Starting A Business The Right Way

It is perhaps the true “American Dream”: to leave your job working for someone else and start your own business. The idea is that not only do you have more control–over your time commitment, pay, the types of customers you deal with–but it also enables people to engage in an activity they actually have a passion for. However, just having that passion is not enough to make a venture successful. It takes thorough planning, researching all of the available resources, and a major time investment. The following is an outline describing several key steps that need to be considered when making the leap from employee to employer (in no particular order of importance since they are all important). The planning stage is perhaps the most important of the entire process, as these decisions will affect everything that follows.

 

  • Choose something that you have a passion for. This venture is still a job, and you will be less likely to put forth the requisite effort and care if you are not emotionally attached to the business.
     
  • Never just decide one day to quit your job. You need to have reserves or cash flow to cover personal as well business expenses in case it takes longer to establish a customer base and start turning a profit.
     
  • Do your research into the market you are looking to get into. Unless you have a new invention or can revolutionize a current process, you need to find a niche market in which you can differentiate yourself from every other similar business.
     
  • Always consult a legal professional, preferably one that specializes in business start-ups or an accounting professional. They will be the best source of guidance when it comes to selecting a business structure and naming issues, as well as state and local licensing issues.
     
  • Stick to what you know best and do not try to do everything yourself! If you are not good at handling finances, then hire an accountant or bookeeper. If you are not graphically inclined, then hire a design firm to create your logo and marketing tools. It is always cheaper to spend the money and have it done right from the beginning than it is to fix a problem.
     
  • Do not rush. Take your time and make sure that everything is to your specification. You need to be able to 100% ready for business from day the doors first open.
     
  • Network. Tell everyone you know about your business. Word of mouth is the cheapest and most effective form of marketing. Also solicit their opinions on everything from the name of the business to the logo design to the promotions you will be having. Having outsiders who are less biased critique your business leads to more honest answers and will most likely reflect the public’s opinions as well.
     
  • Make sure to budget enough money for advertising & marketing. Even if you are running a business out of your parents’ house you want to put forward a professional image, not one that is based on a free email account, marketing materials with another company’s logo and information imprinted on it, or a
     
  • Have patience. Success is not an overnight occurrence, and generally will take much time, effort, and work.
     
  • Talk to people who are successful in the industry you are looking to enter (although try to choose people who you will not be in direct competition with). Try to pick their brains as much as you can without seeming to be intrusive. Many successful people are more than happy to share their stories.
     
  • Join professional associations, the local Chamber of Commerce, networking groups. Form strategic alliances with other who offer similar yet distinctive products or services to gain mutual benefit.
     
  • Don’t be afraid to take calculated risks, just take care not to be too reckless.
     
  • Make sure to get the proper insurance. Business liability and error & omission insurance are quite necessary in many professions. And do not overlook property and business interruption insurance which will take care of lost revenues in case of natural disaster or other even that causes you to vacate the property.
     
  • Above all else, surround yourself with positive people who will support you and your ideas! 

 

This list is by no means complete, and in my estimation can never be considered complete. There are just too many things that need consideration, and everything varies by experience level and industry. This is just a guide.

Bonus tip from Hitachi Capital: Remember that at the end of the day the bottom line is what matters the most, download this 7 point cash flow guide to learn how to effectively manage your finances. If you’re feeling lucky, enter the Inspired Cash Flow competition for small businesses for a chance to win funding free of charge for 12 months.

About Eric J. Nisall

Former NY'er, accountant & business consultant, founder of GreenBridge Advisors. Blogging about personal financial, small business topics, and other fun topics at DollarVersity. Fan of the NHL and everything hockey! Follow me on Twitter, Facebook, and on Google+

  • http://www.carefulcents.com/ Carrie Smith

    “It is always cheaper to spend the money and have it done right from the beginning than it is to fix a problem.” AMEN! I’m a big believer in paying people, or finding help from professionals if I don’t know how to do something. I can really screw it up if I don’t know what I’m doing, and fixing it can take way more money and time than just doing it right.
    Networking is a big key, as is looking professional. No matter how “mom and pop” the business might be, it’s still important to put forth the effort and look your best. And your business should handle customers and people professionally too.

    • http://www.dollarversity.com Eric J. Nisall

      There are just so many little things that people don’t even realize when it comes to starting and running a business, that there’s really no way to spend enough time on each task without taking time away from the main purpose–the business aspects that bring in the money.

