Learn From My Experience - First Year Tips For Small Business Entrepreneurs
By Keith M
The Number One first year tip - it's ALL about finding customers and keeping them happy
Whether you are at the feasibility, seed, or launch stage, you need customers!
If someone is showing interest but is not asking about prices, then you may have a new hobby, which is nice, but not a business.
Why? Ideas and plans are a dime a dozen. Cashflow is King. A potential customer is proof positive you may have found a genuine demand or gap in the market - but only when they start talking price.
A vision means squat without a plan for customers.
"A customer base equals capital"
Attracting investors will be much easier if they can see you are already generating a cashflow.
Also customers will attract people interested in working with you - and eventually you will need a team to go anywhere significant.
A customer means you are not dreaming!
Don't wait for qualifications
You could be forgiven for thinking that in the 2010's you need a string of qualifications and / or an MBA before making a move. It's not the case. Examples abound and if necessary you can hire to cover the gaps. Rather, try to emphasise product, ideas and team.
Which book learning are we skipping over here? What are some of the nice to have's you might defer?
In the initial stages of a business there are marketing skills - be content with seeing the original gap and creating a product to fit. Then finance skills - skip high finance and stick to the basic organisation of personal and business finance to cover risks, and finally time management skills where the essentials can be mastered quickly.
Later in the development phase we have operations - leadership, management, IT, property, culture/psychology, teamwork, loyalty, communications and regulations - the list goes on.
While it may seem heresy to some, the fact is there are many successes in business who started young with no management training.
Starting out under the protection of a franchise is a seductive option. Beware! While it may be a way to start-up with less risk, pay particular attention to:
� The franchise sale
Franchise operators are very good marketers - of their franchises. Be wary that you are not sucked in too much by the promises and pictures. Seriously, it's their job to sell you, just make sure they have a viable plan and you can sell their product.
� Your independence
The bottom line is that you have decided to become an entrepreneur, for reasons which quite likely include working for yourself, and by signing up with a franchise you have immediately given that independence away.
Will you be happy working for a head office? How much input to the business do you really have? Have you just bought yourself a job?
Take a real close look at your marketing plan
How are you going to find and reach customers? Your first job is to run like mad just to find them:
First, are you in an active sector and do you have a ready path to market? Where are you sourcing your leads - today?
Watch out for your own psychology. When starting out you may want to just go with the first half decent opportunity you come across. Relax; try to look at things objectively.
Beware of the "1% of the market is huge" syndrome. Yours may be a billion dollar market, but how do you get any of it? What do you think the competition is doing right now?
Any idea of the cost of acquisition of a new customer? Will your model develop repeat customers? If not you will be forever selling, and this is not a good place to be.
Most forms of marketing except word of mouth are very expensive. When starting out there is no doubt the best marketing model is word of mouth.
Branding. Despite the hype it's nothing new. Don't even think about mega-brand style exposure. A start-up is about a reputation, person to person sales and keeping a handful of customers happy.
What is the shelf life of your idea? How are you going to protect it in the internet age?
How smart is the business model?
A business model is the way we do things - how we find and reach customers, differentiate the business from the pack, price, sell and deliver our product.
But there is more. Other desirables include a residual structure, one that compounds growth, and which is leveraged either in time (employees) or money (loans).
Is it going to be a dynamic business or a job?
Realistically - are your finances strong enough for the first year or two?
Being an entrepreneur is a gamble and you must be prepared for the worst if it happens. How do you view losing money? Perhaps try investing on small bets in the stock market and see how it feels before investing in your own ideas.
Don't get into debt you cannot handle. We should be bold but not take risks. Avoid betting your lifestyle, limit the investment to what you can "afford to lose", then do everything to make sure that does not happen.
Entrepreneurs should always have backup plans. Not everything will work by any stretch of imagination.
How many hours are you working?
Have you really planned your diary? How will you fit everything in? Not all of us can survive on 4 hours sleep per night.
Remember the working rule - hard and smart.
And if you do work all hours, what is your effective hourly rate? Planning any time off?
Do you have a good business partner?
If you aspire to anything other than a micro business, you will have to think "team". The synergy gained outweighs potential downsides. While a committee of one gets things done, eventually you need others in your corner.
Are you ahead of trends?
No business can ignore trends. Try to have an eye on the picture three to five years ahead.
As a qualified accountant with a strong interest in new ventures Keith is well placed to advise on building for future growth.
He's an expert in Excel and financial modelling. Find out more at http://www.teamasiaconsulting.com or http://www.introofferteamasia.com
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