8 “real world” tips for the future Entrepreneur
Becoming an entrepreneur is not as difficult as some may think. With the explosion of technology, it is probably easier today than any other time in human history. Professionals thinking of beginning brick and mortar based businesses can be as successful at getting their dreams started as the e-commerce gurus. However, starting your business is a different animal than keeping the business alive, but with a well rounded plan and proper execution, motivated entrepreneurs can find their dream a reality.
Here are 8 Tips to getting your dream off the ground and in to fruition.
Step 1: Define your purpose and passion for your business. There are two types of future entrepreneurs. One is the individual who wants to be a business owner purely for the money. He or she doesn’t care what the product or service is to be, they just want to make money and answer to no one. The other is the professional driven by their passion and purpose to create a business. This is the individual who enjoys what they do and would perform their duties for free is needed. This is the entrepreneur that would press on when the times are tough and enjoy the fruits of their hard labor when times are good. For example; the individual who loves teaching children will usually find building a childcare business less stressful than the one who wants to open a daycare facility because of the potential tuition fees they could collect. The passionate professional would spend more time and money refining their craft to create a loving environment for every child enrolled while the other will not have the purpose driven passion for the children and only make decisions based on financial gains to protect the business. Sometimes in your professional walk, your passion will convert in to sheer determination to succeed. In business, you need more that a great idea to get through the first five to seven years.
Step 2: Develop your idea in to a strategic plan. Most business ideas have the ability to make money. Failure comes from lack of documented business plans. Your business plan is the guideline to success. It is the map to the hidden treasure that awaits those who follow their plan to precision. It is a living document that every entrepreneur should review or revise every year. Your business plan should forecast at least three years of planning highlighting your products/services, sales plan, action steps, goals and milestones, resources, financials and most of all, the revenues. Some very detailed business plans will include additional items such as: Marketing Plans, Funding request, Organizational management and Leadership team members. In any case, make sure your business plan is simple and clear on future accomplishments for the next 3 – 5 years.
Step 3: Find a mentor to help you in areas that you lack expertise. A good mentor will show you how to progressively build your idea in to a business. He or she should have the knowledge and bandwidth to point you in the right direction. Great mentors can save you time and money by eliminating rookie mistakes. Try and find someone who is familiar with tax laws, contracts, small business loans, other financial options and hiring protocols. Selecting the appropriate business structure could also be a good task for your mentor. He/she will understand the deference between a Limited Liability Company (LLC) and a S-Corporation. Making the wrong selection could affect your personal and professional tax requirements. This could be the difference of being taxed twice for earned income. Mentor(s) can help you identify Small Business Administration credentials that could help your business position itself better such as; Woman Owned, Minority Owned, Veteran Owned, Service Disabled Small Business, HUBZone and HUB Certifications. Many entrepreneurs qualify for government set aside programs that would jump start their business or allow for small loans to fund a project if they were familiar with them. Seasoned mentors will have that knowledge and can point you in to the right direction.
Step 4: Select the type of business you will have. (Brick and mortar or E-Commerce) Part of projecting your business success is understanding your business model. Selecting if your business needs a store front, office suite or online e-commerce package will simplify the early development of your business. If you are a brick and mortar start-up, you will need to know the best place to call home for your business. Understanding the customer census for that location could also be the difference of your business gaining traffic to the location or not. If you are considered an internet based business, you have to gain a strong knowledge of search engine optimization (SEO), website development packages, optional electronic sales tools and ad based advertising. Spending money on SEO tools will be more critical to your business survival than deciding where you will conduct your morning meetings. Successful electronic business owners typically work from a laptop but invest time and effort in to making sure their business is ranked high in google search queries. Selecting the wrong business model can kill your dream faster than you can blink an eye. Choose wisely.
Step 5: Apply for your Employer Identification Number (EIN). This is a specific tax number assigned to your business once you have officially registered your business name. It’s also known as a Federal Tax Identification Number, and is issued by the government. This is probably the simplest application because its free and accessible online. Your EIN number is like a social security number for your business. This process usually takes up to 10 days if you properly fill out your application online. Once you receive your new EIN, keep it close and safeguard it just like you would your social security number. You will need this information once you begin to take on new contracts, solicit opportunities and maybe once you have been awarded a bid.
