smallest elements: Who exactly will be your customers? What products or services will you offer?” Be specific, Lehman advises. Write an exact description of the products or services and to whom they would appeal. “Don’t just assume ‘people’ will want whatever your business is selling—try to figure out what type of people, what age, income, gender. You need to know who your business appeals to before you can judge how it will do in the market.”
Understanding the specifics of your idea is the most important starting point for launching your business. Once you know exactly what you want your business to do, you can begin to research the mechanics of your idea. Where should you locate the business? In what geographic market will your business function? What is the competition? Is there enough consumer appetite for your products or services to keep your new business going? Has anyone else opened businesses similar to yours in the area and what happened to them? What will it cost to procure the equipment or supplies you will need? This applies to franchise operations as well. Franchises generally offer fairly specific information about costs and often have rules regarding location, advertising, and the décor of franchise outlets. Still, whether a particular franchise is a good fit for a given area and for you is something you can only determine through dedicated research.
Your research might include visiting similar businesses, or even working for one in order to gain experience in that business, if you’ve never worked in a similar field. This is particularly true in the case of a franchise. “Seeing how a particular business operates on a day-to-day basis is crucial to figuring out if you actually want to run one of your own,” says Fogg.
If you have never run a business before, or have little experience in the type of business you wish to start, you should seek out people who have and talk to them about their experiences. Their advice can alert you to difficulties you may not have anticipated and point to possible solutions.
“Before I opened my first retail store, I went to several possible locations and stood outside them all day long, just watching who passed by,” Lehman says. “That way I could see what sort of people would be walking past the store on a regular basis, and then I chose the location with the most people I thought likely to buy what was in my store.”
As you progress with your research, you can begin to create a detailed business plan. Your business plan will assemble all the information you gathered during your research and translate that data into a clearly stated outline of your business.
Max Berry is an Associate Editor/Writer for Business 24/7 Magazine.
store.JPG 138.3 K