3 Things To Do BEFORE Starting a Small Business
So, you've decided to start your own business. Congratulations! This should be an exciting time for you so let's make the most of it. Here are some things to do BEFORE starting your business.
1. KNOW THY SELF
The MOST important part of your business is YOU. You alone will be ultimately responsible for all decisions, managing your day to day, and of course, your services or products; your business. The best thing you can do for yourself before you start your business is to know exactly what you're capable of, what your boundaries are and what exactly you want to get out of being a business owner.
The best way to really get a handle on this exercise to do a S.W.O.T. analysis...on YOURSELF. Grab a piece of paper and a pen and start listing out your strengths, your weaknesses, your opportunities, and your threats.
Strengths and weaknesses are pretty basic to understand, but the trick here is to be honest with yourself…go a little bit deeper and list out exactly what you're good at. What are you bad at.? What don't you like to do.? What do you have a PASSION to do? Get specific with these. Now, add in things like: are you an outgoing person? Do you work best away from home? Do you need an hour in the morning for reflection? Are you easily distracted by emails and texts? What are you naturally good at? What things do people always compliment you on? What didn't you like about your last job? You get the picture…if not, you might want to look into taking a personality test to get you thinking this way.
Opportunities and threats are a little more twisted. Let's take a look at each.
Opportunities would be anything you can apply your passion to for a perceived benefit. For example, you might be very artistic; how can you apply your artwork to a service or even a product...or should you use your artistic side for marketing efforts? Be sure to take a deeper look at the real reasons why you wanted to go into business for yourself. What opportunities can you make for yourself from your list of strengths? Now, are you still on track with what you expected your new business to look like? Can you apply each of your expected products or services to this same exercise? If not, what looks different? By doing this you’re weeding out all the “fly by night” offerings…those “get rich quick” ideas that will take you nowhere. You’re also identifying the best of yourself that you can be passionate about on a daily basis…who doesn’t want that??
Threats are the exact opposite of those opportunities. What would stop you from doing what you're passionate about? Think of threats as limitations that you would have to overcome in order to be truly successful. Keeping in mind we're still talking about YOU. Make sure you cover all your threats…all limitations, big or small.
I always try to solve for threats by looking at my “cups”. Traditionally, your cups are all aspects of yourself that keep you balanced and healthy. My personal cups are work/career, finance, health, family, fun/break time, continuing education. If I can keep my cups in check and not compromise to solve for a threat, I’m good…If not, what cup is being compromised and how can I solve for the imbalance? Let’s say you have to make a certain amount of money but have to be home for the kids every afternoon. How can you solve for this to keep all your cups in check? Now consider ALL your weaknesses…and how could those weaknesses impact your cups?
Let's say you're horrible at accounting. You can decide now to prepare yourself to do the work or to hire someone to do it for you. What would you compromise by doing it yourself? What would you compromise if you hired someone?
It's easier to be true to yourself at this stage when you take a good look at yourself, than to try and piece things together down the road and rush a decision…for a less desirable result. By solving for your threats now, you’re defining your boundaries that you need to set as a business owner.
Make your list. Know it. Love it. This list is the one thing that paints your picture before you start. It's the very basis for everything else that you will want to put into place for a successful future.
2. KNOW YOUR INTENTION
So, you've gone through your personal analysis and you're feeling pretty good about what you're going to sell in your new business. Your next step is to truly understand your market and get a detailed picture of how you'll be selling to them.
If you haven't already done so from step one, make sure you've listed out your services and/or products. Grab your computer and a cup of coffee and start Googling. Research every single one of your services or products and get a good idea with what your competition is doing, what they're selling, where they're selling them and how much they're selling them for. For services, you'll want to take a deeper dive into your service area or location to get a better idea of what others are selling their services for and what customers are really looking for. Look at reviews and see if there’s something specific the customers are wanting and/or complaining about.
Let me point out that this exercise is not to imitate your competition. It's to identify what your external factors are. Know your surroundings, solidify your intent and justify your business offerings. Be familiar with the industry you want to do business in. If everything is looking good and actually feasible, great news! If not, where can you make changes that still meet your needs? What is it that you can bring to the market that makes you special?
Next, identify your perfect client...per service offering or product. Start with some basic demographics: How old? Male or female? Where do they live? Do they have children? etc... Are you selling to a company instead? What type of companies are they? Size? Location? Then go a bit deeper…what types of customers can you personally relate to? Keep going until you can start to visualize your "bread 'n butter" clients. Do they have other things in common? Do they belong to certain organizations? This visualization is truly what you make of it. Be creative or keep it simple...but do it.
If you need some help in this area, you can always visit US Census Bureau for data and statistics by topic, industry or area.
3. GET READY
You've locked in on your products/services list, have an idea of how much you want to be charging for each and what your target customer looks like. The final thing to do before starting a business is to map out your startup checklist and a realistic timeline of events that must happen before you open your doors.
This step is very similar to preparing a holiday feast and having everything ready, hot and on time for the dinner bell. You don't want to put your turkey in the oven an hour before everyone shows up…it won't be ready. Same holds true for starting a business. This step should be a true and realistic approach to exactly how much time you'll need to check everything off your to-do list. I'm not saying to procrastinate your start date as you check things off...I'm saying be realistic about what it is you need to do.
Our company has always grouped startup work into four buckets: planning, marketing, systems and operations. At the very minimum, you should have a business plan prepared, have outlined and started your marketing mix and branding initiatives, identified and setup all systems, hardware (computers, phones, tablets, etc.), as well as software for all operating groups, and have defined everything you need in your day to day operations. This will include administrative work, legal needs, marketing & campaigning materials, accounting & finance needs, vendors, employee needs or human resources, and your IT needs. If you're selling products, you'll need to add in components for all production, fulfillment and logistics as well.
Do NOT assume that you can complete your checklist from one bucket. Most people only address marketing or even just the planning part. A complete startup checklist will have everything from ALL FOUR buckets. I'm best with analogies, so here it goes: you would never try to drive a car without an engine, tires, or gas…would you? What would happen if you did? It’s not a business if it’s missing the core components that make it a business.
All problems that happen to a small business operationally in its first 3 years came be traced back to not doing this step correctly or completely. Believe me, you don't want to learn the hard way that the one area you pushed off doing not only has to be done, but it will now cost you extra money to fix it. I guarantee it.
Treat your business like you would treat yourself. Respect it as an entity that has many parts and many needs. If you are willing and ready to manage your business with that same level of respect, you will always be successful.
If you would like more information about startup requirements that you can do yourself, check out our NEW! DIY Tool Kit for Startups here.