  • http://twitter.com/retirebyforty retirebyforty

    Oh man, that’s a lot of work before even starting anything. It’s a wonder anyone start a business at all!

    • http://www.dollarversity.com Eric J. Nisall

      It may look like a lot of work (and it really is to do it the right way), but formulating a plan and listing everything needed to start, as well as outsourcing certain tasks, makes thing much easier. Plus that’s also the reason I say that not everyone should be running a business–many people have the skills to do a job, but to be in charge and responsible for the overall operation of a company is something completely different.

  • http://blog.familymoneyvalues.com Marie at FamilyMoneyValues

    Also, consider taking a Fast Trac New Venture or some other class that helps you get started with your business idea, test it out and then develop it.

    • http://www.dollarversity.com Eric J. Nisall

      That’s odd, I wrote a response last night, and I don’t see it. Maybe I’m banned from commenting on my own site?

      Anyway, any resource should be explored. Even if it turns out to be a bad one, at least the effort to learn was made. I never heard of that company before, so I quickly went to their site. The first thing I noticed (and quite frankly the only thing I can clearly remember) was the 300,00 businesses that were started from the program. I would be more interested to see how many last beyond 1,3 and the all-important 5-year mark. That would really tell people how successful and reliable the program is.

  • http://untemplater.com/ Untemplater

    Nicely put.  You lay out a lot of solid building blocks in this post.  Starting a business takes a lot of work and if people are scared off by these steps they’re going to have a hard time getting their business off the ground.  It takes a lot of hard work and dedication to be an entrepreneur!

    • http://www.dollarversity.com Eric J. Nisall

      That it does. The key is to be organized, and have a plan of action. Without those things, the task gets much more difficult. And, people have to learn that they simply cannot do everything on their own, and will need to get help in the weak areas in order to concentrate on the areas that are true strengths.

  • http://twitter.com/smartfamfinance Shaun Fowler

    I’m a big fan of business plans. Not because you need one, but because if you know enough to put one together, you probably have researched enough to start a “likely” successful business.

    • http://www.dollarversity.com Eric J. Nisall

      I second that Shaun. I will say, however, that if you are looking to obtain financing or venture capital funds, a business plan is a necessity.

  • http://www.mightybargainhunter.com mbhunter

    Excellent point about not quitting your day job until you’re ready.  Bird in the hand, and all that.

    • http://www.dollarversity.com Eric J. Nisall

      I’ve personally seen a guy start 2 businesses in the last year and they are both defunct now. It was mainly due to his inability to take direction and advice from others and he ended up trying to do too much too soon and ran out of money, but for someone like him, continuing to work may have been a benefit since he now has to start from scratch with the job hunt. That and the fact that he has no money coming in to support day-to-day living much less start a third business.

  • http://onecentatatime.com Onecentatatime

    Taking risk is utmost important to get some rewards. Good compilation Eric. Hard work and patience is key ingredient in almost anything good in life.

    • http://www.dollarversity.com Eric J. Nisall

      If the risks are calculated and the proper planning is involved, then I can’t disagree. but if it’s one of those things that just pops into someone’s head and no research or planning went into it, I’d run like the wind in the opposite direction.

  • http://twitter.com/prairieecothrif Miss T

    I agree with One Cent. Risk is key to making positive change. You don’t always know how something is going to turn out but you always gain knowledge from the experience which can help you in trying again if things don’t pan out as planned. Work hard, try new things, and don’t close any doors. That is my motto anyways. 

    • http://www.dollarversity.com Eric J. Nisall

      And don’t burn any bridges! It’s important to keep people in your network in case you need them for assistance or as an investor, or as a customer. It may be tough to do, but it’s really quite important not just in business but in almost all aspects of life.

      ****I said almost all aspects because I hardly ever keep any ex girlfriends in my life!***

  • http://mintingnickels.com/ Lindy Mint

    These are all great tips.  Although, quitting the day job one day out of the blue is quite tempting at times.

    There is a lot to consider when starting a business, and if you’re a person who likes to do things yourself, outsourcing could possibly be one of the hardest parts.

    • http://www.dollarversity.com Eric J. Nisall

      I don’t think the quitting out of the blue is only for those starting a business :-)

      One of the biggest thing a business owner or a manage/executive needs to be able to do is delegate responsibility which is exactly what outsourcing technically is. When it comes to a small business, it becomes even more imperative since more time needs to be spent on the activities that actually bring in money, so they either have to learn to let go, resign themselves to the fact that they will be wasting a lot of time, or quite possible face failure.