HOW TO START A BUSINESS

How to Start a Business.

What Does The Market Need?

Adapted from content excerpted from the American Express® OPEN Small Business Network

This worksheet can help you come up with a business idea by figuring out what the market needs. Don't be afraid to be outlandish; sometimes the best ideas sound crazy at first. And if they have some flaws, just put them aside and keep searching.

When you are contemplating business possibilities, keep in mind that you don't have to stay in the business you start forever. You can run a business for a few years until you come up with an off-shoot idea or are in a position to start a more capital-intensive business.

  1. Keep your business antenna up, with an eye out for unfilled opportunities Research the market by:
    • Reading the newspaper and magazines
    • Watching television
    • Talking to people
    • Going to the mall
  2. What products or services would you want that you haven't been able to find?
  3. Is there something that everybody hates to do that you can do for them?
  4. Is there a product or service that would make life easier for people you know?
  5. What business trends are happening that you want to participate in...that really light your fire?
  6. Are there gaps in the market that you can fill with your talents? What are they? (For example, corporate downsizing has opened up the market for services like consulting, desktop publishing, graphic design, staffing services, and computer maintenance).

Now...
Write down some potential business ideas. Be specific.... don't list something like 'import/export'; instead try something like 'Import gourmet tortilla chips and salsas'.

How Do I Come Up With a Winning Business Idea?

Adapted from content excerpted from the American Express® OPEN Small Business Network

Developing large or small business ideas is a matter of creating a vision, leveraging your strengths and determining what the market needs. These three steps should get you started.

Create a vision

Close your eyes for a few minutes and conjure up a detailed image of what you want your life to look like in 5 years. Be as specific as possible.

  • Where do you live?
  • How do you spend your days?
  • What kind of work do you do?
  • Do you work alone or with other people?
  • Who are you surrounded by?
  • What do you do when you aren't working?

Don't limit yourself to these questions; create a vivid vision of yourself, touching on things that are important to you. These are all personal issues that will impact the type of business you pursue - being a city or country person; wanting to travel or sit at your computer; liking to meet people or work on the phone. This activity will help you create a foundation for choosing from small business ideas, making business decisions, and setting clear goals.

It is best to do this exercise with someone else and share your vision. If you can't, write it down to make your vision more concrete.

Determine what you're good at and what you like to do

It's often useful to look inside yourself to figure out what you like and dislike, and where your talents lie. It's one thing to come up with a winning business idea. It's another to come up with one that fits your skill set and interests you. Your business has to keep you excited so you can thrive over the long haul.

One of the best ways to do this is to make three separate lists:

List 1: What you're good at
Everyone is good at something and many skills can be the foundation for a business. You might be naturally organized or have a knack for fixing things. You may be so used to your skills that they don't immediately come to mind, so assemble this list by observing yourself for a few weeks with an eye out for your aptitudes and by asking people who know you well for their impressions of what you excel at.

List 2: Skills you've acquired over the years
Whether or not you've worked in a conventional environment, you no doubt have accumulated many. Write down all the work responsibilities you've had; think about the varied tasks you know how to complete. Make sure this list is complete -- there should be at least 10 distinct items.

List 3: Things you like to do
List the things you enjoy doing. This may not be as easy as it sounds. This list should be at least 10 items long. Stretch beyond your hobbies and interests that spring to mind immediately. If you're stymied, ask people who have known you for a long time -- particularly people who knew you as a kid -- what they have seen you doing when you're happiest.

Keep these three lists in an accessible place (for instance on your desk) for several weeks, and when small business ideas come to you, jot them down in the proper category. Ask people who know you well for their input or to help you jog your memory.

Figure out what the market needs

So far, you've been looking inward to come up with your business idea. Now its time to look outward to discover an unfilled need that you can meet with your product or service.

There are plenty of "Top 10" or "Hot New" business lists out there. These may stimulate some ideas, but the best business ideas will come from you and will be based on who you are and what the market is looking for. So while you're doing your soul searching and list making, put up your antenna and look out for business opportunities.

The following worksheet is designed to help you come up with ideas. Don't be afraid to be outlandish and don't be discouraged if your first few ideas are flawed. Put them aside and keep working.

