Three Questions to Ask Yourself Before You Go Into Business on Your Own
Whether you have a fantastic idea or you're looking to gain professional freedom, starting your own business has always held appeal. We're constantly bombarded with ads and promotions singing the praises of going into business for yourself, with an emphasis on how easy it is. Whenever there's a rise in downsizing, more displaced professionals seem to join the ranks of entrepreneurs trying to fill a need. Before you jump into an uneasy economy with both feet, it's good to ask yourself a lot of questions. Here are three to get you started on evaluating your business plan and shifting your attention to areas that may need more development.
#1 I Know There's a Need, But How Do I Fill It?
Even after you've determined that there is a need for your product or service, you have to consider how you're going to fill that need. Are you going to provide a long term solution, a temporary one with built in obsolescence, or one that will require you to provide constant maintenance? Are you going to approach marketing your business with a serious air or with more of a flair for fun? Consider how the cofounders of Plaza Group promotions Howard Brown and Stephen Friedman decided to sell automotive products for a gas dealer. They came up with a game built around the entire line of products — tires, car batteries, and accessories, along with gas and oil. Then they designed a card where customers were given the opportunity to fill in a number of various octanes, tires, or car batteries and when they completed a line across they were awarded a cash amount. They decided the best way to push automotive products was to make it into a game. Their game Winning Line was a runaway success. It pays to explore all of the different ways you can advertise, market, and promote your product or service.
#2 What Do I Have to Offer That No One Else Can?
Startup businesses have always had to carve out niches to set themselves apart from their competition. Now it's even more imperative that you are offering something that no one else can. The reason is because the Web makes it easy for anyone from anywhere to access most goods and services. Location is not the major factor in business success that it once was. Dirtbag Clothing, Inc. illustrates how important differentiating your business is. When the San Francisco-based clothing line was launched in 1996 they took the brash step of selling an attitude by incorporating the catchphrase "Wear it 'til it stinks!" Their target audience was the younger, skateboarding/surfing crowd, and sales took off. Founder Douglas Canning describes Dirtbag Clothing's approach to marketing this way. "The Internet has leveled the playing field to the point where pretty much anybody with a solid concept can launch a business and have an Internet presence without investing thousands of dollars."
#3 Do I Have Adequate Funding?
Startup capital doesn't include hidden costs and unforeseen expenditures you may be required to pay along the way. Keep in mind that debt financing involves a loan, and you have to figure in the interest you will be paying on it. There can also be fees for the proper permits and licenses your company needs to operate. Setting up a Web site can be done relatively inexpensively, but costs for more complicated design and development can get high. One of the best ways to anticipate hidden costs is to do your research and talk to as many people as you can in the field about the economics of their business ventures. If they are reluctant about talking to you, consider offering a tradeout that obliges you to promote their business once yours is established.