5 Steps for Starting Your Business in 2017

8 Jan
Alexandria resident and entrepreneur, Jeremy Brandt-Vorel, started The Board Bus with his own savings and a lot of sweat-equity (http://www.theboardbus.com/)

Alexandria resident and entrepreneur, Jeremy Brandt-Vorel, started The Board Bus with his own savings and a lot of sweat-equity (http://www.theboardbus.com/)

by Charles McCaffrey

A lot of people think starting a business is hard. Too many would-be-entrepreneurs get stuck early in the process because they think only a certain type of person has what it takes to make it as a successful business owner. Or they try to start too big. Or they try to go it alone.

What most people lack, however, are the patience, determination and willingness to start small, plan and test their business idea. It’s easy to become overwhelmed in the early stages of starting a business.

Here are five key first steps to starting your own business:

1. Connect with an SBA Resource Partner: There is no reason for a would-be-entrepreneur to try to start their business alone. The Small Business Administration (SBA) directs a national entrepreneurial network that provides business assistance to more than 1.2 million entrepreneurs and small businesses each year. These SBA resource partners (SCORE, Small Business Development Centers (SBDCs), Veterans Business Outreach Centers (VBOCs) and Women’s Business Centers (WBCs)) give quality training, one-on-one counseling and networking events that can help you start, grow and compete in the marketplace. And they have helped small businesses across the country to raise start-up and growth capital and sell billions of dollars in products and services world-wide. You can find the SBA resource partner nearest you at https://www.sba.gov/tools/local-assistance

2. Do Your Research: There are two great myths in the start-up community – 1) Everybody wants/needs what I’m selling and 2) My business is different/unique – and so potential business owners fail to do the proper market and industry research. I highly recommend using The Lean Start-up Method (http://theleanstartup.com/) and The Business Model Canvas (https://www.youtube.com/watch?v=ks68qw5cBMc) to conduct Customer Discovery and build a Business Model before taking any other steps in starting your business. Here is another great resource to help you through the research process: https://steveblank.com/tools-and-blogs-for-entrepreneurs/

3. Educate Yourself: You probably have a fair amount of expertise in your chosen field (IT/cybersecurity, consulting, butcher, baker, candlestick maker, etc.) or you wouldn’t have the passion to start a business based on it. Equally probable is that you lack the requisite knowledge to turn your passion into a successful business. That’s not an insult – most of us are not born with an innate understanding of business entities, small business taxes, registration and regulations, finance, accounting, marketing, etc. You don’t need an MBA – your local SBA resource partners offer monthly classes on all these subjects and more.

4. Draft a Business Plan: Once you have determined that your idea is feasible as a business, you want to draft an action plan. Most lending institutions will want a 3 year financial forecast which is absurd at this point. Instead, this first draft (that’s right, the first of many) should focus on only those actions you need to take to start testing your business. If your plan calls for $250,000 in funding or signing a 5 year lease for office space – STOP!

5. Test Your Plan: Repeat after me: “THINK BIG, start small!” Too many times I meet entrepreneurs who were overly ambitious in the startup phase and are now struggling to generate revenue to cover all of those unnecessary fixed costs. Instead, ask yourself, “How can I test this idea without spending a lot of money?” Again, opt for lean. Start a home-based business or use a business incubator for part-time office/meeting space, prototyping (http://www.techshop.ws/) or as a commercial kitchen (http://www.eater.com/2016/2/26/11110808/food-incubator-accelerator-small-business). Try selling on-line, at the local farmer’s market or try a pop-up (http://www.dummies.com/business/start-a-business/just-what-is-a-pop-up-business/). Can you test your services (and build past performance) by teaming, sub-contracting or forming a joint venture with another, established, business? Not only are you testing your business idea, you are building brand awareness and, hopefully, generating revenue.

In closing, I want to address two issues:

1. Start-up Capital: You are an unknown would-be entrepreneur with an unproven business model, so traditional lenders are going to be reluctant to fund your venture. Instead you are going to have to count on self-funding, microloans and crowdfunding. Osiris Hoil, co-owner of District Taco, started his taco empire with a loan from a neighbor (https://www.washingtonpost.com/local/using-his-moms-recipes-this-mexican-immigrant-became-the-dc-taco-king/2016/01/07/99d18c70-b410-11e5-a76a-0b5145e8679a_story.html?utm_term=.50d8aa20a3f9)

2. Start-up Timeline: Building a successful business takes time. If you are planning to start your business in 2017, I suggest planning to take the whole year to work through these 5 steps. It takes time to conduct 100 customer interviews, attend small business classes and test your business idea. The most important thing to do is to start. Too many would-be entrepreneurs spend too much time refining and re-writing their business plan without ever talking to a potential customer or teaming partner.

Now, go forward and thrive!

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2 Responses to “5 Steps for Starting Your Business in 2017”

  1. Sammy Blackmore 01/09/2017 at 19:39 #

    My friend’s startup closed because he hadn’t draft his plan too well. While he had more than enough money to make the business running for up to 2 years, his startup closed for as early as 8 months.

    • postCynical 01/10/2017 at 02:47 #

      Sammy – thank you for sharing. You make a good point. Most businesses fail due to lack of customers, not lack of capital.

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