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30 Do’s And 20 Don’ts In Starting A Small Business

Small scale businesses are easier to set up compared to the middle or large scale businesses that require more time, feasibility reports, ad...

Thursday, January 31, 2013

How To Start A Small Business

How do you start a small business? I firmly believe there are still many opportunities to make millions selling “picks and shovels” in whatever gold rush is happening today. Here are some ways to find your idea.

Improving an existing product or service is the surest and quickest way to success. Brand-new products or services are usually very risky.

Don’t look for get rich quick schemes. If it sounds too good to be true, it probably is. Look at the long-term perspective.

Decide to be excellent at whatever you do. This provides more leverage than any other factor.

Go to trade shows. If you’re looking for an idea, just start looking at what is being done in that area.

Check products being sold in foreign countries. Even in our global economy, it’s estimated that 80 percent of products are never sold outside the country where they’re produced. Years ago a gentleman saw a wheelbarrow advertised in a magazine. It was fiberglass and plastic, superior to what was then available in the United States. He asked to be the U.S. distributor. He took one sample wheelbarrow to a home and garden show and received over fifty thousand orders. He did not invent it, did not patent it, he simply asked to be a distributor for an existing product. With only a $5 profit margin, that’s $250,000 profit!

Pay attention to passing fads and trendy ideas. People have made fortunes with the Pet Rock, hula hoop, politically related T-shirts and bumper stickers, sports theme items, and other fads that present a short window of opportunity.

As you travel... look, listen, and learn. Orange Julius started on the West Coast. The guy who recognized this creamy orange drink as a growing phenomenon brought it back to the Midwest and made millions.

Make sure you find something you believe in, something you would buy yourself and use yourself, and would sell to your best friend.

Share your ideas. Don’t be secretive. Get input from everyone you know. Ideas are a dime a dozen. But the person who puts a plan of action together is the only one who will benefit.

Eighty-five percent of what you need to know about running a successful business you can learn from running a successful mail-order or eBay business. You can experiment with nearly all the necessary components of a traditional business and adjust your work model as you learn.

That said here's some more practical tips ...

1. Stick with what you know. If you see a business opportunity for installing solar cells on homes, and you don't know the first thing about installing solar cells on people's homes, it's not a business opportunity for you. Learning a new occupation "on the job" while self-employed is a recipe for disaster.

2. Do your homework. Clearly establish the level of demand for your proposed products &/or services. Identify your competition and determine what point(s) of competitive (dis)advantage you have vs. each of them individually. Can you carve out and hang onto your share of the market?

3. Crunch the numbers. What will it cost to launch your business? How will you obtain those funds? What will your revenue and expenses look like for the first 1-2 years of operation? Will it be sufficiently profitable to be sustainable? Can you handle costs or losses if it doesn't launch as quickly as you anticipate? What's your exit strategy at 3-6-9-12 months?

4. Do the marketing. Based on all of the above, how will you package and price your goods and services? Where's the best geographic location to establish your business? How will you promote your business?

5. Using all of the above, put together a comprehensive, clear, business plan, then plan your work and work your plan.

The next step? Jump in and do it!

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