The percent of Americans starting businesses in 2009 and 2010 was the highest in 15 years–and the trend continues into 2013.
Some have started businesses out of necessity due to a challenging job market and others have simply said goodbye to corporate life. It seems that the entrepreneur whiz-kids garner all the media glory but truth be told, the number one age group for new business entrepreneurs is the 45-54 category. Add in the fact that 2/3 of all new businesses start in the home and only 21% initially hire employees, and it’s an exciting thought that starting a new venture is within anyone’s reach. So if it’s time for you to leave the 9-5 behind and be your own boss, here are five considerations for starting your own new venture and navigating it to profitability:
1- What is your VISION?
If you’re starting a business strictly for the money, you’re starting it for all the wrong reasons. Starting a business is not only a career change but a lifestyle change. Profits are thin (or null) for the first few years so be judicious with your funds and choose a business you are truly passionate about. This is the number one common denominator for all highly successful entrepreneurs.
Identify what you really enjoy — what can you really get excited about? Look into yourself—what qualities account for your greatest success in life? Another idea is to look for something that is an improvement on an existing product or service, present line of work. However you choose, it’s going to be your passion and commitment that carries you through lean months or years and impending challenges.
2- Do your research!
Evaluate the need for your product. Just because you are passionate about a product or service doesn’t necessarily mean others will be too. Talk to the experts and people who are already successful in the field. Most will take the time to speak with you as long as you’re asking questions about the industry in general as opposed to sensitive proprietary or trade information. I answer questions all the time from aspiring career coaches and public speakers. If they use my advice to start a successful business, great. I see it as paying it forward.
You also need to assess the competition. Conduct a competitive analysis matrix and learn about the offerings, similarities, and differences each claim to have versus the competition. Then, determine how you’ll position your product to successfully compete. Even in a saturated market, new businesses can succeed if they do things better and in some cases different (see: Smashburger).
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3- Build an effective BRAND
Once you have analyzed your competitors, find your niche. What will your business do more effectively than the others? Why is your product superior? Determine your Key Competitive Advantages and how your product excels vs. your competitors. Answer this question: “If I were to call 10 (your business), why would I hire you or purchase your product?” What will ensure certain failure is a vanilla, plain, homogenous product so don’t be afraid to be Different, Bold and Daring!
4- Determine how to advertise on a limited budget
Advertising on a limited budget can be a challenge for any new business. Though some forms of marketing may work better for some business types than others, there are some proven low-cost or no cost ways to create buzz and recruit customers. Here are a few:
- A well-constructed professional-looking web site is a must as it’s often the first impression customers will have when evaluating your business. Ensure you employ a SEO (search engine optimization) plan for your web site to ensure customers are finding you.
- Utilizing social media (Facebook, Twitter, YouTube, and LinkedIn for starters) will increase your web rankings and presence and encourage customer interaction.
- Blog on a regular basis (weekly is preferred) to position yourself as an expert at what you do, drive more traffic to your site, increase web rankings, and encourage reader interaction.
- Don’t forget about face-to-face networking! Get out and attend industry and trade group get-togethers and general business mixers. Become an “evangelist” for your business by spreading the word!
- People listen to and buy from subject matter experts. Offer to speak at relevant events (even for free) and consider offering free seminars.
- Joining associations and trade groups is a great way to meet others in your field and learn from the experts. Don’t worry about being in a room with 200 of your potential competitors, most are there to learn, help, and share ideas.
- Pro bono work can be valuable for building key relationships, gaining referrals and testimonials, and assembling a list of high-visibility clients and businesses for placement on your web site.
5- Establish a plan for accumulating capital and financing
Probably the biggest challenge facing any new business is developing capital and financing to launch your new venture and to keep you going during the early lean years. Personally, I’m not aware of any entrepreneurs who haven’t taken on some level of debt to live the dream of starting their own venture. Some have been creative and others more traditional and prudent when it comes to financing. Personal savings, credit cards, bank/SBA loans, 2nd mortgage, HELOC, and even relatives are the most common options especially for first-time business owners.
An interesting new option that has gained popularity in recent years is the concept of crowdfunding. Crowdfunding is a way for businesses, organizations and individuals to interact with other individuals, communities and organizations to raise a fixed amount of money as a loan, donation or investment. Some entrepreneurs may turn to crowdfunding to obtain the necessary support for a new project or idea. Most often, crowdfunding requires that funding be raised during a set time frame via a social network. Some popular crowdfunding sites include KickStarter, MicroVentures, Pozible, and IndieGoGo.
Don’t look for easy money, gimmicks, useless gadgets, promises of overnight wealth, get-rich-quick schemes or rewards without working, because there aren’t any. You must be willing to put in a lot of hard work and long hours before you start making any real money in a business, particularly one you’re starting from the ground up.
It takes on average two to three years to break even in the average business. It takes almost three to four years to show a profit and generally more than five to generate any real cash flow. So you have to be patient and pay your dues.
Becoming an entrepreneur is not for everyone. It involves heavy sacrifice in both time and lifestyle, especially in the early stages. However, the rewards of owning your own business and being your own boss can balance the equation. Most successful entrepreneurs wouldn’t trade it for anything. Also, know that most millionaires (up to 75 percent by some accounts) in the United States are independent business owners. You must decide first how willing you are to make the needed sacrifices and how passionate you are about your cause.