The Operator’s Manual for small business states that a starter business is defined as one which earns less than $10,000 in gross revenue per year and requires an investment of less than $5,000 to begin operation says Fred Auzenne. Although the above definition seems simple enough because it is strict and specific there are at least two other critical factors which make the process something other than simple; those being motivation and opportunity recognition.
Without adequate drive you will never get started or maintain momentum once under way no matter how low the cost of entry nor how good the opportunities may be (please note I said “may” as opposed to “will”). Personal drive and resourcefulness must be high if one is to succeed in creating a business from scratch and in this article we will therefore take the approach of examining not only what the potential Starter Business Owner (SBO) should do but also why he or she should do it.
The first task for any prospective SBO is self-assessment, specifically by answering three questions:
- What am I like?
- How much can I make?
- Where can I get customers?
There are no wrong answers to these questions; rather they provide a basis upon which you can build your future business. Think about each question very carefully because your answers will tell you more than you think. Let us consider them one at a time:
“What am I like?”
The SBO has to be self-disciplined or they will never stick to starting and running the business, have realistic expectations about what they are likely to earn and have a willingness to learn. These are your foundation stones.
How much can I make?
As with any new venture, you need to determine how much money (if any) you will personally need in order for this enterprise to be worthwhile undertaking.
You must also consider that there may be others involve who expect to be support by the venture; if so then take their needs into account as well before answering this question explains Fred Auzenne.
Do I enjoy it?
The truth is that some people simply do not like running their own businesses no matter how much they may want to succeed. If running your own business is so repulsive to you that you would rather have someone else do it for you then perhaps the direct approach may be best in which case you should consider selling your product or service to other people who are willing and able to run their own businesses.
What will I do if things go wrong?
This consideration is especially important because, unlike a job, there are no employment rights when running your own business unless you incorporate. You are personally liable for any debts that the company incurs regardless of whether they were incurre through mismanagement on your part or through circumstances which could not have been foreseen at the time (e.g., fire damage).
Where can I get customers?
If you are thinking of starting a business to provide services (e.g., plumber, computer programmer, accountant) then there is no need to worry about this question; simply put your shingle outside your house and you will have more work than you can handle. If on the other hand you are considering manufacturing or selling products either retail or wholesale then it is likely that you will have to prove yourself in the market before people part with their hard-earned cash says Fred Auzenne.
Your best approach may therefore be to start off by offering samples for free carrying advertising materials which people can take away with them. Then when they have seen how good your wares are they can return home and order some more via phone or email. It may even be better to give away free samples if you are producing a baby product or an adult toy because of the embarrassment this might cause.
How can I determine whether my idea will work?
If your proposed business is based upon selling products then the most effective way to find out whether there is sufficient demand for what you intend to sell is by visiting local shops, privately owned service providers (e.g., computer consultants) and wholesalers who may already stock items similar to yours. You need to identify not only those outlets which buy direct from manufacturers but also those which act as agents on behalf of their suppliers; these usually pay less than usual wholesale rates but get preferential treatment in terms of availability and order size which might make it worth your while to approach them first.
If you have not already done so think about each of the above questions very carefully and make a list of the answers that will assist you to decide whether it makes sense for you to start your own business or not says Fred Auzenne. The SBO has to be self-discipline or they will never stick to a plan and achieve their goals.