Updated: Jan 25
So you’re seriously thinking about starting a business? No doubt the thought of getting started has you giddy with excitement one moment and awash in anxiety the next. I know how you feel. In fact, I’m in the middle of it at this very moment and I’d like to share with you what I’ve learned so far in my journey, in the land of the entrepreneurial. Before we begin, a bit of backstory might be in order.
I’ve been in the accounting industry for over twenty years, largely in the back office counting beans, tractors and sometimes widgets. Before I jumped into the world of the self-employed, I was the CFO for a small manufacturing and wholesale business for several years and prior to that worked as the assistant controller for a large regional CPA firm. This experience alone changed my perspective on the needs of the small business owner and my desire to fill a niche that is widely ignored by other accounting firms. More on that another time…
Now back to you! The good news is this…there has never been a better time to start a business than right this moment. This article is the first of 15, where we will explore some of the big questions and issues around starting a business. To get us underway, I believe there are four steps you should take before starting your business.
Start with Why! Simon Sinek states in his book Start with Why: How Great Leaders Inspire Everyone to Take Action, that understanding why you’re starting a business is the most important question you can answer. It’s best to answer this before you begin, because the “Why” is what provides the passion and desire to push forward despite what, at times, appears to be insurmountable odds. This same “Why” will drive customers to use your products or services. It should also be what differentiates you from your competition in the marketplace. Know your “Why”!
Research your Market! It is not uncommon for prospective entrepreneurs to fire up a business having neither researched their service or product market, nor even their competition. This is a hurdle that is both critical and fundamental for moving forward. Spend as much time as you need to understand what the market looks like. Is your product/service local in nature or regional? How differentiated are the products/services? Is there considerable competition in this market? Is there a niche that your product/service fills that competitors don’t? Don’t make the process harder than it needs to be; the internet provides an overwhelming array of tools to help you understand your market. Take advantage of what’s available!
Create a Realistic Forecast or Budget! As a finance guy, you can guess this would be on my list of things to consider before you pull the trigger on opening up shop. In the Bible, Jesus said, “Suppose one of you wants to build a tower. Will he not first sit down and estimate the cost to see if he has enough money to complete it? LUKE 14:27” The same lesson applies to building businesses. Too often I have seen bright, energetic entrepreneurs start their operations without consideration of this factor only to become saddled with significant debt or run out of business quickly. Budgets are meant to provide an air of reality to the dream; a reality barometer, if you will. While the process can be somewhat tedious, the information budgets provide are crucial to understanding the underpinnings of what will drive the revenues and costs of your business, should you take the next step. (More on budgets in the third article of this series.)
Determine Your Personal Financial Commitment! Once the budget has been prepared, the information will provide some sense of the financial commitment you will need to make to nurture the business through the start-up phase. Depending upon the nature of the business, the costs are quite significant, sometimes not. For instance, the start-up costs for a manufacturing business are far likely to exceed those for an accounting practice. Also, is there provision for your family during this start-up phase of the business? You need to determine if you have the financial means to take care of the business and support your family…before you begin.
While these certainly aren’t the only steps to consider prior to launching a business, they are certainly critical ones to understand your motive, your market and financial realities. What steps did I miss? I’d love your feedback. Once you’ve taken the opportunity to really dig into these steps above and find you are ready to proceed, then let me invite you to continue with me through this series of blog posts.