- Find a business opportunity that interests you, and then Do Your Research!
If you believe you have found an opportunity for business, before you actually “start” the venture, research the business idea. Your research should include a full assessment of:
- The industry – what are the technologies and/or equipment involved? Are there any specialized skills required and if you don’t already have them, how will you get them? Are there other potential “employees” in your area that might already have some or all of these skills, or could they gain them easily? And finally, your research would not be complete without considering what might be changing in this industry.
- The competition and your potential customers (your market) – even an extremely innovative “new idea” has some way that the need has been satisfied before. Assess what your potential customers do now to satisfy that need; what are the costs; what are the benefits that your idea will offer (eg. your solution will save them time or money, or both). In addition, if your business idea has already been offered in another market, do your research as to how that market developed, including what type of market share your idea might gain, and what it might have taken to get there. Don’t be afraid to contact business people in other areas that might be able to give you insight as to how their business developed, and what pitfalls to avoid. You should also talk to potential customers to clarify what their needs are, whether they would look at another option to satisfy them, and what that might be worth to them. On a personal note, my own business idea actually started after I have completed my research, and one of the individuals I talked to for the research contacted me and asked if I would be able to offer my services!
- Assess your entrepreneurship attributes, your skills and your goals
One of the most important qualities to being successful in business is having the desire and commitment to own your own business. Skills are something you can acquire, but if you don’t have the desire and/or commitment, they really cannot be gained from other sources. Some things you ask yourself are
- Do you want to operate independently and be the one to make the decisions and have that responsibility?
- Are you willing to work hard and make sacrifices to put your business first when it is required?
- Do you have the confidence and self-discipline to overcome obstacles and build a successful business?
- Do you have a vision for your business idea, and passion to make it happen?
According to a recent study entitled “A Profile of the Entrepreneur”, the seven most highly ranked attributes included: perseverance, desire and willingness to take initiative, competitiveness, self-reliance, strong need to achieve, self-confidence, and good physical health.
In addition to your personal attributes, you should assess your skill set, developing a plan to build on areas where you might not be strong, and enlisting support for areas of weakness (since you can’t be great at everything!).
Owning your own business means that you need to understand not only your own industry and/or trade, but also demonstrate business management skills in the areas of finance, accounting, human resources, customer service, marketing and more. Again, you don’t have to be an expert in all of these areas, but you need to appreciate their value to the business, and have reliable support for areas that are not your specialty. Expect to discuss these management areas with your support system, as this will enhance your skills over time, and ensure that you stay connected to all areas of your business as well as demonstrate your commitment to the success of your business.
- Develop a good support system – Having a good support system entails not only having good employees and colleagues that assist with the day-to-day operations of the business, but also finding mentors and business people to bounce your ideas off. Personally, my connections have come from contacts in business over the past years, and also from being a part of an NLOWE “Mastermind” group!
- Prepare a business plan including detailed financial projections. Your business plan will incorporate much of the research that you gathered in assessing the industry and the market.It will also be necessary to develop a detailed financial plan that analyzes and projects financial statements for three to five years including a monthly cash-flow statement (first 12 – 24 mths); income statement, balance sheet, sales schedules, cost of goods/direct costs schedule. Notes to the financial statements are critical in order to document where all of the dollar amounts come from. Getting professional assistance with the financial projections may be critical to helping you identify areas of weakness and to clearly project the amount of financing that will be required to enable the business to succeed.A well-developed plan then becomes the blueprint for your successful business, and should be used to monitor performance on a regular basis. A good plan often entails contingency plans, and a business that learns to adapt based on monitoring performance (good accounting system!!) and making necessary decisions will succeed. Most businesses that fail in the first two years suffer from insufficient financing and shortage of cash flow – often not even directly related to lack of profitability!
- Get professional help from the start. Since there are many areas in starting a business that involve expertise, it is critical that you find professional help from the start. An accountant can assist you with developing the financial projections and securing the necessary financing, and can also be a key support in setting up an accounting system to help you monitor your business. Your accounting “system” is less costly to setup when you are first starting, as you will know what to keep and how to organize! Your accountant can also discuss the various business forms (incorporation vs sole proprietorship or partnership) and help you decide what works from a taxation and liability point of view. Having a lawyer as a part of “your team” is also beneficial, as they can assist with the details of the incorporation as well as develop sales contracts, contracts for employees, and shareholder and/or partnership agreements. If you are purchasing a business from someone else, both an accountant and a lawyer should be involved to ensure that tax and legal considerations are properly addressed.
- Get the necessary financing! As I indicated in relation to the financial projections, most businesses fail because of lack of finances. If you have developed a good plan with regard to your financial/capital requirements, ensure that you have the necessary finances secured before you venture into business. It is much more difficult to try to find financing after you have tapped all personal resources (i.e. credit card maxed, etc.) and have limited time to get additional financing. Don’t forget to plan for growth too, and have a financing strategy for that!
- Do what you love and love what you do! If you love what you do, that passion will shine through. Your passion in your business will excite your customers and inspire your employees. In addition, if you love what you do, no matter what obstacles you might encounter, you will have a better chance to succeed if you are truly committed to your business. Loving what you do will also keep things fresh, and make you want to keep doing what you do best!
Debra J. Feltham, FCGA is a Partner with the Firm Feltham Attwood, Certified General Accountants in Mount Pearl. Debra has over twenty years of experience in accounting and taxation, systems design, and business management at a senior level. She has worked in public practice firms in both Grand Falls-Windsor and Mount Pearl where she has been responsible for the planning and execution of many audit and accounting engagements for a diverse group of clients. Debra was the winner of both the Innovation award and Visionary award at NLOWE’s 2012 Entrepreneur of the Year Awards. You can contact Debra at email@example.com.