Each year in the United States alone, there are more than 500,000 new businesses started. I believe there are even more people wanting to start a business but are held back by not knowing what to do in order to plan and launch their business idea. Owning a business can be one of the most rewarding experiences and can greatly improve your lifestyle if you take the time to do it the right way. So what is step 1?
1. Your life plan comes before your business plan:
I used to ignore this concept. In misery from trying businesses that did not fit with my life plan, I finally realized how important it is. You do not live to support your business. Your business is created to support you and your plan for your life.
So what do you want in life? What do you hope to achieve? What kind of lifestyle do you want? How much free time do you need to live the life you want? Where do you want to live? What are your top 3 life goals (not business goals)? Start with creating your life plan and the business will take its rightful place as a means to support your life.
2. Determine your business selection criteria:
Based on your life plan, you will determine your business criteria. In other words, you will define how the business will fit into your life and what you want from it. Once you know this, you can select the type of business you want to start. Below are some examples of business selection criteria.
- I want a flexible work schedule. I don’t want a store that has to be open from 10 to 9 and open on weekends.
- I want a high margin product or service (above 55%) or I won’t consider it.
- I want to be geographically independent. I can work from anywhere.
- I want to have an office where I work from every day.
- I love to work nights and want my business to be able to serve customers during that time.
Yours may be different. Figure out your criteria before you decide on your business. You should not start a business of a certain type simply because you have experience in that type of technical work. If you hate your job now, why start a business doing the same thing? You should pick a business type that fits with your life plan, meets your criteria, and allows you to do work you actually enjoy.
3. Begin with the end in mind by creating your business vision:
With your life plan and business selection criteria in mind, develop the vision for your business. This is where you take the business dream and start to give it life. Think of the vision as the blueprint for your business design.
When you start a business without having a clear vision, it can be compared to trying to construct a building with no plans. Everyone working on the project knows they are there to construct a building but nothing is guiding them toward a common goal. Each person is constructing the building as they decide it should be. Could you imagine the chaos on this job site? And the end result would be some semblance of a structure with many different random interpretations of what it should be. The owner of the building would not be pleased because only he knew what the building was being built for.
Small businesses are started every day by using the method described above. We will figure it out as we go and hope it ends up looking like something we like. I want you to have intentional design by spending the time to create the vision and building around it.
Can the vision change over time? Absolutely! Remember, the vision is your idea of what the business should be to fit your life plan and business criteria. You may discover a niche market you wish to focus on that you could not foresee in the beginning. You may discover a passion and a market that better fit with your criteria and plans. Even if you adjust the vision over time, always intentionally build your business in a proactive manner.
If you would like some help with creating your vision, I have created a free guide for your use.
Receive Your Free Business Vision Statement Guide
4. Is the business idea viable?
Once you have the vision, you will need to determine if your business idea is viable. In other words, can you make money with this business idea?
This is the confirmation step to make sure there is a market for your vision. You may have a fantastic idea, but there has to be a market that is willing to buy your idea in order for you to have a successful business. An idea becomes a business when a market is available. This is the step so critical in reducing the number of business failures we see each year.
To determine if you have a viable idea, you will need to:
- Gather demographic data to determine market size, ideal business location, competitor information, and market needs. Entrepreneur lists several resources you can use to gather this information in this article.
- Evaluate the existence of a market in the area of your business idea. If you cannot find people buying or competitors selling a product or service similar to what you want to offer, there may be a reason. A market may not exist.
- Determine if you have the resources to start your business, market your idea, and support yourself while building your business. Making money immediately is typically not the case. It will take anywhere from a few months to a few years to see the returns you are hoping for.
- Figure out your projected payback on your investment to start the business. Is it reasonable for your life plan and business criteria.
- Evaluate your pricing position in the market to ensure you can sell your product at the desired margin to cover costs and earn the return you desire. You do not have to be the cheapest product/service in the market but you have to be competitive enough to influence buyers to purchase your product rather than someone else’s.
If you go through this process and determine your idea has some holes, do not give up hope. This is part of the development process. It is much better to determine your idea has flaws now rather than after you have invested a large amount of capital and energy.
The work you do in this process will give you the best chance at success. I don’t want you to be a statistic. The timing and speed of starting a business is not as important as building a sustainable business. Take your time and get it right.
If you would like more in depth help on starting your business, check out the Start Here page or Work With Me page. Consider subscribing to the blog so you never miss a post. The next post will cover the business plan.