Four things to consider before taking the leap and starting your own business.
Starting a business is a dream for many people. The idea of being your own boss, calling your own shots and making your own money is enticing and appealing. If you are going to take the leap and start your own business, there are several things you need to consider ahead of time. Even before writing a business plan, deciding how large you want to grow your business or filing any legal paperwork, it is imperative that you do four things: figure out what you are going to sell, who you are going to sell it to, how you are going to sell it and who you will need on your team.
The first and most obvious step in building a company is deciding what you are going to sell. What product or service of value are you going to offer to the world? Are you going to make a new medical device that simplifies surgery? Are you going to build the next great software company? Are you going to sell your know-how as a consultant? You have to determine what value you can provide to the world. Said simply, what do you have that other people will pay for? This answer is the foundation of any business that you build.
Once you know what you are going to sell, you will need to figure out whom you are going to sell it to. Think about your target customers and whether you can effectively sell to them. If you have figured out how to make the best air conditioning unit the world has ever seen, setting up shop in Alaska may not be the best idea for rapid growth. You need to know who will buy your products or services and how large the market is. Ensure that the market for your good or service is large enough that you only have to sell to a very small percentage of the available market to be successful. No matter how good you are, you cannot count on capturing the majority of any market.
Next, you will need a plan for marketing your product or service. If you are convinced you have a great idea and that a ton of people will want to buy what you are selling, you now you have to figure out how to produce it, what it will cost you to produce it, how to price it for sales, how to make people aware of it and how to convince people to actually pay for it. This process is called execution and it is where your grand ideas begin to intersect with reality. Unfortunately, the execution stage is also where a lot of great business ideas begin to die a slow death. Homework, a focused strategy, some common sense and a little bit of luck are what you need in the execution phase. If you are creating a product, you need to determine how to make it and what resources you will need to get your product to market. If you are perfecting a service offering, you will need to figure out how your services will stand out from the pack. Everyone has great ideas. Successful entrepreneurs take those ideas and execute relentlessly on them.
As you develop initial plans for execution, you will need to focus on the talent and experience required to build your business and get your product or service into the hands of paying customers. For many budding entrepreneurs team building presents serious practical and financial challenges. Some do not yet know how to recruit the right people at the right time. When it comes to team building, you might benefit from thinking less like a business owner and more like a coach. If you were preparing to field a professional sports team, you would recruit the best talent you could find. You would also look to round out your team with a diverse array of skills and make sure that each key position was filled by the strongest player you could afford to recruit.
A word of caution — avoid making the mistake of assuming that you have to fill every seat in your company quickly. You must be deliberate, efficient and conservative when adding people. Only add people that you absolutely must have and only add them when you absolutely have to. Make sure their skill sets are complementary and not redundant. Maybe right now you just need a partner or two. Or perhaps you really do need a full-blown team. In either case, you must avoid the temptation to fill seats with warm bodies because there is more work than you can handle and develop a solid plan to build the right team for your business. If funds are an issue, consider bringing team members on board as consultants first and then transition them to employee status as you gain more traction.
After figuring out how you want to build your team, you will have to determine how you will compensate team members for their time and effort. If you can afford to pay them outright, you are lucky. If funds are an issue — as they are with most start-up businesses — perhaps you could make a key team member a co-founder and offer that person a small equity stake in your company. You may even be able to barter services to save resources. The key is to be creative and look for options that work best for your company's situation.
Building a business is no easy task. However, with a well thought out plan, it doesn't have to be impossible. A meticulously conceived and well executed approach to your business can set you on your path to success. The key is to spend a lot of time thinking through your business plan before you spend any substantial time or money actually building your company. Once you have done that, you will be that much closer to realizing your entrepreneurial dreams.
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