No job? No problem! Create your own by forming a company!
OK, so it’s not that easy. But it’s not that hard either: Register with the state and local governments, print up some business cards, and you’re good to go. Right?
Let’s step back for a moment and think through this. Perhaps last week’s article on leaving your job inspired you to action, and you’re thinking now about the possibility that you could build on your passions and skills to deliver a product or service that people will value. Let’s go through these steps.
1) What are your personal goals? This may not be obvious. Perhaps you want to try something that you’ve had a passion around, to see if it could be a sustainable business. Maybe you want to generate a big pile of money that you can retire on. Maybe you have some skills that you’d love to use full time.
2) What are your business goals? Are you wanting to create a company that you can sell? Are you looking to be a 1, 10, 100, or 1000 person company ten years from now? What kind of unique qualities do you want to be known for in the market?
3) Who are your target customers? I’m not going to let you answer, “anybody who’s willing to buy my product,” because that’s not useful to make your decisions. That would just be putting a product out there that NOBODY has a compelling reason to buy. So pick some ideal customers, and focus all your energies on them. Others might purchase – that’s fine – but get focused.
4) What do your target customers need from a vendor? Start going into some significant depth on what needs those customers have that aren’t being adequately filled. You’ll have to be significantly, even surprisingly, better than the alternatives in order to get any visibility. Solve a need that people are already convinced they want to spend money on.
5) What could I deliver that would be COMPELLING for a customer? Finally, finally, we get to the place where many people start. But until you understand where the customers’ deep needs are, you’re not able to judge whether they’d be willing to spend money to get their needs fulfilled. Make sure you look at the full experience the customer will need – especially if you want those people to become REPEAT customers.
6) Who’s the competition? As a new company, you’re probably at a big disadvantage relative to other players. You have no track record, few resources, no marketing presence. So you have to be smarter – delivering a better product or service, reaching customers that the big guys are ignoring, adjusting faster to what customers are telling you. But be careful here: The most important competition for you is likely the customers deciding not to purchase at all. After all, they were able to live before you came along, and they may be quite happy to continue to ignore you, no matter how wonderful you think you are.
7) What’s the product or service you’ll sell? OK, now we can finally describe in concrete terms what to sell to the customers. This will consist of the usual features and characteristics, but also the larger experience you want them to have. How will you make their lives measurably better? What will get them to come back again and again, and refer you to their colleagues, friends and family?
8) How will you market and sell it? Your goal is to reach your target customers, when they’re concerned about the need they have, with a message that will compel them to spend money with you. Develop your plan around the 4 Ps of Marketing.
9) Form the legal entity. OK, now it’s time to look on the government websites to see what you need to deal with. Talk to experienced friends about whether a Sole Proprietorship, LLC, or S Corporation will be most appropriate. Get hooked into all the regulations and insurance policies that would apply to you. Look for advice from useful resources, such as Small Business Development Centers scattered around the country.
10) Go! You’ve spent months, perhaps years, on this planning, so now it’s time to get moving, swiftly and decisively. Enlist investors, if you must. Get that product developed. Write the brochures and design the logo and website. Get all the help you can from experienced people who have started businesses, especially to help you invest wisely. It’s easy to burn through LOTS of money in these early stages, and your revenue from customers will likely be slower than you’d like. So spend wisely, but do spend where it will make an important difference.
The success of your new venture will depend on how much investigation and planning you put into it. The good news is that much of this work can be done while you’re still working in another job, which will help conserve your savings. But when you’re through that, you’ll move much faster, with a clearer sense of direction.
But don’t get so married to the plan that you can’t change it. Most new businesses change their plans radically in the first year, based on what they learn about the market. But that doesn’t mean that the earlier plans aren’t vital – they are.
Remember, one of your keys to success in a new business is that you can learn and adjust faster than the entrenched players. So move swiftly and learn, learn, learn.
by Carl Dierschow