| (And a Business Plan Isn't Number One) | | | | generated by the business. |
| As a freelance writer, entrepreneur, and business | | | | Now that you've had your time to dream, it's time to |
| consultant, a lot of people come to me with a business | | | | be extremely pragmatic about applying them. Do |
| idea and want my help to write a formal business plan. | | | | whatever it takes to generate revenues, even if it |
| Contrary to what many aspiring entrepreneurs think, | | | | means door-to-door selling. No dream, however |
| writing a business plan isn't the first or most important | | | | inspiring, will ever be realized unless you can pay for it |
| step to start a business. For most people--especially | | | | to materialize. |
| those who have not yet started a business--this is | | | | 6. Create Financial Systems |
| actually one of the last things you want to do in the | | | | Now that you have cash flow, it's imperative that you |
| start-up and get-off-the-ground phase. | | | | manage it wisely. Account for EVERY income and |
| This article is specifically designed for those brave | | | | expenditure, no matter how trivial, and maintain |
| souls who have never started a business, have a | | | | impeccable records. You'll be glad you did come tax |
| burning desire to do so, but don't know where to start. | | | | time. |
| Here are ten practical, learned from the school of hard | | | | The most common accounting software programs |
| knocks, that will help you avoid common pitfalls and get | | | | are Quick Books and Quicken. Or, you can use a |
| started right. (And keep in mind that these are intended | | | | quality bookkeeping service, which can help you with |
| for businesses that need little to no start-up capital.) | | | | payroll and quarterly taxes in addition to keeping your |
| 1. Read | | | | records. |
| Before you do anything else, read these four books in | | | | 7. Begin Writing an Operations Manual |
| order: | | | | An Operations Manual gives you the ability to leverage |
| Cash Flow Quadrant by Robert Kiyosaki, The Art of | | | | your efforts and duplicate yourself by providing simple, |
| the Start by Guy Kawasaki, Burn Your Business Plan | | | | step-by-step directions that anyone can follow to |
| by David Gumpert, and The E-Myth Revisited by | | | | perform any task. |
| Michael Gerber. | | | | Systematizing your business is the most important |
| 2. Dream | | | | thing you will ever do, and you can never start soon |
| Take time to create your business "spiritually" before | | | | enough. Systems, of course, will be refined over time, |
| you create it physically. See it in it's best, most perfect | | | | but it's critical that you get them down in writing and |
| state, as a world-class operation. How does it look, | | | | keep them updated. |
| feel, taste, smell, and sound? | | | | You may also consider using a professional writer to |
| Entrepreneurship is one of the hardest things you will | | | | write your Operations Manual. |
| ever do, and your business must invigorate and excite | | | | 8. Create Marketing Systems |
| you consistently, otherwise you won't last through the | | | | Many novices want to immediately start spending |
| hard times. | | | | money on advertising, without knowing the costs and |
| Write these dreams down--this is not a business plan, | | | | or benefits. It's been said that advertising takes a lot of |
| just written dreams, plans, goals, and brainstorms. The | | | | money, while marketing takes a lot of time. |
| formal business plan will come much later. | | | | For start-ups, stick with marketing; in most cases, you |
| 3. Research | | | | have time, but you don't have money, and marketing is |
| Before you invest a lot of time and money in your | | | | generally more effective anyway. Advertising is costly |
| dream, do adequate research to find out if your idea is | | | | and relatively ineffective. Start-ups should be |
| viable and sustainable. | | | | obsessive about managing finances wisely, and very |
| In this step, you basically want to ask and answer a lot | | | | cautious about spending money. |
| of questions, such as these: Will the market support | | | | Advertising would include things such as billboards, |
| your idea? What evidence do you have to support | | | | radio and TV ads, flyers, yellow page ads, etc. |
| this? What discontentment exists that your idea | | | | Marketing usually boils down to direct selling of some |
| solves? Will it unleash an idea virus? Who else is doing | | | | kind, whether it be telemarketing, door-to-door sales, |
| it, and how successful have they been? What will you | | | | customer referral programs, etc. |
| do differently? Do you have a readily identifiable | | | | If your idea and delivery systems are good enough, |
| market? Do market trends support the idea, or will the | | | | the business should market itself virally anyway. In any |
| idea be obsolete in a few years? Do you need | | | | case, find something that actually gets results, stick to |
| funding? If so, how much and by when? What | | | | it, and create and document systems in your |
| technology can be leveraged in the business? What | | | | Operations Manual. |
| skills do you lack necessary for the business? | | | | 9. Refine Systems, Replace Yourself, More Refining, |
| Remember also that hands-on experience can be the | | | | & Document Religiously |
| most useful form of research--you may want to | | | | In the first year or so, you will most likely be performing |
| implement your business on a small scale at this stage | | | | most, if not all, tasks yourself. This gives you the |
| to see what the market tells you. | | | | opportunity to learn and work out necessary details, |
| 4. Form an Entity & Ensure Legal Compliance | | | | but it won't be sustainable when it's time to grow. |
| Assuming you're convinced that your idea will work, | | | | With an Operations Manual in place, you can now |
| now it's time to make it real and form a business entity. | | | | begin hiring and training others to replace you. Once |
| You need an entity for four reasons: to be legal, to | | | | they're replaced, then continue to oversee and refine |
| maximize tax savings, to decrease liability, and to | | | | the systems consistently. |
| maintain control. | | | | Also, you must be absolutely religious about |
| Your basic business entity options include a sole | | | | documenting every aspect of your business. For |
| proprietorship, LLC, S-Corporation, and C-Corporation. | | | | example, if your business does door-to-door sales, all |
| Meet with an attorney and a CPA to discuss the | | | | salesmen should document how many doors they |
| differences between them and choose the | | | | knock, how many people they actually talk to, and how |
| appropriate entity for your uses. This will cost about | | | | many people bought. |
| $125 if you do all the paper work yourself, or between | | | | Over time, this data will prove to be invaluable as you |
| $200 and $500 if you use a professional or an | | | | seek to refine your systems; without real numbers you |
| attorney. | | | | have no idea what's working and what's not. |
| In addition to your entity, you must also ensure that you | | | | 10. Write a Business Plan |
| are legally compliant in all other areas. For example, if | | | | The final step in the start-up process is the one that |
| you have employees, you probably need Worker's | | | | most people think they should start with. Here's why it |
| Compensation Insurance. A good attorney will help you | | | | should come last: if you want it to secure funding, |
| safely navigate all of the legal issues you will face. | | | | investors will want to see a proven track record |
| 5. Generate Revenue | | | | before they invest anyway, and if you do it after the |
| This step is absolutely critical. Too many newbies try | | | | first nine steps, you can now do it right, with actual |
| to do too much at once, and are so concerned about | | | | numbers, facts, and statistics rather than unfounded |
| things like image that they spend tons of money, time, | | | | assumptions. |
| and effort on logo and branding work, marketing | | | | Furthermore, this gives you an opportunity to |
| brochures, advertising, etc. While all of those have their | | | | reconnect to your dreams after wading through a lot |
| place, they should be paid for BY the revenues | | | | of trials. |