Building and maintaining your own business isn't just a path to wealth - it's a way of pursuing your life's dreams and finding personal satisfaction. It's not an easy path, but it's one that all great entrepreneurs throughout history have had to walk. While starting a business is easier if you have a large cash reserve, you can still build a successful business from scratch with intelligence, persistence, and dedication even if you are not rich. If you are willing to work hard and learn from your mistakes, you have a rare opportunity to build a successful business that you can be proud of.
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Part 1 of 3: Getting Started
Step 1. Stick to your current job
By maintaining a reliable source of livelihood, you prevent yourself from worrying about how to pay your mortgage and the hassle of huge debts. However, you will need to work even harder. Ideally, when your new business is up and running, you can gradually transition from working full-time at your old job to consulting or part-time. Someday, you can switch to your full-fledged business. While in the real world this process isn't so smooth, it's always safer than quitting your job altogether to follow an unfulfilled dream.
- This first stage is even more important if you have to provide for your family. Don't ruin your family's future by leaving your primary source of input to demand personal dreams. While it can be more difficult to balance your side projects with your daily work and family life, it's much safer.
- If you think you might want to start your own business in the future, avoid entering into a contract with conditions that limit your ability to obtain other sources of income. Don't be afraid to research your contract with an attorney.
Step 2. Develop a business plan
How do you make money? If you can't answer this question, don't bother. The goal of for-profit institutions is to make money - have a detailed plan on how to do this before you start your business. Try answering the following questions - they are fairly basic and not detailed yet:
- How much will it cost you to provide this product or service to customers?
- What price do you charge customers for your product or service?
- How will you grow your business later?
- How will your business offer something better than your competitors?
- What kind of people do you need to hire? Can the work be done without these people?
Step 3. Perform a competitive analysis
Who are your competitors? How do they set a price for a product or service that is equivalent to your offer? Can you provide these products or services with better quality or lower prices realistically? If so, congratulations - you probably can! Research the market as well as businesses that have (and haven't) found success in this market you're trying to enter.
Not all industries have the same level of ease of entry. The IBISWorld business research institute recommends certain industries for aspiring small business owners because the entry costs are small and the growth potential is high. These include: administration of human resources and benefits, street vendors, online auctions & e-commerce, specialty ethnic supermarkets, wine/alcohol manufacturing, internet publishing, and many more
Step 4. Research and test your ideas
Preparation and planning are vital before starting any business venture. If you can, look for opportunities to do a "test operation." For example, if you are thinking about opening a restaurant, first try cooking for a house of worship or school fundraiser and see if you can control the busy kitchen atmosphere and determine if your meal is well received. You may also want to try surveys of potential customers to assess whether they will use your hypothetical business frequently.
A business plan is a changing document. If your research or exam results contradict your current plans, don't be afraid to change your business plan or start from scratch. Doing so can be frustrating, but it's a smarter move than running the risk of your business failing and you wondering why
Step 5. Look for opportunities to develop skills on the cheap
If you have an idea for a business that you don't have the skills or expertise to do, get the training you need as cheaply as possible. Try making arrangements with a training institute or company to train you in exchange for the services you provide. Enter a part-time paid internship. Look for opportunities to gain practical knowledge from skilled friends, family and acquaintances. You should maintain a source of income while you do this - if it means you need to extend your training time, that's fine.
If you need to go back to school for this, apply for any scholarship programs and financial aid packages that you qualify for. Managing the paperwork can be time consuming, but the payoff (in the form of money saved) is worth it
Step 6. Maximize your existing assets
When you create a new business from scratch, you should make the most of the resources you already have. For example, turn your personal car into a company car. Turn your garage into a workshop. Some of today's big companies (most famously, Apple and Facebook) started from humble beginnings - garages, basements, and boarding rooms, for example. Don't hesitate to maximize the use of the items you already have!
If you have a home, use it as the starting site for your business, instead of renting an office. This way, you will save money that is used to pay rent. Regarding taxes, you may want to write down certain parts of your house that are home offices
Step 7. Streamline your employment plan
Paying employees is expensive, especially if you want to hire skilled professionals. Initially, make your workforce as small as possible to minimize expenses. The US Small Business Administration (SBA) recommends that about 50% of your profits go towards hiring employees. If you can work on all aspects of the business without straining yourself, go for it at first. Otherwise, hire as few people as needed to carry out the work safely and professionally. As the business grows, you will find the need to add employees naturally.
Note that, depending on where you live and the type of people you employ, you may be required to pay for employee health insurance in addition to your base salary
Step 8. Ask friends and/or family for a loan
When trying to build a business from scratch, your creativity and hard work can take the place of a lot of money. But you can reach a point where you can't progress without a little money. For example, you may need an expensive tool that you don't own and can't borrow. Many small businesses get help from a good relative or friend. But before you agree to the loan, make sure you state the terms of the loan in writing - how long you will have to pay, how much the payment will be, etc.
