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December 1, 2005 |
Start Your Business - Within One Year
Go
from great idea to actual business in less than a year.
Here are 10 steps to start-up.
Step 1: Prepare for the journey ahead.
Since taking
the risk to start your own business can be challenging —
as well as exhilarating and rewarding — make sure you
have support systems in place. Family, friends, a business partner and/or fellow
entrepreneurs provide moral support. Individuals with
expertise and industry experience offer perspective,
benchmarking and candid feedback on your plans. Create a
plan for financial stability in your start-up phase — it
can take time to draw a decent, consistent salary.
Significant personal savings, loans from family members
or friends, a job and/or a financially supportive spouse
are a necessity. You’ll also want to engage professional
services — a lawyer and an accountant — to help you
chart the legal and financial issues entailed in
establishing a new business.
Step 2: Scout the competition.
Whether your idea is for an innovative consumer product
or a novel service, research the competition. Many ideas
that seem unique at first glance already exist in the
marketplace in some shape or form. Look for direct
competitors — those offering the same or a similar
product. Substitutions — things consumers may buy
instead of your product or service — will also impact
sales. Indirect competitors as well vie for your
customers’ dollars. A thorough analysis of the
competition allows you to position your product or
service as distinctive and valuable.
Step 3: Research the market.
Who will pay for your product or service? Why will they
buy from you? Defining your target market and your
unique value proposition starts with market research.
Secondary research — newspaper articles and industry
reports — can help you identify consumer trends and
point to a need for your product or service. Hone in on
specific populations and then perform your own survey to
confirm your theories.
Step 4: Develop a
viable business model.
Develop realistic sales and expense
forecasts. Market research will help you
determine the size of your market, how
many people may purchase your product or
service, and how often they might buy.
Pre-sales — taking orders before you
have a product or service in place — is
an even better way to predict sales.
Thoroughly research expenses as well.
Find real numbers for legal services,
inventory, staffing, marketing, office
or retail space and utilities, business
insurance and other start-up expenses.
Step 5: Secure start-up
capital.
Identify sources of
capital to bridge the
gap between expenses and
revenues in the early
months (or even years)
of business. Issuing
equity and taking out
loans are two common
financing options.
Issuing equity means
others hold an ownership
interest in your company
and may wish to be
involved in operations.
Loans require you to pay
interest on the money
you borrow, but you
don’t relinquish
control. Finding
investors or acquiring a
bank loan can be
challenging. Angel and
institutional investors
often look for
experienced management
teams and companies with
a track record of
success. Bank loans
require collateral.
Prepare for the
likelihood that initial
financing will come from
friends, family and
personal savings. Start
building relationships
with individuals who can
provide resources —
expertise and financial
— as you build your
business.
Step 6: Develop an
operations plan.
Determine the “flow” of
your business. What do
you need to do to
identify potential
customers, make the
sale, source materials,
deliver your product or
service, and provide
good customer service so
your clients return? Be
realistic about your
day-to-day work life. An
entrepreneur wears many
hats, from big picture
strategy to stuffing
envelopes. Know your
limitations — delivering
a low quality product or
service early on will
deter repeat business
and impact word of
mouth, so make sure you
can keep up.
If you need to hire
staff, develop job
descriptions and
interview candidates
early so you’re ready to
go as business ramps up.
Build time into your
schedule to manage your
team.
Step 7:
Market
your
business.
Market
your
business
early
and
often.
Start
compiling
a
mailing
list of
prospective
customers
and tell
everyone
you know
about
your
business.
Host a
grand
opening
or
kick-off
party.
Invite
family
and
friends,
community
members,
business
associates
and
local
government
officials.
Have
flyers
on hand
so
guests
can help
generate
buzz.
Partner
with
other
organizations
or
businesses
catering
to your
target
market.
Look for
ways to
introduce
your
product
or
service
to large
groups
at trade
shows
and
public
events.
Support
local
community
groups
and
schools
with
donations
for
fundraisers.
Send
press
releases
to local
newspapers,
TV/radio
stations
and
trade
publications
announcing
your new
business.
Create
promotions
to
reward
customers
who
refer
other
business
to you.
Be
visible.
Step 8:
Evaluate
progress
toward
goals.
The
start-up
phase
can be a
roller-coaster
ride —
some
days
sales
will be
up and
you’ll
feel
great,
and
other
days
you’ll
wonder
why you
took the
plunge.
Before
you
launch,
set
realistic
monthly,
quarterly
and
annual
goals
for
sales,
new
customers,
repeat
customers,
average
sales
transaction
and
other
relevant
metrics
based on
concrete
sales
drivers.
Build a
strategy
including
specific
tasks to
achieve
your
goals.
Step 9:
Refine
your
business
plan.
Flexibility
is
important
when
you’re
doing
something
brand
new.
Don’t be
afraid
to
challenge
assumptions
you’ve
made in
your
business
plan if
it’s not
working.
At the
same
time,
don’t
panic if
at first
you
don’t
succeed.
Sometimes,
a new
idea
takes
time to
catch
hold.
Listen
to your
customers
and
gather
data —
not just
anecdotes
— to
determine
if your
product
or
services
need
tweaking.
Test
before
you
change
what
you’re
doing.
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Step 10: Stay positive.
Starting a new business
is a marathon, not a
sprint. If you’re
passionate about what
you’re doing, you have
to have faith that your
hard work will pay off
in the long run. Try to
celebrate small wins
along the way, and don’t
take setbacks too
seriously. Learn from
mistakes and move
forward. It’s the mark
of an entrepreneur to be
ambitious, always
striving for more and
better. But this is your
life, too — enjoy the
journey.
Jan Stephenson is
CEO and Amy Appleyard
COO of Spark Craft
Studios, a unique crafts
retailer and studio in
Somerville offering
cosmopolitan,
professional women a
stylish and social venue
in which to be creative.
They launched their
business in January
2005, less than one year
after they developed the
concept as part of a
business plan project
while attending Boston
University’s MBA
program. |
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