Business Selection Checklist

Provided by Business Owner's Toolkit, Content Partner for the SME Toolkit

Benefits: Those who are interested in starting a new business are often told that they should select a business that takes advantage of their skills and experience. But that often leaves them perplexed because they don't really know how to go about doing that. The following file will clarify some of the confusion by allowing you to rate your interests and compare them to various business possibilities. Once you've completed the "test," you should be well on your way to choosing the business that's right for you.

Special Features: Included are the following:

  • a place for you to rank all of the business you're currently considering
  • an exercise for rating those various business ideas
  • a means for interpreting the results of the exercise and a method for selecting the business that's right for you or at least for narrowing your list

Business Selection Checklist

The following chart is designed to help you choose the business that’s right for you.  To fill it out, follow these three steps:

 (1) In the far left-hand column, list the business ideas you’re considering by order of interest.  So, in the top left-hand blank space, put the idea you think you’re most interested in.  Underneath it put the next idea and so forth until you’ve listed all of your possible ideas down the left side of the chart.

 (2) Now take each idea and rate it on a scale of 0-3 in each of the areas listed.  Use the following rating system: 0-none, 1-below average, 2-average, and 3-above average.

Here’s a look at each of the categories and some of the things you should consider when rating them:

Your knowledge of the business.  How much do you know about the area?  Will you have to spend extra time and money teaching yourself the business?  Will you have to take on a partner because you don’t know the business well enough?

Rating: 0-no knowledge of the business; 1-some indirect knowledge of the business; 2-limited knowledge; 3-working knowledge.

Your experience in the field.  In some cases, you may have a lot of knowledge about the subject, but not much experience.  Have you ever owned or worked in this type of business before?  To what extent is hands-on experience crucial to the business?

Rating: 0-no experience; 1-indirect experience; 2-limited experience; 3-familiar with the business.

Your skills. Ignore, for now, those skills that might be common to each of your ideas, and try to concentrate on skills that are unique to that business.  To what extent do you possess those skills?  If you lack them, how difficult will it be to acquire them?

Rating: 0-none; 1-limited skills; 2-some skills; 3-extensive skills.

Ease of entry.  Think both of the costs of entering the business and of the competitive barriers that might exist.  For example, a service business that you can run from your home might be relatively inexpensive to start, but if several others are already providing that service, entry in the field may be difficult.

Rating: 0-crowded field, very difficult to enter; 1-limited entry available; 2-mix of large and small competitors; 3-virtually unrestricted entry for any size business.

Uniqueness. Uniqueness does not necessarily mean that literally no one else is providing the same product or service; it can mean that no one else is providing the product or service in the same way you intend to provide it, or it can mean that no one else is providing that product or service in your area.  You’re looking for some way to distinguish your product or service from others who are already in business.

Rating: 0-your product or service widely available; 1-a few to several others offering your product or service; 2-only one or two others; 3-no others providing your product or service.

Business idea

Your knowledge

Your experience

Your skills

Ease of entry

Uniqueness

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3) Now total up the numbers.  Here are some tips for making sense of the numbers and for narrowing your list of business possibilities:

  • eliminate any of your ideas that scored less than a total of 10
  • eliminate any idea that did not score at least a 2 in every category
  • eliminate any idea that did not score at least a 3 in the uniqueness category

How many ideas are left?  If the answer is “none,” then you need to use the list to identify where you need to improve and you need to develop a strategy for raising the “1’s” to “2’s” or “3’s.”  If the answer is “more than one,” you have a pleasant dilemma: a choice of which business to start.  If the answer is “one,” you may have just found the business that’s perfect for you.

Set Goals for Your Business

Adapted from content excerpted from the American Express® OPEN Small Business Network

Goal-setting is crucial to the success of any business, but is particularly important for entrepreneurs who can become distracted without focus. Goals direct actions, give you something to aim for, and can serve as a yardstick for measuring your business' success.

The way you approach goal-setting will determine whether you are able to attain your goals. Most people agree that goals are important, but less than five percent of people write down goals or have action plans for attaining them. Fear is most often the culprit. People don't like to write goals down on paper (a crucial part of goal setting) because they are afraid to commit to them. If this is your problem, try to remember that a goal can be changed at any time after you write it down. Also keep in mind that goal-setting becomes easier the more times you undertake it. When you have set goals and attained them, the power of goal setting will compel you to set more.