Having a clause that says if the business fails, you'll have extra time to pay off the debt (or you won't have to pay it back at all) might be a very good idea
Step 9. Secure a legal small business loan
Many governments offer loan programs specifically designed to help small businesses thrive. In the US, the SBA is the institution that operates these programs. The SBA's most frequently used loan program is the 7(a) program, which requires small businesses to meet various prerequisites to ensure their money is used properly. These prerequisites say a business must:
- Operate for profit
- As per SBA guidelines as a criterion of being called a "small" business
- Operating in the US or in its territories/possessions
- Have sufficient equity (aka, have value.)
- Tried all reasonable sources of funds before signing up
- Able to show that you need a loan
- Being able to show how to use the money that makes sense
- Don't be naughty with any existing loans from the government
Step 10. Spread the word
Even the best-run business in the world will fail if no one knows it exists. This is an opportunity for you to compensate for your lack of capital with your own hard work – if you can't afford TV commercials or billboards, try printing out flyers and handing out at the end of the week. Go from house to house advertising your business to neighbors. Make your own banner and hang it in front of your place of business. Wear flashy clothes and put up a sign on the side of a busy street. Do the craziest thing you can to spread the word about your new business – just do it. If money is not enough, you will have to sacrifice your self-respect for the initial marketing efforts.
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Now you also have the potential to reach your online customers through a successful social media campaign. Social media is an effective way for a small business to showcase itself to its customers online. Best of all, your business can join most social media sites for free. Create an account on Facebook, Twitter or other social media, and get your customers to add you to their online social circle (possibly by offering benefits to customers who do) so you can notify them of offers and promotions.
However, keep in mind that online customers are used to being bombarded with ads. Try to make your online content genuinely funny or memorable - you'll be more popular if you use social media solely as a place to advertise
Part 2 of 3: Think Like an Entrepreneur
Step 1. Cultivate passion and persistence
Starting your own business can be very, very difficult especially in the beginning, when you are still "tinkering" with your new business model. If you love your business - if the field is in your interest - work just gets easier. If your passion for your job is so great that you feel guilty about making money from it, you can be sure that you have chosen something that is right for you. If you are happy with your work, maintaining a strong will is easy because you will not be satisfied until you give your best!
Find your area of interest and develop skills in that area through study, training courses and practical application of knowledge and skills. Look for ways to make money on your interests instead of trying to "force" your daily work for a paycheck into something you're passionate about
Step 2. Prepare to change yourself
When you start your own business, you will probably find that you need to make drastic changes to your habits and that even your most basic attitudes will have to adapt to your new demands. Flexibility is a great asset if you're a new small business owner because you'll have to 'transform' yourself several times to figure out the right attitude to take on your chosen field. Remember, starting your own business requires long hours and is very focused - change your behavior to ensure you are able to pay attention and allocate the time this new job requires for you.
For example, do you "dislike getting up early?" Are you "low energy?" If your restaurant's grand opening is in a week's time, you won't be able to do this anymore! Change your habits today - set an alarm clock very early and drink a large cup of coffee
Step 3. Use unconventional sources of funds
So you don't have to look for a philanthropic investor or trust fund. This doesn't mean it's impossible to raise funds for your dream startup! Today, people who have good ideas (but don't have money) find it easier to get the attention of people who have money (but don't have ideas). Consider, for example, advertising your project on a cloud-sourcing site like Kickstarter. Sites like these let you pitch your idea to the internet at large - if people online think your idea is good and your business plan makes sense, they'll choose to co-fund your startup costs!
One more way to get funding for your small business is to register for a startup competition. These competitions are usually run by business schools from major universities (especially universities in the San Francisco Bay Area such as Berkeley and Stanford) which give young entrepreneurs the opportunity to sell their ideas to wealthy capitalists. Usually, in these competitions, winners win seed funds to start their business
Step 4. Put the customer first
One surefire way to differentiate your new business from established competitors is simply to be more friendly and personable than other people - people. like small business with a warm "family" feel. Make it your primary goal to please your customers through quality results and friendly service.
- Try to understand what the customer wants. Find the best way to satisfy those desires. The main focus of any business is customer satisfaction. (Second focus should be quality, cost/benefit, appearance, product/service functionality, etc…)
- Remember that the customer is "always right" - even if it's pretentious or illogical. This doesn't mean you need to go along with silly customer whims – rather, you need to make every customer feel respected.
