So you’ve got an idea for a small business Congratulations! Now, it’s time to figure out how to make it one that survives and even thrives.
Many would-be entrepreneurs are held back by fears of failure due to the risks of starting a business. But there are ways to lessen those risks — by taking a sane, step-by-step approach to getting ready to launch.
Here are seven fundamental steps for planning a low-risk launch:
1. Know how you’ll fund it. There are many costs to starting a business, even if it’s an online one. Do you have money saved up, or access to a credit line you could tap? Will you work a side job? Get relatives to help you? Have a strategy for how you will pay for business expenses.
2. Be realistic about ramp time. Even with a simple business idea, expect it will be at least six months to a year before the business starts throwing off enough cash to support you. Know how you will cover your living expenses until then.
3. Keep overhead low. See how you could start getting sales before paying rent on a big retail store. Try a kiosk, direct sales, e-commerce or even renting space within an existing store.
4. Have a business model. Just because Groupon’s founders started without any idea how their business would make money doesn’t mean you should do the same. The reality is the vast majority of businesses that begin this way will fail. Figure out a revenue model at the start.
5. Test your idea out on prospective customers. It’s better to find out if nobody would buy your product before you invest time and money in launching it. Get feedback about whether there is a real market for what you want to sell.
6. Be ready to evolve your idea. Venture funders like founders who know how to “fail fast.” Don’t cling to what’s not working. One key entrepreneurial skill is quickly recognizing problems and testing out new twists on an idea until you find the approach to which customers respond.
7. Build your network. You will not succeed at this alone. Find other entrepreneurs and mentors who will be a sounding board and share their experiences.
If you decide to go for it and start a business, be committed to it. If you’re not passionate about what you’re trying to do, you probably won’t stick out the inevitable bumps in the road. (credit to Carol Tice)