It doesn’t matter what kind of small business you’re thinking of starting – there are a few essential steps you need to follow before taking the leap.
Research your market
Everyone who wants to start a small business thinks they have a great idea. But there’s a big difference between thinking it and knowing it. The first question to answer is if it’s such a great idea why hasn’t somebody else thought of it already? You need to ask yourself some basic questions: do people want what you’re offering? Is there space in the existing market? Who’s your ideal customer? You need to be confident you’ve got the answers before even considering setting up your small business. Many start-ups fail because they couldn’t carve out a niche in the existing market or their target audience simply didn’t exist.
Make a plan
Your small business plan should answer all the questions listed above. Know how much money you’ll need to start up your business and where it will come from. Your plan should set out what your product will cost, how many you’re likely to be able to sell in the first year and what your expenses will be. Then set some longer-term targets for you to navigate towards. Don’t forget to update it regularly – there’s no point in having a business plan that’s outdated.
Every business idea will morph after it’s hit the pavement. Did RIM predict that Blackberrys would become the hot new thing among kids because they could message each other for free? The most important thing is to be flexible enough to go with the flow. Don’t get stuck on what you think ought to be happening to your business, but understand and react to what is actually happening to it. Don’t be afraid to tear up your business plan and rewrite it in light of your market experience.
Once you’re sure your business idea is a potential winner, think about what could prevent it from succeeding. Look for a small business liability insurance policy that suits your needs. Also no start-up should be without general liability insurance and professional liability insurance coverage. Many aspects of starting up a business are uncertain, but by insuring it properly you can concentrate on making it a success.
Friendship and business rarely mix
Friends are great when you start a small business, because they understand and support you. But you don’t have to go into business with them. You want a business partner who’s your opposite, who thinks differently, has different skills and a different outlook. You want someone who’ll challenge you, rather than agreeing with you. It might be infuriating and uncomfortable, but your business will benefit from the creative tension.
Have an exit plan
You need to be clear in your mind as to what you want from the business. Do you want to build it up and pass it on to your kids? Or do you want to sell it and move on to something else within a few years? These questions will alter how you set your business up in the first place, your strategy for it and how you run it.