Have you ever watched the reality television show Shark Tank, all the while wishing it was you pitching that small business idea to top investors?
Or, maybe you’ve been laid off and need to quickly find a way to cover living expenses for you and your loved ones.
Switching from employee to entrepreneur involves a huge leap of faith, especially when generating a set income isn’t guaranteed and achieving “success” in the business world is often compared to climbing Mount Everest.
Maybe your thought process is this: “All the good ideas have already been taken,” or “I’m just not creative enough to generate a product that would actually sell.”
No matter your background story, the modern age of technology has ushered in an intoxicating entrepreneurial spirit that’s taken some of the brightest minds by storm.
If you’re ready to take on the American Dream at its finest, then keep reading.
Quick Guide / Table of Contents:
Monetary Success and Strong Foundations
Becoming your own boss sounds quite attractive, but without personal responsibility, drive, and a healthy dose of reality, those dividends will only be attainable in your dreams.
Before you should even start thinking about the profitability of a small business endeavor, ensure you’re building a solid structure from the ground up.
How can you enjoy the view at the top without a supportive base? With a strong foundation in place, fiscal success is just icing on the cake.
Keep in mind your idea doesn’t have to be the next internet sensation or QVC bestseller (if so, more power to you!). But, you can’t get around identifying a clear purpose and passion for making your dream a reality.
If you’ve been dappling in entrepreneurship for quite some time, then the following strategies are a good place to start:
Take the First Step
When it comes to tackling a small business idea, now is the time. Don’t give any weight to the “I just need more time” mentality that plagues so many well-meaning entrepreneurs.
Whether you’re a young entrepreneur brainstorming business ideas for college students or a seasoned professional branching into a new field, you need to pick an idea and commit to it.
Even if you do make some hasty decisions or underestimate a business deal, at least you didn’t give up.
You don’t have to pursue your business in leaps and bounds at first – taking conscious baby steps is often the best route to take.
Sometimes you can only do so much planning, though. If you don’t take that first defining step, then who will?
Outline Attainable Goals
Self-reflection is really the mother of invention, gently guiding us toward achieving dreams and aspirations we didn’t even think possible.
With this in mind, take a minute and reflect on the following questions:
- Am I starting my own small business from scratch, or am I buying an existing business, such as a profitable franchise?
- Do I want to slowly transition a current side hustle into a main gig? For example, you could successfully work from home by offering online, one-on-one personal training or tutoring sessions in your living room.
- Which skills, both mental and physical, have I already attained and mastered?
- What do I make time for on a daily basis? In other words, what do I prioritize when time is of the essence?
- Can I realistically stick it out for the long haul – through thick and thin?
Bulk Up Your Savings
Before you venture into the small business world any further, make sure you can afford to do so.
Taking this endeavor figuratively off the ground may mean your dream vacation fund will need a new name. Or, maybe you can tap into some inheritance funds to help absorb large hits in the embryonic stages.
If you’re a visionary and can see an expansion or even outsourcing in the future, then build up your capital reserves now.
Cash flow may also be quite slow in the beginning, and you could experience a sudden dry spell in the middle of a prosperous year. It’s better to be safe than sorry.
Secure a Loan or Line of Credit
You may be able to find industry-specific loans, or loans designated for different causes.
This could translate into loans specifically tailored for female entrepreneurs, or those with first-time business owners in mind.
Or, maybe a preset line of credit would better suit your immediate needs. Draw from the amount when you need to without exceeding limitations. You, the borrower, are held responsible for any associated interest.
Only consider working with reputable investors, though. You don’t want to be stuck with a deal you end up regretting (and that possibly ends up hurting your established credit) down the road.
Anticipate Risk and Failure
This may sound cliché, but it’s not if you fail – it’s how you handle the failure that matters.
As your small business has matured and progressed over time, have you possibly overlooked the foundational principles that sparked growth in the first place?
The more faith you have in the success of your small business, the more liability (and potential failure) you’re willing to take on. You’ll also be better equipped whenever unforeseen obstacles or setbacks arise.
Sometimes a golden opportunity is worth the risk – it’s just the timing and approach that should be assessed.
Account for the Cost of Self-Employment
When you open a small business, you’ll have a number of expenses to consider beyond those needed to fund day-to-day operations.
