27 Things You Need To Know Before Starting a New Business
Starting a new business can be one of the most rewarding experiences of a lifetime. It can also be the most demanding.
If you’re not ready to handle those demands, then you’re not ready to start your own business. I know it is a dream for a multitude of Millennials, but let’s get real – a business will not stay open and be profitable just because you dreamed it would.
If you’re a parent, aunt, uncle or other family member, or even a teacher of one of these hopeful business-focused Millennials, you might want to send this post along to them.
I understand the desire of so many who want own their own business – especially if they’ve worked in a store, had a job or have a hobby to base it on.
Let me give you an example…
A guy who works for someone cutting lawns decides one day to launch out on his own. Great. He gets a few clients but doesn’t make money. Because of that he can’t add employees, so his growth is tapped out to as much as he can do himself. And he just cuts the lawns like he did when he was an employee.
And since he isn’t thinking like a business owner, he’s not suggesting additional fertilizer, checking out the sprinklers or suggesting additional services to his current customers. His nose is to the grindstone and bleeding.
As a former franchiser, and as a retail consultant, I’ve helped a lot of people navigate the finer details of implementing a business idea. This post is more of a self-assessment than a planning checklist.
Here are 27 tips to help you decide if starting a new business is right for you.
1. Personal Investment — You’ll work long hours away from your family and friends. You’ll also need to give up weekend trips with your spouse, dinners out with friends, Saturday night baseball with the guys, kids’ birthday parties, sports activities, shopping trips with the gals – and all of the money to do these things so you have the cash flow to keep your doors open.
2. Family Investment — Can your family deal with the time you’ll invest in opening a business? A lot of businesses sink under the weight of your missing presence from home. Your kids will have to deal with seeing less of you. You will have to deal with whatever way they take out their disappointment and anger. You’ll need the emotional strength to handle it all AND run a thriving business.
3. Time Investment — You have to be prepared to work 60-80 hours a week for the first few years. Not months – years.
4. Investment Risk — Are you willing to put all of your assets and relationships on the line for your business? That’s what being an entrepreneur means. There are no safety nets!
5. Losing Your Investment — Can you handle it if your gamble doesn’t pay off? Many new businesses fail. Can you and your family survive the emotional and financial cost if your business doesn’t succeed?
Planning for Success
6. Market Research — Is there a need for your services in your community? You can use a retail consultant like me to help you evaluate the market in your area. There are already too many places to buy too many things.
7. Naming Your Business — You need to pick a name that no other business is using, then register it. When you pick your name, you need to make sure it is available as a web domain and on social media. Otherwise you could be in trouble when you open your doors.
8. Operating Assets — Do you have the money to keep operating until you reach your break-even point?
9. Business Plan — Again, a retail consultant like me can help you form a solid business plan around your idea. A business plan will help you secure loans and keep you on track.
10. Long-term Support — Do you have the money to keep operating if you don’t reach your break-even point when you expect to? Plan for success but have a fallback. You don’t want to be turning off the lights to save on the electric bills.
Dealing with Bureaucracy
11. Location, Location, Location — Have you found a storefront, or are you operating out of your home? Either way, your store will have to comply with local, state, and federal regulations. This could be as simple as installing a smoke detector, or as complicated as putting a wheelchair ramp in your front yard.
12. Type of Business — LLC, Sole Proprietorship, Corporation, etc.? The kind of business you choose will impact tax filings, licensing, and more.
13. Licensing and Taxes — Can you meet the requirements for licensing and keep up with all of your tax documents? Most states require quarterly filings, so you’ll be doing taxes four times a year. If you hate that stuff, it doesn’t matter; you’ll either have to learn or pay someone.
14. Insurance and Bonding — You’ll need insurance on your property, merchandise, employees, vehicles, etc. Depending on the services you offer, you and your employees may have to get a surety bond. That can really impact your hiring of friends and family.
Day to Day Operations
15. Vendors, Suppliers, etc.— Dealing with deliveries and pickups will take you away from other business activities.
16. Packaging and Shipping— Shipping orders takes extra time and preparation.
17. Mountains of Paperwork— Everything you do creates more paperwork. Managing it could be a full-time job.
18. Unhappy Customers— Be prepared to deal with angry and rude customers— frequently. When you are brand new, you’re going to make a lot of mistakes. Customers will notice and complain. Can you deal with that?
19. Tasks Eat Your Day— Are you able to give up the fun parts of running a business to handle the multiple details you need to take care of as a successful business owner?
20. Competition— You must be able to recognize when your market shifts or new competition crops up in your neighborhood or, more likely, online.
21. Technology— You have to be up-to-date with current technology so you can use it to market your business, monitor customer reviews online and use social media effectively.
22. Employees— You better like people because without them liking you, you won’t be able to provide an exceptional experience to your customers. You’ll deal with their crap whether you like it or not.
23. Perseverance— You need to tough it out during the hard times and maintain focus during the good times.
24. Flexibility— You will be wrong. Accept it, make changes, and move on.
25. Customer Service— You can’t always make customers happy and make money. To avoid being taken advantage of, you have to remember that you’re a merchant, not a charity. Do your best, but don’t sink your business trying to please everyone.
26. Employee Relations— Just like customers, your workers won’t always be happy. Don’t use personal attachments as an excuse to keep a bad employee.
27. Walking Away— If the time comes to walk away, you have to be willing to do so.
When you start a business, you won’t be able to immediately buy a three-bedroom house on the sand in Newport Beach or have your minions run your successful store while you vacation in France. But you will be able to find out just who you really are and what you are capable of.
These aren’t all the considerations you need before you start your own business, but you need to candidly look at your own skill sets, motivations and personal tolerance for risk and the unknown before you open your doors.
Build it and they will come only works in the movies.
Bob Phibbs is the Retail Doctor®, a best-selling author and speaker who has helped thousands of independent businesses compete. His new book, The Retail Doctor’s Guide to Growing Your Business has received praise from both Inc. magazine and USA Today and can be found at your local bookstore or ordered at http://www.retaildoc.com/guide. He and his work have been featured in the New York Times, the Wall Street Journal and Entrepreneur magazine. Questions? Contact Bob at email@example.com. This article was reprinted with permission of the author, Bob Phibbs, aka The Retail Doctor®. Read more articles by this author
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