As a small business owner, I often have people ask me for advice on starting their own business. They are excited to purchase a web domain, get a website up, get a logo designed, print business cards and letter head, and lease an office, but they haven’t actually thought through the process of how this business will come together and what it will take to make a living.
There are a few things that I offer as advice to those thinking about the glory of being self-employed full-time.
How long can you survive without a paycheck? If married, is your spouse supportive of long hours with no pay? I have started two businesses as my full-time venture, and both required 6-12 months with no incoming salary. In other words, it took me almost a year to get to the point where I could afford myself as an employee. Both times I talked this through with my wife before going out on my own. There are so many costs to starting a business, from computers, to furniture, from warehouse equipment to the actual product to stock. Usually that alone will scare most of the starry eyed self-employed hopefuls away.
What is the demand for what you want to do or sell? If you want to start a carpet store, you need to answer this question. “Why will people buy from you instead of your competitors?” You need to know the competitive landscape. Are there already 10 other carpet stores in town? Will you be able to offer anything unique? Price, service, product, quality, or location? Is your product in demand?
Lastly, what makes you qualified for this business? Do you have any particular skill or knowledge that will help you to be successful? Are you going to sell direct in a retail store, through dealers and distributors, or online? If you like being a carpenter or a salesman, you may not enjoy actually running a business, because you will end up spending most of your time “running the business” rather than actually being a carpenter or getting out and selling. Ultimately, are you starting a business just for fun or do you think you will really enjoy running a business?
I think that all of these questions can be answered in some sort of business plan. It is very important before walking in and quitting your day job, to have answers to some of these basic questions nailed down. As part of this business plan you need to know: 1. Start up costs. 2. Money resources for those first 6-12 months during the time when you may not be able to pay yourself. 3. What the product or service is that you will sell. 4. Who are your competitors? 5. What are your competitive advantages? 6. What do you offer that your competitors do not? 7. How will you advertise and market your product? 8. Who will be your suppliers? 9. Who will be your customers? 10. How much will you need to sell per month in order for you to make a comfortable living?
These are lessons that I have learned from owning two businesses. The first one I started in 2001 with a colleague at work. We both had sales skills and had been in the industry for a number of years, so we knew that end of the business. But my business partner, who was a 50% owner, really only enjoyed sales, and ultimately did not enjoy owning and running the business. After 3 years, he decided that he wanted out. We ended up selling the business. I knew that I would eventually start another business because that is what I enjoyed. We are still friends. He is VP of sales for a company and I’m self-employed again. We’re both happier now doing what we love.
Professional Cable (www.professionalcable.com) has now been in business for over two years, and I love it. We manufacture and supply computer, network, fiber optic, and home theater cables to a number of markets and industries across the USA. Before opening my doors in 2007, I already had talked with many of my potential customers. I had already talked with my main suppliers and made them aware that I was going to start another business. I had a business plan, not for other people, not for investors, but just for myself so I could think through everything. I knew that I could be successful. But, even with so much in place, it still took 6 months before I could start paying myself a paycheck. Luckily I have a supportive wife.
Starting a business is not a venture for the weak of heart, but if you are prepared it can be extremely rewarding. I love to hear of other success stories of entrepreneurs who have gone out on their own. I have now been in the cable industry for 15 years. I’ve been selling computer cables since back before we were all using email and the Internet. I’m somewhat of an expert in the industry. This has been key to my success. But more than anything, my relations with both my suppliers and my customers have made it possible for me to be successful. Once I opened my doors for business, I had many customers start doing business with “me” not the company, because of our relations. It had nothing to do with “Professional Cable”. In business, the old adage is true, “Never burn a bridge”. Someday that person may be your supplier, your customer, or your boss. Your reputation will enable your success or hinder it.
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