Feeling trapped inside those cubicle walls? Do you spend many work hours fantasizing about being your own boss, working from home or having a storefront with your name on it? In these economic times, many feel risk-averse and tend to stay put. But the economy is looking up, and life is too short to languish in a job you hate. It's time to take the plunge. And to help you with that big jump, here are four guidelines from those who have done just that.
1. Make sure your business solves a problem
Brian Leventhal and friend John Stires were sitting at a bar in 2009 wondering why there wasn’t a place to make wine in New York City. The duo had been traveling down to New Jersey to make spirits and found the commute a drag. That annoyance inspired them to launch Brooklyn Winery.
“If you are looking for a business idea, think about what causes you pain in some capacity and how something you are familiar with can make it better,” suggests Leventhal.
From there, do as much research as you can on the industry, your potential competition and possible business plans. Look online, make cold calls, walk into related businesses and join networking groups such as BNI International.
2. Write it down
Although Leventhal says business plans are “somewhat archaic” (since things can change quickly in startup land), he does recommend writing one early on, just for internal use.
“The exercise can force you to answer questions that may arise in your business,” he says.
And Brooklyn-based designer Grace Bonney, the founder of the popular design blog Design*Sponge, recommends writing a mission statement. Why? Entrepreneurs can get lost in the financial side of their businesses, she says, but a well-crafted mission statement helps ground all future decisions.
What’s the best way to come up with a mission statement?
“Sit down and have a conversation with someone you trust and describe what you are going to do, what sets your business apart and why you are so dedicated and passionate about it,” Bonney suggests. “Then write that down. It doesn’t have to be specific or detailed.”
3. Seek help
Don’t have the capital to pay a business consultant? Enlist free help from your local SCORE office, as Leventhal and Stires did.
“SCORE is a great organization that pairs you up with retired, successful business persons who donate their time to help entrepreneurs,” Leventhal says. “We met with a man every two weeks who helped us create a business model, find a good lawyer and nudge us to really go for it.”
Once your plan is in place, it’s time to hire a well-established small business lawyer and accountant. This may cost you a few bucks, but it is worth it in the long run.
“This is not an area where you should skimp,” Leventhal says. “You want to make sure everything is legit or it can hurt you later on.”
4. Figure out your funding
To get a concrete idea of your startup capital, Leventhal suggests firing up an Excel file and dividing it into 12 tabs, one for each month. Then tally up major upcoming costs (hiring, office space, equipment, living expenses). Just make sure to be conservative in your estimates.
“Always build out your worse case scenario,” he says. “Do some research if you don’t know what things will cost.”
Acquiring funding is a whole different story. Both Leventhal and Bonney discourage non-technology entrepreneurs (those who don’t need millions up front) to forgo the venture capitalist route because, as Bonney says, “a deal can come with a lot of strings.”
Instead, they both recommend tapping into personal capital or asking for investments from friends and family.
“Banks don’t like lending to startups, so you may have a problem there,” Leventhal says. “If you do get investors, I strongly advise small business owners to maintain all voting control in the company, regardless of an investor’s financial stake.”
Bonney says, “I’ve seen a ton of amazing design businesses get started thanks to crowdfunding sites. Even before you go looking for funding, though, get some experience in the industry you want to dive into. When you finally do go off on your own, you won't regret it."
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