Step 5. Offer something that is worth more than your competition
Money is important. For most customers money is the "bottom line" – something that counts when they choose which products and services to pay for. Customers want quality that's worth their money and don't like feeling 'tricked'. Take advantage of this! Offer a better deal than your rivals - doing the same job cheaper will definitely give you an edge. However, make sure your profit margins are protected when deciding on your business's pricing structure - you always need to be able to pay the rent.
Keep your promises and never be tempted to create false advertising as it will quickly damage you and your business reputation
Step 6. Turn your creativity into your money
Get your business back on the "basics." Initially, try to make sure your business is as lean as possible. Minimize the need for money, which can be hard to come by at first, and aggressively increase sales activity through developing and implementing your own creative ideas and concepts. Always think big. One great idea can be worth thousands of dollars.
Step 7. Respond to contracts and partnerships with care
Make sure you carefully consider any business relationships or partnerships you have. Only hire or partner with people you have great confidence in. If you decide to partner with someone or a business you trust, make sure your relationship terms are written down before formalizing the relationship.
- Paying an attorney to help write your contract can be a very good idea. Penalty costs can be high, but a well-written contract can save you many times over on your initial investment in the long run by preventing your partners from using you.
- Be careful using the term 'partner' when you talk to coworkers, because the legal concept of a promissory stopper can be detrimental to you later, especially if you start making money.
Step 8. Build your negotiating skills
When everything else fails, negotiate, barter, and trade things. Confident and intelligent bargaining skills are one of the hallmarks of a true entrepreneur. This is a valuable skill to build on, as it strengthens your natural business understanding and boosts your confidence. Whether you're hiring a new employee, buying equipment, or signing a business partnership, don't be afraid to haggle and make an offer that works in your favor - at worst the answer is "no." Take the plunge (while preserving your legal rights) and you may be pleasantly surprised at the results.
Try going to a flea market - here you are usually allowed (even encouraged) to haggle with the hawkers, so you get a less risky exercise
Part 3 of 3: Keep Safe and Sane
Step 1. Rely on family, friends and loved ones, you don't have to do this alone
Even if you don't establish a business relationship with your loved one (which is a great idea), you can lean on this person in the beginning (and later, when the going gets tough). Family and friends can offer strong emotional support during your entrepreneurial journey. When you are depressed to your breaking point, this support can influence whether you push for success or give up.
- Talk to your family and make sure they agree with the outline of your business plan, because you can, at any time, have to use up your family's resources, time, money, health and mind. So it's only fair that they know where you're getting them involved.
- After being your own boss in your business life, you may be tempted to pretend to be the boss at home. Don't follow this temptation. Keep business matters separate from household matters - make it a rule that you don't discuss your business at dinner, for example.
Step 2. Know your rights
Having a proper understanding of commercial law (especially contract law, taxes, and the legal requirements for running a small business) is a valuable skill for an entrepreneur. If you can, it's a good idea to introduce yourself to this area of law before you start a business. If you are really confident in this legal area, you can save money that could be used for legal counsel. You'll also avoid the headache of trying to understand complex business and tax documents.
However, if you are unfamiliar with the law, ask for help. The money you spend on a lawyer can save you a lot of money on your initial investment, for example, by saving you from losing contracts
Step 3. Pay attention to your physical, mental and emotional state
If you lose health, you lose everything. A healthy body, mind, and feeling are vital to success as a business owner. Especially in the beginning, where the hours can be very long and the work can be very hard. Still, you should always try to dedicate enough time to exercise, sleep and "rest." Take good care of these things as they should - it keeps you healthy and sane. Remember, if you're paralyzed, you can't run a business.
Try getting income protection insurance, especially if your job is at risk of injury - self-employed people can't risk their income as a result of this
Step 4. Balance work with life
Everything is not superfluous. Live life with balance, even if you start a business with almost no money. Losing perspective on life will impoverish you in the long run (emotionally - not necessarily financially), so it's never worth risking it. Never miss a night's sleep. Don't work half to death. Always make time for your family, hobbies, and, of course, yourself. Your life should be a source of happiness and interest - not just a job opportunity.
In addition, you should not rely on drugs to help your performance skills or replace a healthy eating and exercise plan. This will, in the long run, damage you and lead you to make irrational and emotional decisions that are never good in business
Tips
- Try to avoid borrowing money as much as possible. Money is king. Let it be. If you don't have money, don't use it and don't take any major surgery funds that are 'trusted' at any stage.
- Try to avoid entering into long-term contracts, such as business leases or permanent employment contracts for employees at first. Since you don't know for sure how it will turn out in the first year of operation (experimental stage), making a big commitment like this is not wise. Do not do it.
- Do not carelessly share your business idea with others. Has your brilliant business idea been stolen? If you have, maybe you won't be that stupid again. The element of betrayal can destroy trust. In this case, prevention is better than treatment.
- Talk to experienced entrepreneurs for their ideas on starting from the ground up.
