Have you heard that before? Well, actually, it’s closer to 9 in 10 start-ups fail. And there are a lot of reasons why. So, why bother trying? Well, again, there could be a lot of reasons to try–chasing your dreams, a really good idea, self-employment, to name a few. But starting a business is a little bit like having kids–there isn’t really a concrete, logical reason to do it. It comes from the heart. The key is to understand the risks so that you manage them well. Here are my top three tips for planning a start-up:
1 — Know yourself. Your idea, product or service might be awesome, but if you don’t also know how to manage the business side, your risks of failure rise considerably. You could take business classes to prepare yourself, find a partner with more business experience, hire a consultant or, yes, wait for it…incubate your business in a business incubator while you get a handle on the business skills. 🙂 Just don’t try to do everything yourself because the reality of starting a business when you don’t have business experience is that you begin with all of the things you don’t know–licenses, business plans, funding, etc. You don’t get to the good stuff of advancing your idea until later.
2 — Consider the possibility of failure. It seems crazy to start a business by planning for failure, but knowing the statistics, it’s important to make sure that you can financially handle a loss. It’s like having a will–if this ends, what’s the fall-out? Your average small start-up business does not attract investors. Most small startups get going on loans, their own assets or a combination of the two. So, take a close look at your long term personal finances — or have someone help you do that — and make sure you aren’t overextending yourself with your start-up.
3 — Research, plan, survey. Do not be impulsive. Talk to people. Ask small business people in your area how they got started, what were their obstacles, what advice they have. Bounce your idea off of people. If you’re concerned about the proprietary nature of your idea, keep the conversations in your close circle, but talk about it until people start to avoid you. You cannot have too much information, so gather data on others in your field, the area that you’re considering, cost comparisons, and so on. Before you decide to proceed with a start-up, you should know as much as you can about locations, competitors, costs, and market rhythms.