Starting Your Own Business

So you want to start a business – congratulations! Some of the largest fortunes belong to people just like you: people who had a vision, the ability to set things in motion, and the drive to follow through with their plans. Whether your business is wholesale, retail, service, bricks-and-mortar or Internet based, whether your idea is to maintain a single location or your dream is to take your business global, if you have the right product or idea and are willing to work hard, a fortune could await you.

That’s the good news.

The bad news is, just because you possess the vision and are filled with entrepreneurial spirit doesn’t mean that your business will be a moneymaker. Fully half of the businesses started each year never see their first anniversary, and some estimates put the number of businesses that fail in the first five years at over 80%. In some cases, of course, these failures are due to simple bad luck: wrong place at the wrong time, an idea that is just beaten to the marketplace by a competitor, natural disasters, etc. In many cases, however, businesses fail for one simple reason: poor planning.

Competition for consumer and business spending is more fierce then ever. The same holds true in the international marketplace. Failure to adequately prepare your business – both before and after it is actually started – for the challenges that the marketplace will throw at you can spell disaster. While there are dozens of things that you need to have in place when starting a business – whatever the size – there are three key areas in which many of the businesses that fail shortly after inception all fall short.

1. The Business Plan: A business plan is a resume for your business. If you want to get a job, you have to have a resume. If you want to attract investors or partners to your business, you need to have a professional properly formatted business plan that presents not only the basics of your business and its potential markets, but also the state of your business at its inception, as well as reasonable projections for three and five years down the road. The business plan allows potential investors/partners to get a quick and manageable idea of what it is you are asking them to invest their money in as well as providing you, the entrepreneur, with a roadmap for the future.

2. Start-up Capital: Perhaps the most common – and the most avoidable – cause of new business failure is inadequate start-up capital. All too often, start-up businesses look at the minimum amount of capital it will take to get them off and running, without looking at the broader picture. In fact, even the most successful start-up businesses can operate in the red anywhere from 3 to 9 months, and many only start generating significant revenues after a year or more of operation.

During this “lean” time, cash reserves are essential to keep your business functioning. Determining, and then obtaining, an adequate level of start-up funding is crucial to the overall success of any business.

3. Market Research: Understanding your product or service is only half the road to success – the other half is identifying who needs what you have to sell, and understanding the best way to sell it to them. Identifying and appealing to your customer base – be it consumer or business – and completely understanding who your competitors are and how they operate is crucial to the success for your business. For many businesses, market research can be the most challenging and daunting aspect of the entire start-up process, but it remains a major component to your business’s success.

With the above three components in mind, here are the areas I suggest you should focus on to maximize your chances of success. Doing so helped me grow my company $2 million and four professional staff members in just three years.

• Know what it is you have to offer (this should be clear and easily understood by potential clients) and what your clients will pay for, not just what they need. EXAMPLE: I know my American clients need to earn a certain portion of their revenue from international sales.

• Have a clear plan—usually a business plan—with defined success and failure markers. Use these markers to recheck your assumptions. EXAMPLE: Regular checks led me to switch my focus from clients in publishing to those in manufacturing.

• Examine your business objectively and not personally. Your goal is to make money, not prove how smart you are.

• Know your strengths and weaknesses, and adjust accordingly. EXAMPLE: I knew my strength was reading people and not numbers; I therefore hired a good numbers guy as a consultant to help me out.

Whether you intend for your business to remain domestic or your plans are to go global, the above principles apply. In the international market a broader spectrum of challenges await the new business and in many cases you would do well to know your market and your product.