Now’s The Perfect Time For You to Start a Business Full-Time.
There are essentially five (5) paths that you can take, in order to start a business full-time. These vary based on the degree of control you want to have, the amount of money required to launch, and the need to develop products and services, then determine if their is a market demand for your offerings. These five paths are:
1) Start Your Own Business
2) Buy an Existing One
3) Franchise a Business
4) Inherit a Business
5) Get Hired to Manage a Business
1. Launch your business yourself. The first option for you to start a business is to launch your own business from the ground up. There are many benefits to taking this approach to starting your own business:
• You start with a clean slate. By creating a new business from the start, you get to create the business in your own image, with your vision and to accomplish your stated mission, with your values and moral compass. You don’t inherit any flawed processes, ineffective employees, bad business practices, or a damaged culture created by others.
• Uses the most up-to-date technology. By starting your own business, you can apply the latest technologies, systems, infrastructure, and software in your day to day operations. A few examples include:
– Client Relationship Management Software to track your prospect and customer information like Zoho or SalesForce.com.
– Social Media: Social media tools change constantly. Today’s Pinterest, Instagram, and Tumblrs may give way to Vizify and About.Me. While the technology keeps changing it’s important to understand how social media can be leveraged to build strong relationships with clients, the media, vendors, and other stakeholders online.
– Web 2.0: The collective suite of technology surrounding the latest Internet platform.
– Email Marketing Systems: These service providers offer much feature and functionality beyond simply email, from surveys, to newsletters to greeting cards.
– Online Meeting Services: A suite of offerings that collectively enable distance-based teamwork to be performed regardless of where your workforce is located (ex. Skype, file-sharing vendors, GoToMeeting)
– Inventory Management Systems: from point-of-sale systems to retail worker headsets to bar codes, these technologies enable organizations to keep track of their inventory down to the single unit in real time.
– Performance Management Applications: enable you to effectively manage each worker’s productivity and engagement in your firm.
– Financial Management Tools: accounting and bookkeeping software (ex. Quickbooks, Quicken)
• Offer new products or services. By launching your business yourself you can bring to market new products and services that you have been working on and match ideally your background, experiences, education, training and certifications.
• It can be kept small.
Despite the many benefits that you derive from going out on your own to start your business, there is also a down side to starting your own business that you MUST be aware of. Some of the disadvantages of starting your own business are:
• ZERO brand name recognition. When you start with a clean slate no one knows you exist. You don’t have any awareness in your desired target markets so you have to build a name for yourself before you can get people to buy from you.
• Significant time and effort requirements. It’s NOT easy to start your own business. It never fails to amaze me how few entrepreneurs and start-ups that I work with truly understand and appreciate how much work is required to get their new business off the ground.
• Hard to finance. The traditional banks don’t tend to look to favorably on entrepreneurs. It’s a Catch-22 they come to you after you’ve already proven you can get your business to profitability but you need the financing to be able to grow your business. The flip side is there are more and more non-traditional financing options such as micro-lenders and crowd sourcing (Kickstarter, Indiegogo, etc.)
• Difficult to obtain credit. When you start out your business credit is your personal credit. Make sure you do everything you can to prop up your credit worthiness. Check your credit score before you launch your new business from a free service or one of the three major credit rating agencies (Equifax, Experian or TransUnion.)
• Lacks experienced managers and workers. It is extremely hard to find talent for all the functional areas of your business (HR, Marketing, Sales, Finance, Operations) since you will be barely scraping by at first. Affording top talent to come work for you on a shoe string budget can be a daunting task. You can lower some of the cost in hiring expertise through bartering provide services to others who in turn provide you with services. Such bartering is referred to as “boot-strapping.”
• VERY hard to maintain motivation. When you first start out, you will be riding an emotional roller coaster of success and failure. One of the reasons I urge entrepreneurs to pursue partners is, you can pick each other up when you’re feeling down and provide emotional support to each other.
