Ahah! You’ve got that bug again to start a business.
As a fellow entrepreneur, I’ll be the first to encourage you to pursue your dreams.
However, owning your own business comes with great responsibility and risk.
In this post, I’ll share five things to think through before starting your own business.
1. How Will You Get Customers?
An idea without customers is simply an idea. Whether you intend to offer the next hot smartphone app, this year’s must-have stocking stuffer, or freelance consulting services, you must have a plan to reach your target audience.
Before investing time and effort in developing your product or service, familiarize yourself with the industry and market that you plan to serve. Does a similar product or service already exist? If so, is there room for a competing or enhanced solution? How do competitors promote their products or services?
If your idea is completely revolutionary, you have your work cut out for you. What steps can you take to create a need in the minds of your ideal customers? Will you rely on paid advertising, search engine optimization, social media, or a niche-specific approach?
And, don’t forget to factor in the cost of reaching your prospective customers. Even if paid promotion is unnecessary, your time is a valuable commodity. Be sure to budget for tangible and intangible costs as you formulate your marketing strategy.
2. What Does Success Look Like in 12 Months?
New entrepreneurs can get overly enthusiastic about their ideas and fail to plan for future success.
As exciting as new technology and innovative business models can be, a company must be able to support itself. Self-sufficiency relies on earning a profit. Profit is the outcome of a healthy revenue stream and operational efficiency.
Be sure to set realistic goals for both revenue and profit. When you’re just getting started, this may be difficult to do. Your projections don’t have to be perfect; the most important thing is to at least have defined goals that you’re striving to achieve. If, after a year in business, you’ve substantially failed to reach your goals, step back and reassess the situation.
Remember, a company that earns no profit is not a business – it’s a hobby.
3. What Perks Are You Giving Up?
You’ll also have to make trade-offs as you venture into the entrepreneurial world. Some may be closer to home than first thought.
For starters, you will likely have to come up with your own health insurance. Retirement planning is also on your shoulders now. Vacation time? Yeah…that might not exist for a few years.
Don’t forget to consider how your personal budget will be impacted. Your mortgage, transportation expenses, and insurance costs are still due at the same time each month. Make sure that you have a high level of confidence in meeting your basic needs. If you expect a delayed revenue ramp-up period, then be sure to have enough savings to bankroll your lifestyle.
4. What Does “Running a Business” Actually Involve?
You’re contemplating the creation of a business for good reason. You’re probably very good at what you do. The implementation of your idea is within your sweet spot. But, what about everything else that keeps the doors open?
As any business owner will tell you, there are countless things to consider. Here are just a few:
- Cashflow planning
- Client invoicing (here’s a free invoicing template from our friends at Invoice2Go)
- Following up on accounts receivable
- Continuing education
- Staffing of employees and contractors
- Contract management
- Risk reduction activities
- IT procedures and systems
Of course, you don’t have to master each of the aforementioned issues on day one. Just be aware that these will eventually require your attention.
5. Do You Care About What Others Think?
Lastly, be advised that every entrepreneur has received skepticism from colleagues, friends, and even family. If you’re already worried about what others think, you might need to hit the reset button. People will never stop questioning your decision-making abilities.
It’s time that you just get used to being weird – or stick with your current job.