So you are ready to start your first business. The first step in creating a business is to find a business you want to start. Ideally, you should do something that you are good at and you enjoy doing. Most people will tell you that if they really love what they do, it’s not considered work. I love building web sites and being creative and transforming someone’s online presence. This will be the most complicated part of your journey because once you start and focus on the business, it should be something that you feel like you are good at and having fun with.
SELLING A SERVICE
One of the easiest ways to start a company is to work in a field you were already working in if you have a job. In other words, let’s assume you’ve been painting houses and working for someone for the past five years. Over that time, you have met other people in your field (who you could hire later) and you have been learning all of the ins and outs of how to paint a house professionally. If you decide to start your own business, you can start promoting your services to family and friends and work nights and weekends on projects for yourself. If you have learned a lot about painting and you do great work, you will get referrals to grow your business very quickly. On the flip side, if you are not good at what you do you will run into problems and people will not be happy and you could end up facing legal issues. You absolutely must work on a basic tenet of owning a business; under promise and over deliver. If the job is going to take 3 weeks, tell the client it will take 5 weeks. They will be amazed if you complete the projects 2 weeks early OR it gives you time in case of an emergency.
SELLING A PRODUCT
If you decide you want to sell a product then you need to start with figuring out what your product is going to be, how much it cost to create and what other competitors are doing and how they are creating the same type of product. You need to understand what competitors are charging for a product that might be similar to yours. Make sure you are not infringing on someone else’s idea or using a name that is already trademarked (see below). The most important question here is “Is your product filling a need that isn’t out there or is it something people might want, but don’t need?”
If you have a product that everyone needs, it will be easier to sell. For example, I have a friend who makes candles. The process of making candles can be very hard as far as keeping the candle wick straight. She invented a very simple tool to hold the candle wick vertical while pouring wax around the candle. It was a simple invention (patent pending) that all candle makers could use. Based on this invention, she checks off some boxes:
- Focusing on a targeted group of people (albeit small) that make candles
- Creating a product that people need
- Creating a business with recurring revenue because the more candles someone makes, the more of this little tool they need
Not every product needs to be invented, but by finding a niche and creating something that fills a need will go a long way to building a successful business. On the other side, you need to look at where we are headed as a society. Creating a cleaning product for DVDs is probably not the best use of your time or money.
BUSINESS NAME AND TARGET MARKET
Once you decide what type of business you were going to start do you need to figure out a business name and what kind of market you are targeting for your business. This can be complicated, but you need to do some research here. The beautiful part of today’s environment is that you have the Internet at your fingertips and you should be able to research online if anyone has a product similar to yours or even better a business name that is similar to yours. The worst thing that can happen is that you come up with a business name and start marketing to thousands of people and then you find that there is another company with the same name.
I was a co-founder of a company that created an alcohol product where are we sold shots of alcohol in little pouches. We called the product Pocketshots. After branding and logo design and manufacturing, we did a search on the US Patent and Trademark web site and found there was another company with the exact same name! Unreal. We had to redo everything we had done from the name to the logo to all of the product packaging. It was a very brutal lesson to learn and a very big waste of money for us. It set us back about 6 months in our business.
There are a number of online resources you can use to search for names and companies and products that are trademark. The website where you can search is https://uspto.gov. Here you can search for company names and product names and industries where people have a trademark for their products and services.
DETERMINE YOUR TARGET MARKET
After you come with the business name, you need to determine who your target market is. This is another huge part of your business plan. My advice is to find a business that caters to a specific audience. If you are selling jackets to a large audience, on one hand, maybe your jackets appeal to “everyone” and you have a larger market to target. However, the more broad your market is, the more competition there is. If you are only selling jackets to Biker Gangs, it is easier to find where those groups are via facebook groups or conventions or magazines and create marketing directed at them specifically.
Your target market will then determine how you want your business to look and how marketing materials should be designed. If you are targeting people that are very wealthy then your design and branding must be on par with exquisite types of companies who cater to the same market (like Ritz Carlton, Tiffany, etc). On the flip side if you are marketing to surfers or beach bombs then your branding should be more sports driven or “beachy”. Again, you need to do your research and look at companies who are targeting to the same group that you are marketing to and that will help you to develop your marketing and branding strategy.
This is an important step because changing your logo and your color scheme and your marketing overall after you have already launched your business is very difficult and expensive. Keep in mind that your marketing is not as important when you have a service-based business, but if you are marketing a product and have to redo all of your packaging marketing materials, it could set you back quite a long time.
DO YOU NEED A BUSINESS PLAN?
Creating a business plan can take quite a long time. I have created two or three for businesses and they can be helpful, but there are many factors that go into a business. At the end of the day, if you were starting a small business, creating a business plan can take quite a long time. The main things that a business plan allows you to are things you can do in a word document and spreadsheet:
- Who are your competitors?
- What do they charge for their services? Pretend to be a customer and call them and get their marketing materials and prices
- What do they charge for their products?
- What your cost to provide your service?
- What is your cost to manufacture your product?
- What other outside costs are involved?
- What are your start up costs?
- DO you need an office or warehouse or can you start out of your garage first?
- How much do you need for marketing? Web site? Business Cards?
- How much money do you need to generate to break even?
- How much do you need to generate to quit your job?
In this phase there is a phrase you should become aware of. It’s called “paralysis by analysis”. What this means is some people analyze and research so much that they do not start their business. There is a point where you have to take the leap of faith for your business to start. For example, when I wanted to start this blog, I researched other people starting financial advice blogs. For the most part, the things I am writing here are common themes across most financial advice blogs. However, I didn’t really find a STEP BY STEP guide to understanding how someone can understand the basics of becoming financially free. Most of the blogs post concepts and ideas and article resources. However, there were enough blogs out there to be pretty daunting. Why would someone read this? Am I going to get through to anyone? Is this a waste of time (something I desperately need to build my own wealth).
I decided to take a leap of faith and put my time and resources into this because I like writing and maybe one person will get something out of this and go on their own journey to become wealthy. Back to my point. If you can answer the questions above about your business, and you still find that it’s worth it to move forward, then it’s time to open your doors.