I sort of co-oped another thread with my own interests so decided to make some small amends. Plus, this might be a timely thread given the current world economic climate. Currently I'm in the process of trying to start a business and don't mind sharing some general observations, but I won't go into specifics. I also get the impression that quite a few MN posters are knowledgeable on the subject. This post, however, is really directed at people who don't have much past business experience.
First off, I'd make an analogy. Haven't being in a business in the past, although self-employed previously, I'd liken the initial phase of starting up a new business to being a bit like reading a manual on how to swim but not being able to practice swimming before hand. I have a fella in the US kindly giving me advice and his last e-mail was short and sweet. Advice time is over. Just do it. You have to spend some money on whatever product/serivce strategy you've devised. Don't be afraid to fail. Easy for him. But this kind of encapsulates the process.
1. Study the market and the competition. What's their prices for products/services? Can you figure out why they're successful? Most of all can you provide a product/service that can compete in the marketplace? What is special about your product/service? I can't emphasize this enough from my limited experience. Price is nice but it will not gaurantee success alone in many cases. For example, I know of a fella, again the US, who made a couple of million from hairdressing. He took a basic course and used profits from a hot-dog stand to open his first shop. Was he a brilliant hairdresser? Was he feck. He had the patter. He told me he sold gossip and knew his market which was middle class Italian-Americans. Once he had a blueprint, he just repeated it about a dozen times. He then sold the profitable shops to make his first few million, and then he went into home improvements. Hotdogs to hairdressing to home improvements. A fairly improbable way to millions but the man knew he had to have, as he would say, "an angle" to make profits. He of course wanted the highest price for any service he rendered but he always had a long term plan in place for a given enterprise. He'd also failed at quite a few ventures; a nite-club being his biggest failure as he couldn't cope with drunks, being a pioneer himself.
2. Don't ignore govt regulations, taxes, etc. I personnaly know of a highly successful lady who lost her business because she didn't keep her taxes in order. An accountant or very good book-keeper is important. Don't be afraid to interview several accountants and tell them you are doing this. If an accoutant is taken aback by your questions or process, you can be fairly sure she/he isn't right for you. Also ask about start-up packages for new businesses as they are cheaper and don't tie you into binding agreements. Don't sign any agreement that will bind you into a two year deal, for example, where you end up paying for accounting services but your business has gone down the tubes.
Health and safety are real concerns; especially in a manufacturing context but don't ignore the rules in a service industry either. While the plethora of rules and regulations can be annoying and somewhat time consuming, they can be used to your advantage for quality control.
If you have employees, get workers compensation insurance. If you have customers coming to a premises, even if its your home and you might only get a few people in during a given year, still get liability insurance. When you're in business, people tend think of you as a business and not a person. Most of all, they think of money. For a few Euros a week, you can avoid future headaches. One fella who worked at home and had no customer visits was still sued by a workman who came to do some work on his home office.
3. KIS. Keep it simple. Whatever your enterprise is going to be try and keep the process simple at the beginning. Don't try and make your product/service so unique, for example, that it's costs quickly become uncontrollable. At the start-up phase, and I dare say later on, you're always juggling what you want with what you actually need. Simple solutions and processes are almost invariably cheaper and easier to monitor.
4. Flexibility/Research/Info. Really offshots of #3. You have to be prepared to change your plans; but once you've decided on the best way forward, it's time to spend the investment money and leap. For example, I have worked in construction in the past and know all about mitre, band, rips saws etc. However, I just couldn't find a machine that would cut full-proof 45 degree angles thus cutting down on wastage and lowering production costs. (Automation is just too expensive, to my mind and pocket, in launching a start-up product.) While sitting in the sitting room one day I just looked up at picture and saw the most perfect 45 degree angles one could wish to espy. I called the SU (spousal unit) who knew a picture frame manufacturer in Donegal who was happy to help and it now trying to purchase second hand machinery on my part.
Any and every resource that increases your knowledge is indespensible. You may have to grow a tough hide but don't be afraid to use any resource or ask any question(s) that makes your enterprise that wee bit more prone to future success. The worst that can happen, as long as your mannerly (sales ability), is that someone will tell you to feck off. Big deal. Every once and while a tidbit of info may come your way that just might pave the way to success or divert you from disaster.
5. Focus & The Plan. I think you almost have to be obsessed with what you wish to do as you begin a start-up biz. The research alone into my ideas have taken up countless hours and I've spent quite a small chunk of change at this stage. Focus also entails zeroing in on the essential. If you're only thinking about making the first million or the mercedes you're going to buy, you're only creating artifical hurdles. Even if your motives are pure, such as being able to hire employess, you're still creating artificial hurdles. Instead, you must be focused on how to make money - how to turn a profit. When you make profits on a consistent basis you can think about other factors, but even then you mustn't deviate. You must do what needs to be done not what you want to do. Having employess only the have the business fold because your business plan was ill conceived doesn't do favours for anyone. In a sense you must be ruthless in your planning and execution in order to be kind.
I've been assured by a mentor that a start-up that has a detailed buiness plan (e.g. cost projection, future income projections, mission statement, etc.) has a far better chance of success than an enterprise without one. Tbh, I though a piece of paper with makey up numbers was just plain useless. However, as I researched, I've come up with some pretty firm cost numbers. Suddenly, I know what my break-even is. I'm getting an idea what kind of profit margin I need. I have a good understanding of how to price my product against the competition. The process has made me make adjustments and come up with new ideas or angles. Enlightening stuff. I'm also going to apply for a loan I know I cannot get nor do I particularly want. Why? Because I want the bank manager to keep the business plan on record. If I can show him/her (actually someone down in Dublin) that my business plan was based on sound numbers and, even though items on the biz plan may change dramatically in the future, that I had a viable idea/plan and was able to manage the business through change. It might just give me a chance for funding in the future if I need it. It's what biz gurus call planning for success.
6. Finance - At the moment, unless you have your own sources of finance, you won't get a loan. There are very few grants available and the competition is fierce. I purposefully didn't look for outside finance and I'll be doing everything on a shoe-string budget. On the plus side, my discipline will have to be extraordinary. One bad decision could/will collapse the business plan. On the negative side, one small slip-up will cost me the business; but I won't be in debt in a big way.
Going back the swimming pool analogy. There is a shallower end to the pool but the water still covers your head. If you jump in the shallower end, like me, you might be able to bob for air for awhile as you learn to swim. Some ventures require a considerable capital investment and you're in the deep end from the get go. Either you sink or swim. In any case you'll, more than likely, you need to start treading water very quickly.
Like I said earlier, I won't go into specifics on my ideas or products but will be very happy to supply any information on the process if anyone thinks it would be helpful.
In my own case, I've completely flip-flopped several times over the last 48-72 hours. I have a slight seasonal variability in my proposed product and should have had it produced by now. So there is yet another change in plans. For example, my SU who does purchasing for her company will largely have the Christmas stock purchased by the end of this month! They may buy some items right up till October but the plan and bulk of purchases is nearly complete for the December selling season.
Good luck to anyone planning a new start-up business venture.
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