You're starting a business! It will be one of the toughest and fulfilling experiences of your life. I have started several businesses. I've been through all the trials and tribulations of owning a business. Here are five factors that I believe are critical to success when starting a business.
Starting a Business: Five Key Steps
Get your concept in motionYour most valuable tool is research. Learn everything you can about what you are going to sell. Know your customer! When starting my personal services business I did research on several trades' sites including About Retail Industry. Sue Higbee, founder of Sue's Errand & Mobile Notary Phoenix, said she discovered her business model through research on iVillage.com and built a successful business based on the needs of homebound people and busy companies.
Ask for help
Many people highly recommend the Service Corps of Retired Executives (SCORE), which is a volunteer organization that helps new entrepreneurs with advice regarding starting a business, from business plans and modeling to funding. Before setting up my business we met with SCORE to understand how
to conduct business in Phoenix.
Business planning
Put your thoughts about starting your business on paper. My businesses couldn't exist without a business plan. Jen Diebel, a partner in NetworkNetPlay, a Phoenix venture, stresses, "we believe the business planning process is essential. The structure of a business plan helps assure that we haven't missed any of the key elements that could affect the success of our company in the short or long-term. It limits risks."
Funding, Funding, Funding
When starting a business there are basically three ways that it can be funded: from your own money, venture capital, and/or from loans. To obtain funding you must be able to show how money is made and spent. Understandably, it can be difficult to pinpoint cash flow details with accuracy when writing a business plan for a new business. Calculate to the best of your ability. Your business plan serves several purposes, not the least of which is to show lenders how they will be paid back if they grant your business a loan. Investors, who take on greater risk with start-up ventures, are looking for higher returns than they can get by
investing in a more established company.
Vivian Valenty, president of VB Cosmetics Inc. based in Phoenix, has great advice for people who are interested in starting a business. "It is easier to obtain funding when you have assets to use as collateral for the loan. VB Cosmetics Inc. grew on revenues generated from its business. Only after being in business for six years did we solicit loans to finance a diversification effort and equipment purchase for expansion. A track record of business profitability, company's cash and personal assets used as collateral were factors that led to funding."
Love what you do
Business is not only about money; it is also about your passion. Starting a business takes a great deal of energy. I founded one of my businesses, Accents By Allison, because I love great clothing, but mostly I love helping women look their very best. Vivian puts it so poignantly when she says, "I would be in the nuthouse from stress if I was not passionately in love with creating products that help people look good."
Obviously every situation is different, and there is a lot of information to be gathered and work that must be done when starting a business. These five steps are pretty basic, but they were fundamental to getting my company up and running successfully. I hope they are useful to you. Good luck in your new venture!
