Starting a Business

Know the Ropes Before Starting Your Lifestyle Business

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Are you considering an exciting new lifestyle business idea and wondering if it will work?

Perhaps you’ve been to visit your banker, accountant or lawyer. Maybe you’ve wandered into a couple of the agencies that help new business owners get started. Hopefully, you have learned that you will need to do some market research and that you may need a business plan.

In researching your business idea, you need to prove there is demand for your products or services and that you can supply them at costs that leave enough money for you and your fledgling business to survive and hopefully, to thrive.

If you hope to shepherd your concept from mild curiosity to the action stage, here are some points to consider.

Evaluate whether you are ready to own a business.
Do you have the knowledge and skills? Do you have the financial muscle to nurture the business until it can support you? Are you motivated to get yourself to work each day without a big bad boss cracking the whip? Are you ready to be your own boss?

Learn all you can about your business idea.
Are there competing businesses already selling products and services you’re considering? Is your idea new to the area? How is your idea different from the existing businesses? Why would people buy from you instead of the competition?

Determine if there is demand for your goods.
Can you sell enough products and services to sustain your business? Learn about demand by talking to potential customers and competitors. Talk to anyone knowledgeable about the industry and who will take the time to educate you about the business.

Identify your supply costs.
If you’re buying and selling products, this means communicating with suppliers, learning their prices, their terms and shipping costs. If you’re providing services and doing the work yourself, you will need to set your rates high enough to sustain you. If you’re hiring others to provide the services, you will need to know how much they will charge you.

Decide what you need the business to provide for you.
Will it be money, lifestyle, or the pleasure of working at something you love to do? If money is a motivator, the starting point is to list your personal expenses and calculate how much you need to earn each month. Once you know that amount, you can then determine whether your hot new business idea will pay enable you to sleep nights without worrying about where the next meal will come from.

Market research is an opportunity to learn about your business. Be curious, ask lots of questions, and evaluate the answers. If you can prove there’s enough demand, and if you can provide your goods at prices that leave enough money to meet your needs, you might well be on your way to making a living doing something you truly enjoy.

Are you starting a lifestyle business? What lifestyle business would you like to start?

Do you have any helpful hints on lifestyle business?

Owning a Business, Starting a Business

Champions Will Get You Out of the Crab Bucket

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crab-beachOnce you decide to start a business, you set yourself up as a target for doubt and negativity. Although it helps to have a thick skin, entrepreneurs need to pay attention to all sources of input in order to learn their way into business, and it’s not always clear who or who not to listen to.

As I work with entrepreneurs from different communities, the crab bucket story comes up again and again. The analogy goes like this: If you observe a bucket of crabs, you will notice that, for the most part, they just clamor and struggle and go nowhere. As soon as any crab appears to be climbing toward its freedom, the other crabs all pull it back into the bucket, ensuring that none escape.

If the crabs would just work as a team, it’s conceivable that they might help each other to escape, perhaps gain their freedom, and in some way become masters of their own fates. But the crabs just keep each other down.

Crab bucket antics are most prolific in the business start-up realm, most visible as jealousy, resentment, discouragement, and random disrespect for one’s boundaries.

> Well-meaning friends will discourage you, citing notorious business failures

> Old party partners will go to great lengths to get you back into the party game

> Knowing you just scored a business loan or earned a profit, some will try to guilt you into lending them money

> Your acquisition of new equipment will generate gossip and negative comments

I’ve come to realize that the crab bucket action never really goes away. What changes is one’s ability to deal effectively with it. Successful entrepreneurs find ways to deal with negativity and get on with the business of self-improvement. Here are some ways to get and stay on the road to success.

Have a Plan. Planning helps you build resolve. Knowing what you want for you and your business will prepare you to make the right decisions when negativity tugs at your sleeve. A leader sets her goals, charts her path, and then does what it takes to get where she wants to be.

Set Your Boundaries. Take special care to establish your limits and require that business and personal associates respect them. Drop the crazymakers from your life. The party animals that refuse to accept that you have business responsibilities and time commitments will have to go. Don’t hang with people who trample all over your needs.

Surround Yourself with Champions. Network with positive people who will be supportive and help you succeed. As you grow into your business, build a strong network of people who are intent on success. This can include the more supportive of your personal friends and an increasing number of professionals as you progress.

Take Care of You. Setup your own personal and professional development plan. Read great books and subscribe to publications that support your vision and mission. Invest your time in healthy activities that move you toward your goals.

Improving your life is a serious matter, requiring focus and perseverance. Doing so by starting a business is even more rigorous. Prying yourself loose from the jaws of an unwanted or undesirable lifestyle will require distancing yourself from those who would bring you down or keep you there.

Owning a Business, Starting a Business

Business is More Than a Crap Shoot

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Those who haven’t owned a business tend to think businesses are built on mystical gut feelings that readily morph into bulging bank accounts, hot cars and holidays. Sure, Mark Zuckerberg and Bill Gates did just fine by following their hunches, but the hype overshadows the massive amount of work it took to make Facebook and Microsoft successful.

