Many people dream of starting their own business. After years of hard work and forced laughs in response to their manager’s bad jokes, aspiring entrepreneurs are ready to “take this job and shove it,” as singer Jonny Paycheck sang. Most people dream of more free time, being their own boss and enjoying the pride of watching their business grow.
However, it can take a lot of preparation and planning to get a new business off the ground and keep it going. According to the Small Business Administration, a lack of proper planning causes more than half of new businesses to fail within the first 5 years. Before you quit your day job consider these five suggestions.
The Importance of Foreknowledge
The business you start should match the strengths and skills you already possess. The more intimately you know your niche the better. By having a clear understanding of the ins and outs of the goods you sell or the services you offer, you will start your business two steps ahead. This knowledge will allow you to better understand potential customers and the market you are entering into.
Do Your Research
Researching your potential market will help you decide whether your idea is viable. It is important that you take the time to answer these questions.
• Is there a need for my product or service?
• Is the current market already too saturated?
• Who would my competitors be?
• What are their strengths and weaknesses?
• How will my business differ from competitors?
• How will I protect my idea from copycats?
Potential to Make Money
While it is impossible to see how well your business will fare financially in the future, you must make an educated and conservative guess at how much money it will bring in. At the very least, you need to break-even between your sales revenue and overhead charges. When setting your prices, be sure you aren’t leaving out any hidden fees such as taxes, administration or the use of technology. Consult with a business planner or friends who are business owners and ask for their honest opinion on what you may not have factored into your business equation.
Should You Quit Your Day Job?
Before cutting all ties and taking the plunge, it may be wise to slowly start-up your business and do it part-time if possible. Most likely, your new business will not be able to help you keep up on personal bills or pay the benefits your current job offers. If possible, avoid the stress that comes from not knowing when your next check is coming.
Have a Game Plan
If you fail to plan, you are planning to fail. While you may be tempted to jump in and figure it out as you go along, taking the time to prepare a detailed road map will give you direction, keep you on track and give your business a better chance at success. A well-developed business plan walks you through the steps necessary to see your business through because it makes you think about these essential building blocks:
• Executive Summary – A snapshot of your business plan as a whole including company profile and goals
• Company Description – What you offer and what makes you different from the rest
• Market Analysis – Who are your customers and your competition?
• Organization & Management – The way your business & management will be structured
• Service or Product Line – How your service or product benefits customers
• Marketing & Sales – Your sales strategy and how you will market yourself
• Funding Request – Will you need to seek additional funding and where will you get the funds?
• Financial Projections – Be able to provide financial projections to back up any requests for funding
• Appendix – What licenses, permits, resumes and leases will your company require?
It is impossible to look into the future to know the true potential of any business idea. However, upon forming a solid business plan that has been scrutinized many times over by those you trust, you will have a better understanding of the potential risks and success of your business endeavors.
About the Author: Robert Cordray is a freelance writer for Income.com and expert in business who specializes in giving entrepreneur advice. With over 20 years of business experience, Robert is now retired and hopes others can benefit from his writing.