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Home Business Magazine Online arrow All HBM Articles
So, You’re Thinking of
Starting a New Business?
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Written by Byron Kalies   
home business
home business
First, Take Into Consideration These Personal Implication

So, you're thinking of starting a new business? 
First the doom and gloom:

~ The Statistics – Some figures suggest that 93 percent of small businesses fail in their first year, and of the 7 percent that survive, only half of those will make it past 5 years. 

~ The Money – It is very likely that you will not have a regular salary for a few years.

~ The Time – There will be occasions, especially early on, when you will be exhausted having worked a 100-hour week.

On the positive side, however, you are your own boss. Really, you are your own boss. There's no one telling you what to do, when to work, when to take holidays, when to go home — seems a good deal to me.

Survival Necessities
What can you do to help your business survive? There are a number of steps you need to go through before you start selling and recouping some of your outlay. These steps are part of the planning stage and are vital. A great many businesses ignore these steps and jump straight into the action — the “doing” stage — and regret it. It’s understandable, but it is a mistake — be patient. 

So, do the planning and thinking first, before things go wrong. There is a good deal of financial and legal help out there available to you. There are articles on business plans, cost benefit analyses, market strategies, cash flow matrices, ROI, etc., all freely available. My advice is to read them and try to relate them to your business on the most practical level you can. If there is something you really can't do — the financial or legal implications of starting a business springs to mind — get the best advice you can afford.

What I'll be looking at are the personal implications for you. Psychologically you need to be strong and determined. You need to be confident and determined. This will not always be as straightforward as it seems. There will be times when you're tired, broke, fed up. These are the times when you really need to be sure of a few things.

Your Idea
Number one, you need an idea. It's not enough to want to do “something.” You need an idea and you really need to believe in it yourself. This will be a large part of your life for a long time so if you have any serious doubts about it early on — have a rethink. Do a little research on your idea. Find out about competitors, opportunities. Get some information on a range of aspects. Talk to people. Carry out some basic research. However, it's important not to get too bogged down in the details. One of the traits of successful entrepreneurs is their ability not to over-analyze. They are frequently confident enough to go for something before all the results are in. What helps a great deal though is their ability to adapt their ideas, stay flexible, and keep constantly alert.

Your Values
This is the key to setting up your business. You need a strong set of values and beliefs. To help with this you should sit down and ask yourself a few very difficult questions:
~ What would success look like? 
~ Where would you like to be in 3 years time? 
~ What are the values you have? 
~ What won't you compromise on?
~ Why do you want to run your own business?
~ What are you good at?
~ What aren't you good at?
~ What are you like when things aren't going well?
~ Do you have people who can help you?

Your Techniques
You need to be clear about exactly what business you are in and everything about your business. I was amazed recently to hear a leading figure for Mcdonald’s stating that McDonald’s was in the retail business. On further thought I realized that if people stopped buying McDonald’s meals tomorrow they would still survive. Their restaurants are all placed in extremely marketable locations. 

Parker Pens had a meeting a number of years ago when they were trying to compete with cheap pens and realized they weren’t in the "pen business" at all. They understood that their main competition wasn’t Bic, but bracelets. Think about it. When did you last buy, or receive a Parker Pen? I would guess it was some kind of gift, or present. Realizing this totally transformed Parker Pen’s mindset. Instead of trying to cut costs to compete with cheap pens, they spent more and added nice boxes, ribbons, and marketing to help their products compete in the gift business. 

What business are you in? If you know what business you’re in you should know who your customers will be, shouldn’t you? Use this fun exercise with a trusted colleague to gain some interesting insights:

1) Write the name of any customers, or potential customers on Post-it® Notes. These customers can be grouped however you want: “Mr. Smith”, “students”, “men with spare money who like football”, “ex-criminals who eat chicken”, etc. List them in whatever way makes this real to you.
2) The next stage is to draw a grid as shown here, and place the Post-it® Notes in the relevant sections. This part of the exercise, in itself, often reveals some interesting insights as you discuss where certain groups of customers or potential customers sit.

HIGH

 I
N             HIGH INTEREST                                         HIGH INTEREST
T             LOW DISPOSABLE INCOME                       HIGH  DISPOSABLE INCOME
E         _____________________________________________________________
R
E             LOW INTEREST                                          LOW INTEREST
S             LOW DISPOSABLE INCOME                       HIGH DISPOSABLE INCOME
T

LOW    ___________________________________________________________ __ HIGH
                                       DISPOSABLE INCOME

3) Having completed this, focus on the right hand side of the grid. These are the people with the money. The people who are highly interested and have high disposable incomes should be customers already — if they’re not, make sure they are tomorrow.
4) Next, focus on the group with high disposable incomes who are not interested. What would it take to interest these people? Do they know about you? Where do they go? What do you need to do to get them to hear about your product?
5) Take notice of the people on the other side of the grid and keep them informed — especially the group with low disposable incomes — who knows, they may get money soon, but don’t spend too much time and resources on them. You simply can’t afford to. 

This simple, fun process should help you target your marketing. One other point: you need to repeat this process regularly — people move and new customers emerge — it’s very useful.

So, are you still thinking of starting your own business? Still seems a good deal to me. HBM

Byron Kalies is a Liverpool-based writer with 13 years' international experience as a management consultant. For more information on Byron Kalies, visit www.byronkalies.co.uk.

Previously published in the February 2007 issue of HOME BUSINESS® Magazine, an international publication for the growing and dynamic home-based market. Available on newsstands, in bookstores and chain stores, and via subscriptions ($15.00 for 1 year, six issues). Visit www.homebusinessmag.com

                                                        
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