Statistics on the failure rate of small businesses can be sobering. Conventional wisdom suggests that about half of small businesses (those with revenues under $30,000) survive after three years, while approximately a third survive after five years. To be sure, this category of business activity, also referred to as micro-enterprise, includes a lot of businesses that are simple to start and easy to jettison when something better comes up. The statistics deal with the most developmental business arena, where a lot of newbies cut their entrepreneurial teeth. It also includes a lot of drive-bys who jump in long enough to check out the self-employment scene, and bail out once they realize they’re earning less than minimum wage.

Whatever else the high failure rate of new business tells us, it hints that success is more than blind luck. Some would characterize entrepreneurs as risk takers. While there’s a bit of truth to this, successful business owners are not so much gamblers as they are effective risk managers.

One of the cornerstones to becoming an effective risk manager is to find a healthy balance between intuition and due diligence. Due diligence is the research needed to validate your hunches and clarify your business case. A business case is built on more than notions and dreams; it has to have a solid indication of demand for your goods, customers that are willing to pay the right prices, and a bulletproof plan for getting in front of customers.

New business owners can increase their chances of survival by doing due diligence in the following three ways.

  1. Validate the Demand. To confirm demand for products or services, business owners will learn all they can about their customer’s wants and needs. This education can come through a combination of reading, working in the target industry, conducting surveys, and most importantly, talking to customers.
  2. Validate the Prices. When it comes to setting prices, there’s no confidence builder quite as convincing as making sales. However, prior to making sales, entrepreneurs can learn about pricing by knowing what it costs to produce their goods, and by learning everything they can about the industry and in particular, the competitors. The Internet is by far the easiest source of information on prices.
  3. Develop a Marketing Plan. Think of marketing as everything you will do to communicate to potential customers. Your marketing plan will detail how you’ll get your goods in front of customers, including costs each marketing campaign or activity.

Business success is much more than a crap shoot, and much riskier than buying a lottery ticket. It’s also true that business, managed effectively, is a surer path to success than gambling. And if you enjoy the work you do, it can also be fun getting there.

Gates and Zuckerberg are inspirations for us all, but don’t be blinded by the hype. If you’re feeling intuitive and lucky, buy a lottery ticket. If you want to build a successful business, by all means follow your instincts, but do your homework by validating your hunches before putting any significant investment on the line.

Business Killers

How Debt Can Become a Small Business Nightmare

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It starts out innocently enough, usually with a small loan or a couple trade accounts, but by the time the bailiff puts a lock on the door, the amount of debt has become one of the nails in the failing business’ coffin. Here’s how easily it can happen.

Imagine that you’re starting a venture with limited funds and eager to get the doors open and succeed.

A startling number of new businesses fail in the first five years. Lenders know new business is risky, and manage their loan portfolios accordingly. However, with the right security, such as equity in the family residence or a willing co-signer or guarantor, it’s entirely feasible to nail down a start-up loan for a risk-laden small enterprise.

So, congratulations are in order; you’ve got the loan and started your business. Let’s say the borrowed funds pay for leasehold improvements and enough operating money to see you through the start-up period.

Life is good, but you still need supplies. In the early days of business, suppliers can be an uncooperative lot—nobody wants to extend credit until they develop a relationship with you. So, following “Supplier Development Rules Of The Road”, you proceed to build relationships and apply to establish a couple trade accounts with enough headroom to enable you to order a month’s supply, as long as you pay within 30 days.

Because the business isn’t yet churning out enough margin to provide you with a paycheque, you might find yourself nicking the corporate credit card to buy a few groceries. Every new business owner knows this is evil, but most do it anyway. After all, you’ve got to eat. You intend to pay the card to zero at the end of each month, but as you bang it up with personal knick knacks, and the money just isn’t there to pay it down, the carryover gets higher each month.

You discover that you need a couple more trade accounts and use your newly-honed skills to set up a few more accounts. In the meantime, your responses to pre-approved credit card marketing campaigns procure you a couple more credit cards.

With trade accounts and other random sources of debt like credit cards, the trap is that none of them know what the others are up to, they rely on your diligence and integrity, and also hedge their bets on their expertise at extracting payment from you like bad teeth, regardless of how you’re managing your other debts. So, by cherry picking and presenting a small part of your financial picture to the disparate players, it’s entirely possible for a clever operator to outsmart the entire bunch, including yourself, and tilt the financial chariot so far off centre that you wake up one day with no hope of ever getting your business back into the black, and no possibility of ever repaying the amount you owe.

All it takes from there is a small disaster to tilt the financial house of cards into pandemonium. Perhaps one morning as you’re about to head off to work, your aging vehicle coughs and refuses to take you anywhere. A flurry of repairs and a yelling match later, you owe a mechanic $900, and the corporate credit card takes yet another hit.

That’s how debt can destroy a business. Credit can be evil. Just because you can borrow, doesn’t mean you should. Treat debt with respect.

Your Business. Your Plan. Your Way.