Game Plan for Starting a Small Business
When I first became a financial planner, my specialty was small business owners. I also headed my local Chamber of Commerce’s Small Business committee. Over the years, I received a lot of excellent business advice. Below are the top five most impactful business tips I’ve heard:
Get your personal financial house in order
If you plan to leave your job, create a budget based on your new income. Live on your new budget for three to six months before quitting to gauge if you can live on the new budget. Have at least six months of income saved for household emergencies. In my first six months of business, I had over $5,000 in unexpected expenses. My emergency savings account was a life-saver. Pay off your debts, particularly your credit card debts.
Get buy-in from your family
Starting a business is going to be a sacrifice for everyone in your family. Starting a business is an emotional, relational, time, and financial strain on your family. If any of these areas are already suffering, business ownership at this time may make it worse. Discuss with your family your new work hours and any changes that may impact your family.
Take the time to research
As a former head of a Small Business Committee, I saw so many businesses come and go because they did not study their business idea. Just because you think it’s a great idea does not mean people will pay you what you think your idea is worth it. SCORE is a free mentorship program for business owners. A mentor can save you thousands of dollars in mistakes by helping you navigate business decisions.
Create a business plan
I saw many businesses fail because they did not have a business plan. A business plan can help you do the following:
- Assess how much money you would need to start your business (it’s always higher than you think)
- Help you estimate how long before your business breaks even (it’s typically longer than you think)
- Decide if your business location is ideal
- Market your business to get clients
- Luckily you can tap into a lot free or low-cost help to starting and maintaining your business such as SCORE, SBA, Small Business Development Centers, and your local chamber of commerce or business association.
Consider using what some call an upside-down business strategy. The model takes advantage of the low cost and ease of creating an online presence through social media and a website to build an audience of your future customers. The low cost allows you to refine your message and understand what your audience wants. Once you create an audience of people who know, like, and trust you, you can confidently develop products and services because you know from your audience what they want. This model is less costly and risky than the traditional way of starting a business, which is to start with the product, then try to create a message.
No matter what method you use, the important thing is to start from where you are and just get started.