Step-by-Step Approach to Starting a new business


The Step-by-Step Approach to Starting a new business is shown in this article
Decide if you really want to be in business
You are putting some (not all, hopefully) of your net worth at risk. You may run the risk of becoming eccentric, meaning creating a life that is out of balance, with working hours taking away from other family or pleasurable activities. There may be levels of stress you have not experienced as an employee.

Decide what business and where
Once you are satisfied you have the characteristics of a successful entrepreneur and that you definitely want to be in business, then you must decide which business is best for you and where to locate that business. Selection strategy is covered later on in this session. Also, see our home-based business session for those considering operating a business from their home.

Decide whether to operate full-time or moonlight
There are some interesting advantages and some pitfalls in operating as a moonlight business. (That is, a business you start in your off hours while still working at your current job.) More often than not, the advantages of starting as a moonlighter outweigh the risks:
·        You avoid burning your bridges of earnings including retirement, health and fringe benefits and vacations.
·        Your full-time job won't suffer if you maintain certain conflict of interest disciplines, including compartmentalizing your job and business into completely separate worlds.
·        You can avoid conflict of interest with your job by choosing a business that is appropriate for moonlighting, such as single products, real estate, specialized food, e-commerce, direct marketing or family-run operations.
There are great advantages for operating a family business. If you are a moonlighter the family can run the business while you are at work. You have a built-in organizational structure. You can teach your kids the benefits of being in business.

But there are also some pitfalls to consider in starting a moonlight business
·        There is a temptation to spend time at your job working on your moonlight business. That is unfair to your employer and should not be done under any circumstances. (You may need a family member or some trusted person to cover emergencies when you are at your job.)
·        Another problem may be competing with your employer, which is not right. Think of how you would feel or handle this employee if you were the boss.
·        Any kind of conflict with your regular work can jeopardize your job and your moonlight business.
·        Overwork and mental and physical exhaustion can also become a very real problem for moonlight entrepreneurs.

Selection Strategy
Operating the wrong business is the most frequent mistake that start-up entrepreneurs make. Here is a checklist to help you to evaluate if you are in a potentially successful one or to reassess the business you are in:
·        If you have not yet selected a business, take your time and wait for the business that is just right for you. You will not be penalized for missing opportunities. The selection process takes a lot of planning and your experience and complete knowledge is vital for your success.
·        A common problem is not having much money to start a business. Surprisingly, there are a number of businesses that require no money at all.
·        Don't tackle or pursue businesses that may be too challenging. It is better to identify a one-foot hurdle than try to jump a seven-footer.
·        Try to identify a business that has long-term economic potential. Follow Wayne Gretzky's advice, "Go to where the puck is going, not to where it is."
·        A big mistake can be an error of omission. This means you may fail to see an opportunity that is right in front of you.
·        Keep in mind that as a general rule specialists do better than non-specialists. Wouldn't you be more inclined to take your sick cat to a veterinarian whose practice is limited to cats rather than to a general practitioner?
·        Operate a business that will grow in today's and tomorrow's markets. Many small retail stores are no longer in business because huge stores such as Walmart and Home Depot provide more choices to the customer and often at a cheaper price.
·        Follow the advice of Chairman Warren Buffett, of Berkshire-Hathaway Inc. and the most successful business picker in American history. Mr. Buffett looks for businesses that focus on a "consumer monopoly" with pricing power and long-term predictable growth prospects.
·        Businesses to avoid are "commodity" businesses where you must compete entirely on price and in which you must have the lowest cost to survive. As Mr. Buffett has said, "In a commodity type business you're only as smart as your dumbest competitor."
·        Most service businesses have pricing power. Pricing power means that you will not need to have the lowest price in order to secure business. Your customers will be willing to pay a fair price for a better product or service.
·        Should you bet on a business you don't know when you can bet on a business you do know?
·        If you are manufacturing a product, consider the pros and cons of contracting out production to a low-cost supplier. In other words, operate a "hollow corporation." A "hollow corporation" is a company that subcontracts manufacturing and packaging.
·        If your business is based on marketing an invention or patent, keep these ideas in mind:
1.     First check to determine if there are any issued patents similar to your idea. You can secure information from the U.S. Patent office at www.uspto.gov.
2.     Be cautious about getting involved with firms that ask for up-front fees to market an invention.
3.     No matter what you hope for, you will need a product to test, to show and to solicit feedback.



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