Hi there, entrepreneur! This is your new business idea talking. I thought to send you a note for Valentine’s Day. So here goes:
All right, a card from the depths of your subconscious might be a bit extreme, but before I scare you away, think about it. Starting and running a small business is not for the faint of heart. Just like any successful relationship, you need to bring your passion and commitment to your startup. And yet, that is not enough. Every business starts with an idea. You should either have an original, effective solution to a problem or a better, more creative (perhaps even better-priced) solution.
I have launched or managed successful startups for the past 30 years. Most recently, I co-founded bizHUMM, a free online small business solutions resource that includes comprehensive ebooks on How to Start a Business.
It seems appropriate to share some of that experience with you as Valentine’s Day approaches. So, without further ado, here are five essential “love/success” elements to think about as you launch or manage your new business.
1. Do your research.
Check out the competition. Be thorough. Are you a local brick-and-mortar business or launching online exclusively? Who else runs a similar type of business and where are they located? What is their pricing like? Don’t be afraid to Google ‘til you drop.
If you move forward without doing your competitive research, you might later discover that XYZ Inc. does the same thing and for a better price. Don’t forget to look into domain names that will help you brand your new business on the web. A domain search can also give you insight into the competition; if someone else already has registered the domain name you’ve got in mind for your startup, there’s a chance they might be offering similar products or services.
2. Test your business model.
Try to test market your product or service prior to launching. If you want to sell cookies, for example, ask 25 people of different ages and backgrounds to taste them and give you feedback. Ask some business people about your pricing. Are you too high or even too low compared to the competition?
You’ll most likely have a website, so share your home page with friends and again get feedback. Find out what is engaging to potential visitors and what doesn’t work. Be open to suggestions for improvement. Test the way you convert visitors to customers. Try different landing pages. Work on your plan to generate leads and see what works best.
In other words, break down every key element of your business model and ask people you know and trust for their honest feedback. Find the value in their response to you and make changes for the better.
Do as much as possible before starting your business. You will be happier and more successful for embracing this approach.
3. Create a business plan and financial projections.
If some of you just got a knot in your stomach, it’s understandable. Most of us resist things like writing a business plan. And when it comes to financial projections … would someone call me an Uber please? Here’s the thing: when you’re bogged down with to-do’s and these are important to-do’s, just start. Don’t worry about writing the best business plan. Just sit down and write an overview of your business. Share it with a mentor and slowly go through the items you need to address to create an effective business plan.
As for the dreaded financial projections, speak to someone you trust who is good with numbers (and Excel spreadsheets), and go through your sales and expense projections for the next three years. Let’s face reality. This is something you have to own — your numbers and the plan to execute to create your success. At bizHUMM we have free business plan and financial projection templates.
4. Come up with a funding strategy.
I know, I know, more fun. And on Valentine’s Day. But you can find a way. First, you need to know how much to raise and for that … you guessed it … financial projections. Once you know that to get through year one or two, you need $10,000, $25,000 or $150,000, you can begin fundraising.
Most entrepreneurs start with good friends and family — people who believe in you and want to support your dreams. There are also crowdfunding sites that are worthwhile to check out — such as Kickstarter, GoFundMe and Crowdfunder — though don’t expect people to just give you money because you’re a good person.
One more thing and this is, well, delicate. Be honest and real with your loved ones (and all fund sources, for that matter). Be sure to tell Mom or Dad or best buddy Jim that there are risks. That you believe in this project and that you hope to make X% for them, but anything is possible. And be sure to think through how you are going to return their money — better known as an “exit strategy.” How much equity are you going to sell in your business for how many dollars? Will you share the profits? Are you going to sell the business in five years? You need to understand these issues and share them with your potential funding sources.
5. Love what you do.
Believe in yourself. Be brave. We’ve come full circle and are back at the love thing. But there’s no escaping it. Running your own business can be challenging, exhilarating, heart-thumping and thrilling all rolled into one. You can do this. And your chances for success will be so, so much greater if it starts with a genuine belief in yourself and your idea.
Happy Valentine’s Day, entrepreneur! Have fun. And here’s to your success!