Step 6: Get registered and apply for all licenses, permits for your market. To become a viable business you have to file for a local license. Some internet businesses may not require this step, but it is alway safe to go down to your local business registry office and ask. Certain businesses, like ones that sell alcohol or firearms, require a federal license and a special permit. Your local business registry agency will be able to review your business articles and help you select what applies to you and which ones don’t. Be prepared to make a payment, for some licenses require a fee based on projected revenues you provide on the application. Wait until you have registered the business before beginning. You don’t want to put your business at risk before you get the opportunity to start living out your dream. It is your responsibility to find out which rules impact your business and how you comply.
Step 7: Be prepared for a 5-7 year journey as the boss. The part you never see in your business dream is the amount of time and sacrifice it takes to becoming successful owner. In your dream, you only see the beginning and the end of the professional road. The reality of owning and managing a business is knowing your responsibility as a owner and the hard work it will take to get there. Meaning, if your business requires employees, you’re responsible for each of their careers. You pay their salaries, provide opportunities and its your responsibility to make sure the business is ran properly for sustainability. On the other hand, you are also responsible for ensuring the company continues to earn revenues. This takes a special person who is strong willed, driven and able to sacrifice their own personal needs to ensure the company continues to grow. Some may disagree with me here, but I’ve owned several businesses and there are seasons that you can’t predict. These seasons bring good and bad results no matter how hard to work. If you find yourself in a recession season, it could mean laying personnel off or having to source additional funds to make payroll. These are tough decisions no business owner enjoys. It’s your job to make that decision. Statistics show that most startups fail within the first year. Others say that most small business die within the first 5-7 years. I can speak from experience here. I’ve had two businesses fail within the first 6 years. Those were 6 very tough years filled with all types of scenarios. The unprepared entrepreneur who is naive can be a statistic, but those who prepared for the long haul, understand its part of being an entrepreneur. “Plan for adversity and live for success”.
Step 8: Know your financial limits. This is probably the best advice I recently provided a striving entrepreneur. “Know your limitations”. Don’t start a business without some capability to survive during the early years. Your personal financial status could ruin a good thing if you fail to have the ability to focus on your business. If you are married or have a family with children, make it a joint decision. Get buy in from your personal team. There is no worst feeling in the world than having your family suffer for your inability to produce in the business. Remember, the owners get paid last not first. Too many times I’ve seen businesses fail because the owners are taking away from the business growth only to stay afloat at home. There may be a few that can maintain that type of tug of war, but others don’t have the fortitude nor financial freedom to do it without killing the business. Your personal finances may be adjusted to allow you and your family to live comfortably but living outside your means during your start up period is not a good idea. Not only are your personal and professional credit worthiness at risk, but your personal relationships, as well. Knowing your personal financial limits will also dictate when its time to pull the plug on a failing business. Even though you feel your idea is the best, there still is the chance that your business will not survive. Never put your family or yourself in a position of complete failure. There is always another idea, another business venture and a good business model that will work for you. Just don’t put yourself in a predicament that will hinder you to continue your pursuit of happiness.
America is the land of opportunity. There are no limit to how many businesses you can have. Some business leaders have owned and operated one company for decades while others have a business portfolio the earn billions annually. I always tell other entrepreneurs that you don’t have to be a billionaire to live comfortably. In fact, you don’t have to become a multi-millionaire to have a great life. You just have to love what you do. If you need proof, find a successful entrepreneur and ask them about their journey. You will literally see the passion gleam from their eyes. If you spend time with them, you will hear about the life lessons that turned in to life changing opportunities. Just like the ones you read from Warren Buffet, Jack Welch, Apple, Microsoft, Ford and many others. These are the same life lessons that helped me turn business number 3 (SoComm) and business number 4 (Alltek Project Solutions & Integrations) around for me.
Good luck to all of you future business owners and I hope to read about your amazing story some day in Fortune Magazine.
—Scott A. Coulter, CSS/TCSC/MTC