Very few people think that starting a new business is easy. But at the same time, there are few first-time entrepreneurs who realize just how involved things are from the moment you start trying to bring that idea that previously only existed in your head into the real world.
There’s a massive amount of commitment required, even before your business technically exists at all. This is okay, because as the old saying goes, “anything worth doing is worth doing right.”
In fact, there are a number of key steps that you need to take BEFORE you’ve even started the business of your dreams that you’ll absolutely want to pay close attention to moving forward.
Identify the “Why” of It All
First thing’s first: Before you do anything else, you need to determine why you feel so compelled to start this particular business at this particular time.
Is it just because you think you have a great, sure-fire idea that is going to generate a lot of money? If so, you may want to take a step back… you’ll likely be disappointed. But if it’s because this will allow you to genuinely do something you love, and something that you think will make an impact on the lives of a lot of people, then, by all means, push ahead.
Identify the NEED
Next, you need to verify that this idea of yours is actually a viable one in the first place; essentially, you have to confirm that there is a genuine need in the marketplace for a product or service like the one you want to create.
DO NOT allow yourself to become “a solution in search of a problem.” Make sure that people are asking for a business like yours and that need is currently going unfulfilled.
DON’T Quit Your Day Job
Building a successful business is not something that happens overnight. This often takes years of planning and hard work, not to mention many mistakes along the way.
All of this is to say that if your ability to quit your day job and focus on your new business full time depends on an instant success… don’t quit your day job just yet.
DON’T Neglect Your Family
Yes, starting a business is something that requires a huge amount of your time. Yes, you need to devote every ounce of space in your brain and every free moment to this goal. But do not, under any circumstances, let that come at the expense of your loved ones and those around you.
You’re going to need quite a bit of support to get your new business up and running. If you neglect your family now, you’re not going to have that support later.
The Art of Writing a Business Plan
At this point, you can start working on making your vision a reality. This part of the journey always begins in the same basic way: writing a realistic, actionable business plan that will guide your every move in the future.
With a business plan, you really do need to be as specific as humanly possible. You know where you’re starting, and you know where you want to end up. The job of a business plan is to connect those dots by way of a series of smaller, logical and achievable steps. It’s essentially the roadmap you’ll use to shine a light through the darkness, guaranteeing that you’re always moving in the right direction (and that this direction is forward).
The Entrepreneur’s Bet
As you write your business plan, you’ll also have to make what is often referred to as “The Entrepreneur’s Bet.” Essentially, you need to figure out how much money a business like yours needs to make in order to become profitable.
You also need to acknowledge that, once again, your business is very unlikely to be successful enough right away to have this bet pay off in the short term. A lot of new businesses are operating at a loss at first — that’s okay. But this is yet another step that confirms the path you’re on is actually viable and it’s one that you absolutely do not want to skip.
The Myth of the “One Size Fits All” Approach
At this point, it’s also important to acknowledge that there really is no one “right way” to start a business. The choices you have to make will be influenced by a wide range of different factors, many of which are unique to your industry, your business plan and even the vision that you’re starting with.
Case in point: You need to review all local, state and federal regulations pertaining to what you’re trying to accomplish. Different places have different laws, and ignorance is not an excuse for breaking them. Factors like how to become compliant, what standards a product has to meet and more will all be influenced by these regulations, and they will impact a lot of the steps on your business plan as well.
It’s Time to Start Thinking About Technology
Once this foundation is all in place, it’s time to start thinking about the tools you’ll need to bring your new business into the world. These days, that involves a lot more technology than people often realize.
This is another one of those steps that will obviously be impacted by the type of business you’re starting. A local brick-and-mortar retail store will obviously have different technological needs (point of sale systems, inventory management equipment, etc.) than an online marketing agency (graphic design software, collaboration tools, etc.).
But when built properly, your technology strategy and your business strategy are essentially one and the same. They feed into one another, and your IT helps generate the momentum you need to continue to grow and expand while remaining agile as well. It’s far too important to neglect.
Choosing the Right Business Entity
This is another important step you don’t want to skip because it dictates things like taxes, paperwork, liability and other legal elements of your business.
One of the most common types of business entities is the limited liability structure, or LLC. This is because it provides you with the level of flexibility you need right now, coupled with the protection you’ll need from a personal liability standpoint.
But that isn’t a guarantee that this is right for you. Other structures like sole proprietorships, partnerships, S corporations and C corporations all have their fair share of advantages and disadvantages. You need to pick the right one today or you’ll open yourself up to a world of problems tomorrow.
Finding the Help You Need (and You WILL Need It)
Finally, as your journey toward true entrepreneurship is about to begin in earnest, you need to understand two of the core pillars of successful business ownership:
- You do not know everything, even if you think you do.
- You cannot do it all alone, even if you think you can.
The difference between failed and successful business owners often comes down to the acknowledgment of these two points.
Rather than do a poor job at a business task for which you don’t have the skills, don’t be afraid to hire someone who does have those skills. Rather than guess at answers to questions, find the right advisors and mentors to guide you. Reach out and find the people who are willing to assist you and don’t be afraid to share your vision with them.
You WILL need help and there are people who are absolutely willing to stand by your side. You just have to want to look for them.
In the End
It’s fair to say that starting a new business is harder than you probably thought it was going to be, especially when you consider the sheer amount of time you’ll need to devote to the steps outlined above. But provided that you have a realistic vision and a passion that cannot be extinguished, success is no longer a question of “if” but “when.”
The stakes are high and the risk is higher, but the rewards are even greater if you persevere. Never let anyone tell you otherwise.
If you’d like to talk to a tax professional about starting (or growing) your business, please give Scott Nissen a call at (360) 671-0700, or send an email using the form below.