Starting a Business? 10 Steps You Cannot Ignore

These are ten tips that I have used myself to start a number of online businesses over the past decade.

1.) Like a boyscout, be honest, trustworthy, and professional in all business dealings. In a small business your reputation counts for a lot. Customers will either think well of you and spread the word, or think poorly of you and trash your business – which would you rather have?

2.) While still at your original job and before you quit to go full-time at your new business you should be finding as many customers and potential customers as possible. Get going on all marketing efforts because this is what will dictate the success or failure of your business assuming you have a viable business to start with.

3.) Business research. Ideally you will run almost every important part of your business through Google to see what everyone else in the same situation is doing with their business. When you are piloting your own small business you will need to be an expert at everything after a fast period of time where you’re learning everything you need to know. Joining business groups in your niche can be a big help. Online forums covering your niche is also a great place to get free information from people that want to help as they’re probably not in direct competition with you.

4.) Follow passions. I’m talking in this case about doing business in a niche that you love. This may well be the prime determinant of whether your business succeeds or not. If you love what you do you are more likely to put the required effort into it and make it a winner because it is the ideal business for you!

5.) Don’t break the bank! A clue that you’re not going to make it and your business will fail is that you have already spent most or all of the money by the time you are ready to open to the public. That’s a very bad sign. It’s a sign that you need to keep working at your ‘other job’ too. Don’t quit too soon.

6.) Don’t walk alone. You, and every small business owner I have met – including myself, needs help. If, during all my website development over the last 12 years I was responsible for doing everything – I wouldn’t have enjoyed the success I have. In fact, I’d probably not have been a web developer at all. Find help. You need it. We all do.

7.) Business plans are not optional. They are necessary whether you are going to a lender for funds or not. You’ll need it to guide your business and to bring others on-board. Your business plan will be the in your face reality that you may need confronted with because many businesses are started on dreams. The business plan can help lead you to the place where dreams and reality mesh.

8.) Outsource tasks and entire projects you don’t want to do, and that you’re not competent doing. Outsource trivial tasks that take your time. Your time should be spent keeping an eye on product development, sales, and marketing, and managing customer service.

9.) Locate more funding resources than you think you need. Have some backups you can use if you reach a place where you cannot continue without more funding. Many businesses that would pull through the hard-times get stuck in a place where the funding dries up and the entire business dies. Don’t get caught in that place.

10.) Find a good accountant, lawyer, and business advisor. Stay up on taxes and other legal points that could sink your business. Lawyers are good for advice on certain things, and business advisors like at the Small Business Administration are good for general advice.

How to Implement a Business Strategy in Your Organization

Ask any successful business owner and they will tell you their success was not based on luck. The success – and failure – of a business is dependent upon the strength of their business strategy. A successful strategic plan employs cost reduction, development, and sustainability techniques to ensure a bright future. You need to know your business inside and out in order to create a comprehensive and realistic plan.

Your strategy should help you achieve the objectives of your business. A business strategy is the driving force behind any organization, and takes the form of an official report. Businesses are self-sustainable systems, when you change one thing in the system; it has a positive or negative chain reaction. Like an organism, businesses learn how to adapt to the change if it is positive, and rectify the situation if it is negative.

Organizations have several phases of development, including creativity, direction, delegation, and consolidation. A company may start out with lenient rules and regulations, but as time progresses management adopts more efficient policies that hinder creative thinking. Companies mature and lose sight of their goals and mission statements, with more of an emphasis placed on individual projects or initiatives. As a business enters maturity processes, departments, and policies are refined to reunite the organization.

Ways to Conduct Business Strategy

Historically there are two ways to develop a business strategy, using the “bottom up” and “top down” models. The bottom up method is when employees generate ideas on the floor and the best results are passed onto management. The top down strategy is when business owners create the strategy and implement the changes without seeking employee feedback. Unfortunately, both models fail to include all of the employee feedback.

The new method of developing a business strategy uses a collaborative process, which is when managers and employees exchange information and work together to create a sustainable solution. It is a team-oriented process that bridges the gap that exists between managers and workers. Before you create a business strategy ensure you have the additional resources to carry out the task without interfering with normal operation. Assign tasks and delegate responsibilities while keeping to a defined chain of command.

Functional versus Operational Business Strategies

There are two types of business strategies: functional and operational. The functional strategy focuses on general ideas and a variety of tasks for different departments. The generality is a major disadvantage, however; areas of concentration include marketing, new product launches, human resources, financial assets, and legal issues. Functional strategies provide a nice overview of the business but do not tackle the important issues employees encounter day-to-day.

Operational strategies are ideal for businesses that want to reduce costs and streamline processes because it is much narrower in scope and requires accountability on all levels. The detail oriented plan encompasses everyone and everything, from the number of cashiers on duty to how much inventory is carried at a given time. A strategy is unique to each business and reflects the needs and requirements of the company’s management.

Implementing a Business Plan

A business plan is the textual version of a strategy, as it includes pertinent information regarding the company, including: vision and mission statements, measurable objectives supporting the vision, actionable tactics meeting the objective, resources, milestones and timeframes, accountability and role designations, as well as internal and external risks. The business strategy is not evergreen and should be evaluated routinely to ensure the company still has the competitive edge.

