Small Business Connections                                           April 2010

Challenger, Gray & Christmas' job market index reported that 8.7 percent of job seekers gained employment by starting their own businesses in second quarter 2009 - more than double the 4.3 for the second quarter of 2008. If traffic at the IL SBDC is any indicator, new business starts will continue their upward trend in 2010.

 

If you are thinking that this might be the year to start your own business, you need to answer a very important first question:  Not "What are the steps?" but "What are the odds?"  To make sure that your new venture has the best chance for success, make sure you include the following in your calculations:

Thorough Market Analysis 

Most business plans are weakest in this area - the area that is actually most important to your survival.  You MUST know your market.  Who are your customers and what makes them tick?  What is compelling them to purchase from you, and what is preventing them?  How will they know about you? Who are your competitors, and most importantly, what is special about your business that will draw customers away from them?  If you are guessing at the answers to these questions, your odds of success are slim.

Detailed Financial Analysis

A business plan without a detailed financial projection is a recipe for disaster.  If you are like many entrepreneurs, preparing financials is probably not your strong suite, so get help.  The IL SBDC has financial templates to help you prepare these numbers, and will show you how to use them - even if you were a math dropout.  Then, be very conservative.  If the forecast does not produce the profits you want, don't fudge the numbers to make the plan work.  Continue to research and revise your strategies, products and services until you are confident that you have a winning plan.

Diehard Support Network

Let's start with your family.  Are they prepared to take this journey with you?  If not, you risk losing more than just your business.  Talk to your friends.  Find out what help you will get, and in what areas.  Investigate partnerships with other businesses.  Finally, include fees for professional services such as legal, financial and IT in your start-up budget.  Skimping in these areas could cost way more that you would spend to get it right the first time.

Rigorous Self Assessment

Are you sure you are cut out for entrepreneurship?  Do you have what it takes to make your business successful?  Are you willing to work long hours, seven days a week for the foreseeable future?  Are you prepared to step outside your comfort zone to sell yourself and your business, solve difficult problems and make tough decisions?  Be honest about your weaknesses, and have a plan to compensate for the things you are not good at - these are the things that will kill your business.