Part of the challenge in launching your own business is in actually deciding what new business you want to pursue. Following is a pretty important short list of the things you need to consider when deciding what your new business will be:
• Spend a lot of time thinking about what makes your business idea truly unique. If you can’t figure this out, then what you’re proposing creating is nothing more than a “Me Too” business and you will only be able to compete on price.
• Develop a Market Entry Game Plan (call it a “Task List” of required action items you need to complete. Task lists include the following elements:
– Tasks: List all of the required tasks.
– Project Owners & Contributors: Who has ownership in completing the tasks and who can contribute to completing each task on the list.
– Start/End Dates: Helps you to rank the sequential order of when your projects need to be completed and know when things have to get finished.
– Status: Where are you in getting each task completed? Is it open, completed, in-progress, or being planned?
– Priority: One is the most critical action that MUST get done, #2 priorities are also urgent. #3 items should get done but are not nearly as mission critical.
• Define the industries you will serve:
– Develop ideal client profile(s)
– Identify ALL relevant stakeholders
Here’s a useful list of Steps you should go through, to maximize the likelihood of starting a successful business:
• Find a business incubator to work with.
• Consider asking your current employer for help?
• Obtain directly relevant experience in the industry you are looking to start your business in.
• Pursue partners (multiple founders.)
• Start with established clients.
• Enlist coaches/mentors.
• Obtain any/all of the relevant certifications.
• Develop a start-up budget.
• Select a product/service and determine if there is a proven demand for your offering.
• Line up your investors.
• Obtain experience managing small firms.
• Just start SOMETHING fort he experience of creating.
• Select a business that produces HIGH margins.
• Build trust in your personal brand/story.
2. Buy an Existing Business.
This is yet another viable to consider in getting a business. The three primary advantages to buying an existing business are:
• Established customers mean immediate sales and profits.
• Processes and operations are already in place.
• Requires less cash than starting a business from scratch.
There are also disadvantages associated with buying an existing business:
• Finding the right business.
• How do you determine what a business is worth?
• Management and employees may fight you.
• The existing business reputation may be hard to change/overcome.
• Business may be declining.
• Facilities and equipment may be obsolete.
3. Buy a franchise.
• A legal agreement that allows one business to be operated using the name & business procedures of another. There are four types of franchise you can pursue.
1. Trade name franchising: only the right to use the franchise trade name and trademark.
2. Product distribution franchising: provides franchisee with specific brand named products that can be resold by the franchisee in a specific market (examples include Coca-Cola, Goodyear Tires, and John Deere.)
3. Conversion franchising: provides an organization through which independent businesses may combine resources (Ex. Century 21 Real Estate.)
4. Business format franchising: the right to use the company’s trade name, products, business/marketing plans, national advertising support (Ex. McDonald’s)
• Carefully review TWO documents that you receive from the potential franchisor:
– Uniform franchise offering circular (UFOC): standard franchise document outlining a business’s operations, procedures, costs, requirements. Check out the FTC website for guidelines on how to complete the UFOC.
– Franchise agreement.
There are many advantages to starting a business by purchasing a franchise:
• A proven successful business model.
• Training & management support.
• Less risky than starting a business from scratch or buying a business.
The disadvantages in franchising as a new business venture.
• Lose control of your marketing and operations.
• The business can be taken away.
• Your success is tied to the success of the entire organization.
Resources For You to Use in Pursuing a Franchise.
• Business Nation
• International Franchise Assn.
4. Inherit a Business.
• Whether you inherit a business or someone bequeaths it to you, the same issues of passing ownership to successors exist:
– Have a succession plan.
– Hire a professional management team.
– Gain loyalty of the existing family, employees, and managers.
– Have experience leading others.
– Know how to manage/lead.
Inheriting a business: https://www.smartentrepreneur.net/inheriting-a-business.html
How to manage a business you inherit: https://smallbusiness.blogs.cnnmoney.cnn.com/2009/03/03/how-to-manage-an-inherited-business/
Here’s to your success in starting a new business in 2013. May it be the start of an entirely new path for you!
Ethan Chazin, The Compassionate Coach
Now’s The Perfect Time For You to Start a Business Full-Time.