If you avoid goal-setting, the tips and hints below should help.

Have short-term and long-term goals

You might want to set weekly goals, quarterly goals, annual goals, and even 3-year or 5-year goals. One way to generate short-term goals is to first consider your long-term goals. Is there a certain dollar amount you want to earn or a number of clients you need to sign up by a certain time? If nothing like that comes to mind immediately, take a few minutes and think about what professional goal you would like to attain. Once you have determined long-term goals, you can work backward. If your goal is to make $100,000 this year, you should make a list of what it would entail to make that money. If you encounter difficulty creating your list, ask peers or friends for help. When your list is complete, break those small steps down into goals.

Make your goals specific and measurable with a deadline

"Increase my sales" is a good goal, but it's so vague that it does not provide a means by which you can judge your success. Modify your goals by making them specific. All goals should be specific (Get new clients), measurable (Get three new clients), and have a time frame (Get three new clients by November).

Don't set yourself up for failure

Make sure your goals are attainable. If you aim too high, you're dooming yourself to defeat.

Don't be lazy

On the other hand, some entrepreneurs set goals that are too easily attained. If you tend in this direction, look for ways to challenge yourself. If you usually aim to add one new client every quarter, push yourself to shoot for two or three.

Be relevant

Goals should help you attain a specific aim. Look out for goals that are just going to keep you busy, but are not appropriate to the overall success of your business. If you don't believe your goals are worthwhile, you won't make the necessary effort to achieve them.

Be patient and persistent

It your system of setting goals does not seem to be working because you are not attaining much of what you write down, do not give up. Keep setting goals for several months and you will find that your goal setting skills improve.

Review your goals constantly

Keep your weekly or other short-term goals in plain view -- by your desk, or next to your computer, for example -- so you know what you need to attain. Look at your annual goals monthly to see if you're on track. If your business' focus changes, don't be afraid to alter your goals. Flexibility is a crucial component of goal-setting.

Checklist for Starting a New Business

Provided by Business Owner's Toolkit, Content Partner for the SME Toolkit

Benefits: The attached file contains a checklist for all the steps you should take before you start a new business. It's a "to do" list for starting a new business in much the same way that a grocery list is a "to do" for grocery shopping.

It contains a general, high-level listing of the tasks you need to complete in starting your new business. So, for example, while it lists "prepare a business plan" as one of the tasks, it does not list every step you need to take to create a business plan.

File Description: The file contains a one-page document in rich text format (RTF) that is suitable for use with most word processing programs used in the Windows environment.

Special Features: Included are the following:

  • a listing of all the background steps you need to take, including establishing business goals, determining the best location for your business, and assessing your financial situation
  • a listing of all the business transactions you need to take, such as hiring a lawyer, establishing a line of credit, and getting business insurance
  • a listing of all the pre-opening steps you need to take, including reviewing building codes, obtaining business licenses, and joining professional organizations

Owner’s Checklist for Starting a New Business

Background work

  • assess your strengths and weaknesses
  • establish business and personal goals
  • assess your financial resources
  • identify the financial risks
  • determine the start-up costs
  • decide on your business location
  • do market research
  • identify your customers
  • identify your competitors
  • develop a marketing plan

Business transactions

  • select a lawyer
  • choose a form of organization (proprietorship, partnership, or corporation, for example)
  • create your business (register your name, incorporate the business, etc.)
  • select an accountant
  • prepare a business plan
  • select a banker
  • set up a business checking account
  • apply for business loans (if applicable)
  • establish a line of credit
  • select an insurance agent
  • obtain business insurance

First steps

  • get business cards
  • review local business codes
  • obtain a lease
  • line up suppliers (if applicable)
  • get furniture and equipment
  • obtain a business license or permit (if applicable)
  • get a federal employer identification number (if applicable)
  • get a state employer i.d. number (if applicable)
  • send for federal and state tax forms
  • join a professional organization
  • set a starting date

 

For additional information on this and other subjects visit the site http://www.smetoolkit.org/

HOW TO START A BUSINESS
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