Starting up a new business enterprise?
Some of the successful business startups share commonalities in approach and launch. Having a “good idea” is really only a starting point as you explore whether it can be a business that is financially worth pursing.
A report from the Global Entrepreneurship monitor finds that nearly 13 percent of Americans are involved in early-stage entrepreneurial activity. Moreover, the U.S. Small Business Administration found only one-third of small businesses are still around in 10 years. It truly is much easier to start a business than to stay in business.
Entrepreneurs need to see an opportunity, size it up to see if it’s worth pursuing, and only then should they seize it. In Christopher Hann’s Entrepreneur Magazine Oct 2014 article called “Laying the Foundation”, he writes that after entrepreneurs have their concept and finances in line, there are still two basic yet critical questions that all entrepreneurs need to consider before they decide to seize an opportunity. First, validate that the idea is in line with what the customer needs and wants. Second, confirm that there is a market that will pay the price you need to make the business profitable.
Hann recommends that a startup business owner establish a support system like friends and family that will enable them to weather the coming storm. Additionally he stresses the need for entrepreneurs to be flexible enough to respond to feedback in order to refine their model. This solicitation of detailed feedback from customers will allow entrepreneurs to know if their idea is a good one.
What can you do first with your given resources? As Hann notes the importance of proper financing and financial planning are one of the first areas to concentrate on for new companies. Once the opportunity has been recognized and the concept developed, that money thing needs to be understood and a strategy put in place so there is cash flow to meet financial goals and to avoid financial embarrassment. When budgeting for a start-up business, he recommends that entrepreneurs anticipate that the company will generate zero revenue for the first year and that they need to plan for how they will cover the expenses of sales management, rent, utilities, inventory, salaries and promotion the first year without this revenue. Sharon Epperson’s Sept. 2014 article in the National Business Report called “Small businesses: lessons on how to survive — and thrive” encourages entrepreneurs to understand the breakeven sales level and how this can change with lower fixed costs. See my previous article in Michigan State University Extension news about understanding the cost of startup.
In December 28, 2010, Jason Baptiste posted an article about “14 Ways To Be A Great Startup CEO”. He emphasized that the entrepreneur needs to be the keeper of the company’s overall vision. In other words, a great startup CEO will often judge upcoming initiatives to see if they fit in as a piece of the larger puzzle of goals and financials. Baptiste feels that the Chief Operating Officer (CEO) should “be close to the product vision of the company. And be able to fill in the management gaps.” He gives the example of why Apple had a great resurgence with Steve Jobs at the helm. Sharon Epperson went further by saying, “Small businesses often lose focus, even successful ones. Conversely, she notes that sometimes a change in direction can help to save a business. For an example of when change is good, a dairy farm that I worked for began delivering milk as its first product. Within 40 years, ice cream was its top product and milk delivery was discontinued.