A business plan includes the primary and secondary objectives of your organization, an analysis of current policies and procedures, and the development of new policies or procedures to correct weaknesses within the organization. Before beginning a strategy, it is helpful to conduct a SWOT analysis, which helps identify weaknesses and loopholes within the organization. Your competition capitalizes on your weaknesses, thus it is essential to continuously evaluate your business.

Developing a Competitive Strategy

Brainstorming and collaboration are essential to the development of a successful business strategy. Begin the process by identifying the strengths and weaknesses of the organization. Without erasing responses, continue to identify current opportunities that help your business succeed. Finish the SWOT analysis by identifying threats or risks that place your business in danger. Identify how your company beats the competition, outlining the various strategies already in place.

Identify your current target audience and list potential audiences in the form of demographics. Assess current market conditions and how your company can defeat the competition. Reevaluate how you are reaching current and potential customers and consider your overall marketing plan. Think positively and develop solutions to overcome any weaknesses that you have discovered thus far. Admitting your weaknesses is the hardest part of drafting a business plan, as most companies want to appear strong and mighty. Research why you have these weaknesses and find realistic solutions to the problems.

Business owners often become so caught up with their work that they fail to concentrate on their business strategy, which is a significant source of cost reduction. Achieve your goals by dedicating time each month or week to address issues surrounding the operation of your business. Make the process a tradition, ensuring operations are aligned with current goals and future forecasts. Make your business stand out from the competition by utilizing different techniques to attract the most people.

A successful strategy overcomes organizational hurdles by understanding customer needs and predicting the unpredictable. The formation of a business strategy is a science that combines current circumstances with a variety of internal and external variables, addressing immediate and long-term goals of the organization. The implementation of the strategy is rolled out slowly, starting with management. The plan encompasses everyone; however, customers are indicative of the final result.

How to Keep the Business in the Family

It has been said that it takes a generation to make a business and two generations thereafter to lose it. Usually, the entrepreneur creates the product or service and sells it, creating a great business model over his or her lifetime. Then, upon the entrepreneur’s death, the family fights over who should be in charge and what distributions should be given to the family not directly involved in the business. No one is really “minding the store” as no one stands to directly gain from the extraordinary efforts of maintaining and growing the business, creating a higher stock value. Consequently, after the family disputes and the distributions to the next generation of family members who are not involved in the business, the business diminishes. The competitors to the business visit the customers of the business and lure away the key employees. As a result, the business is sold to an outside third party at a fraction of what it was worth in the entrepreneur’s lifetime.

Sound farfetched? Not really. This is the reality of the circumstances when the entrepreneur fails to do any succession planning. Many times the entrepreneur has a family member involved in the business, but many other children or other family members not involved in the business. If the entrepreneur just leaves the executor or the trustee in charge, in the case of a more standard estate plan, the family member who works in the business now reports to the executor or trustee, who may have no experience in the family business. The family member who is involved in the business finds that he or she must work harder than they did before, absorbing some of the entrepreneur’s job, getting paid the same amount, not having any stock in the company, and having the fruits of his or her labor being paid out to the other family members not involved in the business.

A better route is to do succession planning–starting now. Even when the entrepreneur is relatively young, he or she still needs a plan as to how to leave the business. For instance, if the entrepreneur is incapacitated and cannot work or dies, obviously there needs to be a plan as to how the business continues and how the value of the business can be realized through a sale to provide funds for the entrepreneur’s family. For this purpose, the plan may be as simple as to train employees to do certain facets of the entrepreneur’s job and leave a list of potential buyers of the firm, in case the unthinkable happens.

If the entrepreneur has children involved in the business and children that are not involved in the business, the entrepreneur will have to decide over time which child has the capability to manage the business and how the children can eventually buy the entrepreneur out. The entrepreneur will include provisions in his or her will or trust to give the business to the children who work in the business and to provide alternative assets to the children who do not work in the business.

As with many entrepreneurs, the business may be the largest asset, so the entrepreneur may have to seek some life insurance to equalize the value between the children who are receiving stock in the company and those who are not. This dichotomy resolves the issue of children not working in the business expecting the same amount of distribution from the business as those working in the business. Since those working in the business are receiving stock in the business and those not working in the business are receiving other assets or proceeds of life insurance, the children not involved in the business will not have the rights to any income from the business, only from their share of the other assets allocated to them.

If the entrepreneur does not have any family working in the business, he or she may consider taking on a “junior partner” who can grow into the job and who may have the monetary strength to buy the entrepreneur’s interest in the business out at the time he or she retires or dies. It is important in that circumstance to use a shareholder agreement with the appropriate buy-sell provisions in it, coupled with an employment agreement to protect both the entrepreneur (and his or her family) and the junior partner.

Your succession plan needs to be reviewed from time to time, as circumstances change. Sometimes the family members leave the business to explore other opportunities. Sometimes the junior partners leave as well, due to family considerations, or to change industries.

If the entrepreneur wishes to protect the value of the business to benefit his or her family, it is important for the entrepreneur to have a succession plan and keep it up to date.