If you are thinking of starting a new business, there are seven key factors you should consider. Read on to see if you are ready to handle all seven.
Starting a business can be a fun and exiting time in your life. If you want to have it be a successful time in your life as well, consider these seven things; your experience, the market, the economy, your finances, your ability to handle stress, and your back-up plan.
This is one of the first factors to consider when starting a business because of one reason – you must have experience in anything you set out to make money in. People have started hot dog stands who have never worked in the food industry and thought their love of hot dogs would be enough. They failed. Not because of a lack of passion, but from a lack of knowledge working in a business similar to what they wanted. If you want a business, try working in that field for at least two years before going on your own.
Another of the many factors to consider when starting the business is the market you enter. If the town has 15 pizza shops, can enough of an impact be made to keep the pizza shop going? If the business idea is a small niche or neighborhood business, is there enough need for the business to survive. People can applaude the idea, but money in the hand is always better.
People go into business with the experience and the need for their products or service, and still fail. One of the factors to consider when starting a business, even with the above factors handled, is the availability of money. If the economy is down in certain areas, industries, or in general, you can still open shop but consider doing so on a smaller scale, with a more general product, or waiting a year to increase the chance of survival. However, with this in mind, there are still some types of businesses that are more recession-proof than others.
This brings us to the next of the factors to consider when starting a business. The money. While there are stories out there of people who started businesses with a dollar and a prayer, their success is either unusual (which is why they became a big story), or it took much longer than it should have. Know the numbers it really takes to get started properly and get those numbers in line before moving forward. Make sure you have a way to fund your business.
The Time Factor
One issue you hear from new business owners is that they didn’t think the business would take as much time as it has in their lives. I fell into this trap myself – twice. Time is needed to handle customers and “public” business operations; but time is also needed “privately” to handle paperwork, maintenance, taxes and other items that come with running a business. I’ve learned that for each hour you spend in the public eye, expect two hours handling the back office work, travel, and daily operations.
Stress is one of the many factors to consider when starting a business. This is especially true for someone who, as an employee, has never handled the management end of daily operations. You might be great at customer relations, but that is a percentage of the total package. If money gets tight, the bills will still keep coming and the business must keep going. Something will break at least once a week. Sudden changes in schedules or availability of something will constantly occur. If you’re not ready for it, you can become both physically and mentally drained very quickly.
A Fall Back Position
This is one of the factors to consider when starting a business which I fell upon by accident when starting a consignment store. I had the merchandise coming in free; I had the display racks and counter donated; and I had the store front paid for out of my own pocket. This lasted for about six months, then I was closed. Why? I had forgotten to consider a contingency plan for the possible slow start of the business. I failed to ensure continuous income. You must have a way to cover potential serious problems should they arise in the first year. A working spouse, a loan, a second job, a second supplier are all critical items.
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