Sunday, December 16, 2007

Doing Business (1.) Make Plans

This post, and some which will follow as a sort of series, is aimed at the start-up internet business owner. While it uses yarn as the product, the ideas apply to any new business venture.

The very best businesses happen because of good planning, not because of luck. Most people are not skilled at all aspects of running a successful business, but I contend that anyone can learn and acquire the basic skills of running a business, watching the competition, understanding the effect of the economy on your field. It takes good planning, a strong work ethic, a realistic approach to life, and the ability to learn from mistakes and the strength not to repeat the same mistakes. To start and run a successful internet business the owner needs to consider some basics: time, finances, future.

Time is limited because of whatever reason applies to you. Do you have a fulltime job? Are you starting a parttime venture? Are you a work-at-home-parent with sporatic blocks of time available for a business? Do you have demands on your time which involve family committments? Have you lost your job? Do you have time to make the product you want to sell and to run the business, too? Do you have time to invest in learning about the how a good business in run?

Finances are just as important as a person's will to start a new business. The best plan will fail if you cannot afford to put it into action. Start-up capital will be needed for every business. It is true that the actual costs of getting a website up and running (if you choose the route of establishing an individual website for your business) can be controlled through the use of good resources, and going only as far as your money will allow you to go. Best course: write down all costs associated with three phases of your business: Start-up costs, initial inventory and launch, how to manage costs of holding adequate inventory for at least the first two years of business.

Future: I often think of a terrific TV ad which featured a happy group of entrepreneurs who were launching their first internet business. They gathered around the screen to watch the hits, and then the orders as a ticker slowly turned over. As the order ticker started to spin faster and faster, their reactions went from joy and pride to wonder to dismay! That ad says it all. How will you finance the demand of product if your venture takes off? How will you keep family finances secure and still grow you business? Basically, a good rule of thumb given by the SBA is not to put your home in financial jeopardy or use up the equity to finance a new busness. Savings and personal credit are probably the two best financial resources for the startup business. Banks are not in the business of financing startups, and there are no grants for the first time, start up. At the beginning is the time to examine all aspects of committing to this big step. Imagine how your life will change if and when the business takes off. Will you run it out of your home? Rent a warehouse? Move? Hire family members, or outsiders? Are you willing to give up control of the business to employees? Will you expand or contract business activities to maintain a desired lifestyle? Will you be willing to quit your job?

Write down every idea about time, finances, and future growth which occurs to you. Keep notes and as they grow, divide them into folders (physical or on a word processing program). Whatever you do, keep notes of this planning stage. Some ideas will be the basis of a brilliant marketing strategy down the road. Some will be unrealistic but you will learn if you can spot the reason why some ideas just won't work and others attack your needs. It will help you as you begin to develop a budget and make plans to launch your new venture.

I firmly believe that entrepreneurs can improve the quality of their lives by putting their dreams to work. In fact, I often say that the purpose of my businesses, over the years, has been to improve the quality of my life.

No comments: