Story by Era Sundar, Editor in Chief
Starting a business is a big step.
Steady paychecks and employment benefits are traded for the complete freedom of being the boss. However, that freedom comes at a price — complete exposure to risk and ultimate responsibility.
In order to make the risk pay off, thorough preparation is an absolute must. The following tips address some of the most important areas of business preparation.
1. Gain a working knowledge of the business
Formal education is always a plus, but it’s not the end of the road. Actually working in the same type of business you plan to open is invaluable. For example, if opening a restaurant, it may be worth it to take a job as a restaurant employee for a while. Working in as many aspects of the business as possible, from bookkeeping to kitchen management, is best.
2. Consult the experts
The advice of lawyers and accountants helps ensure the correct business structure for liability and taxation purposes. Do some research before the consultation and have questions prepared beforehand.This will maximize the time and help keep consultations fees to a minimum.
Mentors who have successfully engaged in the same type of business are another valuable source of knowledge. At austin.score.org, entrepreneurs can connect with the Service Corps of Retired Executives (SCORE). The organization provides free small business counseling and low-cost business seminars.
Help can also be found through the Small Business Association. A number of online resources can be found at sba.gov including instruction on how to create a business plan.
ACC also offers business preparation courses including a Small Business Workshop through it’s Continuing Education Department.
3. Understand the full scope of financial need
ACC management professor Dan Dewberry said, “Many people who end up failing, did not start out with quite enough money to get them to the point where they are selling their product or service and can pay all the bills and make a salary.”
Dewberry said delays in city permits can prevent a business from meeting its scheduled opening. If the lease is secured and staff already hired, these expenses will need to be paid even if the store cannot be opened and no income is generated. Having cash reserves is helpful in such a situation.
4. Anticipate the unexpected
Fire, water damage and equipment failure can cause substantial financial setbacks. Property and liability insurance are important aspects of business planning and should not be overlooked.
5. Consider Conservation
“Entrepreneurs need to embrace energy and water efficiency,” Dewberry said. “More and more businesses are learning they can save money by purchasing vehicles that get better gas mileage.”
Dewberry said by purchasing energy efficient appliances, a business may spend more upfront, but will save money in the long run with lower utility bills.
6. Test market the product or service
Being passionate about their business may cause some entrepreneurs to overestimate the demand for their product or service. The opinions of friends and relatives may also be overly complimentary.
“All that really matters is: will the public buy your product or service at a price that covers your costs and earns you a salary,” Dewberry said. For these reasons test marketing is essential.
7. Jump on the social media bandwagon
Most people would not jump off a cliff just because their friends did. However keeping up with trends and customer preferences is necessary in business. And right now, social media is where the customers are.
There is a caveat, however.
“You shouldn’t be engaging in social media marketing if you don’t have a website first,” Shama Hyder Kabani, author of “The Zen of Social Media Marketing” said.
According to Kabani, the amount of information that can be given in a social media profile is limited and is not enough to make a sale. The primary purpose of social media is to attract attention to the website. It is then the website’s job to convert visitors into customers.
Starting a business is a major undertaking. But with patience, perseverance and the right planning, entrepreneurship can be a rewarding and fulfilling experience.