Things to Consider Before Starting a Business
I‘m a firm believer not much is required to start your own business. You really just need to get out there and start making sales (read: revenue).
A business just needs customers. After all, a business without customers is no business at all.
Now, you can technically start a business with no money, but sometimes a little cash injection can move things along a little quicker.
In any case, there are a few things you should consider doing before you start your own business, no matter how you plan to begin.
Let’s look at a few.
Table of Contents
1. Brush Up On the Fundamentals
If you’re planning to start a service-based business, it’s probably a good idea to brush up on the basic fundamentals of your craft. You don’t necessarily need to be an expert, but you definitely want your first customers to be comfortable you know what you’re doing.
For instance, if you’re planning on starting a T-shirt design company, it would be helpful to:
- take a course on Photoshop or other design software
- test out and get familiar with different printing machines
- read up and understand what symbols, phrases, or art you can and can’t use
- investigate costs of materials and supplies, and what retail prices you can expect to earn on sales
What if you want to be a writer or editor?
Miranda Marquit, a freelance writer here at Part-Time Money®, recommends anyone wanting to start their own freelance writing business should take a writing class. She recommends:
- a community education class on writing
- auditing a writing class at a nearby college or university
Not only will this help you improve your basic writing skills, but it may even lead to a few business contacts and potentially a few gigs.
Getting in their and getting your hands dirty will also help you discover what you you don’t know so you can learn your craft even faster.
In addition to looking for training and classes, you could also consider volunteering or interning for a company who already does the work that will be required in your business.
2. Save More Money
Gary Christensen, who started a delivery service, says:
“If you’re not sure what you want to do, start by saving some money. Start putting some money aside. Start looking around. Start doing some investigating.”
I love this advice because one of the hardest things people struggle with in business is coming up with the idea for your business in the first place.
But, just because you don’t have the specific idea, it doesn’t mean you can’t start saving money for a potential business right now.
Having the cash ready beforehand also means you can act quickly on your idea and not have to rely on debt to get started.
In addition to saving money, I’d recommend having your personal financial details in order before starting a business.
The leaner you are on the personal side, the more freedom you’ll have to explore your business idea. The longer you can stick with your business, the greater your chances of success.
3. Test Your Idea
Before you hire a single person, purchase a bunch of inventory, or spend a ton on advertising, you should test out your idea to make sure it’s a winner. Not every business is successful, but you’ll have a better chance at success if you pick the proper niche, product, or service.
Steven Sashen, who started a shoe business, made his barefoot running shoes for just a few people before deciding it was a legitimate business idea.
Steven said,
“I bought the materials to make some for me and a couple other people, and about 20 more people said, “Hey I want those!” So, I made about 20 or 25 pairs. The last pair I made was for a local barefoot running coach who said, “You should do this as a business.” I said, “Yeah, I don’t think so. I’ve got other stuff going on.” He said, “Well, I’ve got a book coming out, and if you had a real business, like a website, I would put you in the book.”
Not only did Steven’s first few shoes prove he could sell more, it led to some free advertising!
Put a small piece of your business out there and let your potential customers tell you if it’s wanted.
Steven didn’t stop with his offline testing, either; he used Google’s Keyword Tool to determine how many people were already searching for his type of running shoe each month.
Turns out it was more than enough for him to have a market demographic to go after.
4. Learn the Legal and Compliance Aspects
Depending on the type of business you are planning to start (e.g. food service), you may need to check with State and Federal business regulations to understand how to meet compliance concerns and local, state or national regulations.
You may need know things like:
- licensing requirements
- bonds and/or insurance needs
- shipping fees
- tax considerations (state and national)
- allowable industry lingo & sales terminology
Now, before the idea of a high-priced lawyer scares you away from doing business, consider the strategy used by Cara Bergeson, who started a custom t-shirt company.
Cara says:
“The Oregon Bar Association offers free to very little cost consultations for new business owners, so I spent $25, spent an hour with a lawyer on the phone giving me advice and stuff, and then I just took it from there…”
In addition to cheap legal advice, you can usually find free help from the Small Business Administration through their SCORE program, or use Just Answer; you can get advice from a lawyer for your specific question anytime, day or night.
It’s always better to be cautious, but don’t let it stop you from beginning, either.
5. Consider Your Family
Finally, think about how this new venture is going to affect your family. I asked a friend who recently started a real estate business on the side and he said this should be one of your biggest concerns before you get started.
Not only will you be spending money on this new project, but you’ll also be spending all your extra time to get it off the ground.
This means potential time away from family.
If you already have a full-time job and you’re considering a business of your own, you’ll certainly have to skip out on some family time.
Talk to your spouse about any new business ventures before you get started to ensure you’re both on the same page.
What are some other things to do before starting your own business?
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I would ad network and learn from the leaders in your industry. Why reinvent the wheel when already successful businesses in your space have some proven strategies and processes?
I would ad network and learn from the leaders in your industry. Why reinvent the wheel when already successful businesses in your space have some proven strategies and processes?
@buckinspire Oh, man, I totally agree with this. Many entrepreneurs tend to work in a silo. I do, I know. The cool thing about most business-owners I’ve found though is that they love to talk shop and share their knowledge. I always recommend any potential entrepreneur take a potential mentor to lunch and pick their brain about things.
I would ad network and learn from the leaders in your industry. Why reinvent the wheel when already successful businesses in your space have some proven strategies and processes?
I would ad network and learn from the leaders in your industry. Why reinvent the wheel when already successful businesses in your space have some proven strategies and processes?
I agree with you Phil – just get the thing started and do some tests.
Unless you are independantly wealthy, the new business should be something you can start up on the side. If not – you probably can’t afford to start it. In that case, think up some other ideas.
I’ve been doing some research for a new biz idea and the amount of resources out there on how to start a new business are incredible. You could burn through all your start up capital just reading it all. 🙂
I would have to disagree. I think there a good many things that need to be done before starting a business. There are a number of things that need to be in place even before opening the doors so to speak, unless it’s simply a side gig that isn’t going to be a serious or full-time effort. Everything from deciding on a legal structure to getting all of the necessary licenses, setting up bank accounts, marketing materials (website, biz cards, letterhead, social media), developing a business and marketing plan (if there is a need for investors), networking, the list is pretty long.
I’ve seen clients come and go in as little as a few months simply because they threw an idea together, jumped in feet first, but didn’t properly plan for anything along the way. Most of them thought it was just as easy as “if you build it they will come”, but found out the hard way it couldn’t have been more opposite.
@Eric J. Nisall I definitely come from the side-gig mentality. Every business I’ve ever started has been on the side, so that’s the way I tend to think. Most people, I would think, have some type of job while they are starting their business. Therefore, I don’t want the barriers to building a business to be too high. Nor do I want them blowing a bunch of savings just because they think something will work. Just get in and see if it works (test it) without investing a lot of time and money. If you already have money and time and are just looking for a business, then yes, I’d say a full plan could and probably should be executed.
@ptmoney I got you. My only concern would be if it did turn out to be something more–it’s pretty difficult to go back and take care of those types of things.
@ptmoney I got you. My only concern would be if it did turn out to be something more–it’s pretty difficult to go back and take care of those types of things.
I think the most important thing on the list is saving up money. Many people tend to jump in when they are not financially ready and often underestimate how much money it takes to make a new business successful. With poor cash flow and low emergency savings, most business dies right out of the gate.
I think the most important thing on the list is saving up money. Many people tend to jump in when they are not financially ready and often underestimate how much money it takes to make a new business successful. With poor cash flow and low emergency savings, most business dies right out of the gate.
As bad as it may sound, I would also add – have a plan B and an exit strategy, at what point should you give and get out. It is easy to fall into the sunk cost hole.
Ask yourself if you’re ready to be the boss.
That’s huge.There is definitely a shift in mindset that needs to take place. Just because you’re good at a skill, it’s not a lock that you’ll be good running the business that serves up that skill. Two different beasts. I recommend reading the E-Myth by Michael Gerber: http://amzn.to/u0GBvs for anyone wanting to make the shift.
How is that book? Embarrassingly enough, I’ve had E-Myth Revisited sitting on my bookshelf for over a year and haven’t even started reading it yet. 🙁
@Jeremy Vohwinkle I did the audio book. Loved the concepts. The analogy went a little too far, but the core concepts are great for any ‘practitioner’ wanting to become an owner. Have I implemented a lot of the teachings? I’m getting there. 😉
@Jeremy Vohwinkle I did the audio book. Loved the concepts. The analogy went a little too far, but the core concepts are great for any ‘practitioner’ wanting to become an owner. Have I implemented a lot of the teachings? I’m getting there. 😉
@Philip Taylor@Jeremy Vohwinkle
I loved that book so much I reviewed it and am planning to buy it.
http://www.moneysmartsblog.com/starting-or-running-a-business-e-myth-revisited-book-review/
It won’t apply to every entrepreneur or business model, but I strongly recomment checking it out.
Good points! I would add asssess your risks. I always have a plan B.
This is a good one. Nobody wants to envision their business failing, but it happens more often than not, so being prepared and having that exit plan or backup plan in place can be crucial.
@Jeremy Vohwinkle Hey, your comment came though! 🙂 i say have a backup plan for success too.