Walking away from your cubicle to pursue your dreams is highly rewarding, but it often means leaving behind a comfortable benefits package. As an entrepreneur, you’ll need to consider your options for retirement plans and health insurance for self-employed individuals, and the cost of that coverage.
In addition to approaching health insurance and retirement plans differently, you may also face challenges in your personal finances. Your income will likely be less stable, especially in the early years, meaning you may need to get strategic to secure mortgage approval as a self-employed small business owner.
These factors should by no means deter you from starting your small business. But rather than being caught off guard by these costs, you should go into your business venture fully aware of the costs so you can build them into the foundations of your business.
Steps Toward Fiscal Gains
Funding a startup and implementing the necessary precautions seems pretty straightforward, right? Well, don’t bite more than you can chew – with a strong foundation comes significant responsibility.
If you’re ready to experience fiscal gains, the following steps will help pave the way toward real success:
Acknowledge Market Demand
This goes back to that simple economic principle of “supply and demand.” If you don’t have the demand, there is no reason to manufacture supply. If you do, you’d simply be throwing away resources at your own expense.
It’s also a red flag when there is too much inventory and not enough demand (this is often why car dealerships seem to have so many “sales” going on).
Visually, you could picture the concept of supply and demand as a figurative “seesaw,” where it’s quite obvious when one end is pulling more weight. Find the right balance for your business and maintain that equilibrium to avoid unforeseen drops or spikes.
But, market research is not even close to being one-dimensional. You should also set aside the time to analyze your purpose and target audience.
Who are you trying to reach? What type of demographic will this product or service attract? Are there any outlier elements to consider? What specific need or want does this product or service fulfill?
You’ll also want to be mindful of your overhead costs and competition. Most business gurus advise keeping any overhead costs as low as possible. For instance, review the financial ramifications of contracts before signing, or downsize to a smaller facility if you have a simple operations process.
When it comes to the competition, know who you’re working with and what they’re offering. Be creative, vigilant, and one step ahead as much as you can.
Construct a Solid Business Plan
Look to profitable franchises, such as Chick-Fil-A or Planet Fitness, for inspiration. Research how they market their brand, what standards they uphold as an organization, or how they handle overhead costs and expense projections.
To construct a solid business plan, think about your service or product, organizational management, marketing, and a financial blueprint. Also, identify scenarios you could potentially find yourself in and analyze how you’d approach them corporately.
While in the drafting process, you may even want to consider copyrighting and protecting your work, especially if the product is an original idea. Take advantage of the opportunity while you can before someone else does.
The intellectual property debate often means treading through murky waters. But, if it results in peace of mind and long-lasting protection for both you and your business, then tread on.
Even if you don’t have any employees yet, go ahead and put together an operations handbook. Make small business accounting a habit from day one, and establish connections with a local law firm and a bank you can trust early on.
Once you’ve determined your target audience and fleshed out your product or service, it’s time to go digital.
To reach your target audience effectively (and potentially expand your customer base), create an engaging website, set up a thriving social media account, or start a focused blog.
There are so many free, quality resources out there that business owners can take advantage of, such as Wix or Weebly.
It may take some time to craft your brand identity and marketing strategy, but developing and protecting these critical assets will be worth every penny.
But, don’t spread yourself too thin. Be authentic and relatable while building an authoritative voice in your specific niche. You may even want to venture into affiliate partnerships with like-minded businesses or organizations.
Thanks to our advanced technologies, distance is not a defining factor anymore when it comes to meaningful collaborations. You can bring in some extra cash by using your platform to endorse other products or services you believe in.
Going virtual also makes it easy for you and your customers to contribute to worthy organizations across the globe. Build rapport with customers by donating a percentage of sales to a nonprofit organization. Determine how you want your small business to be perceived by others and act upon it.
Use Online Resources
In addition to turning to the internet for crafting your identity and targeting audiences, you should also take advantage of all the digital resources that can help you streamline small business management.
For instance, you can take advantage of electronic tax payments with the IRS, simplifying and expediting your tax filing process.
You can also take advantage of marketing tools to manage your social media and email campaigns. Word of advice: Do your research to ensure you’re using the best platforms, looking to online reviews. For instance, I had a poor experience with AWeber, an email management system, but have since found that there are excellent alternatives that provide useful insights.
This one may be a no-brainer, especially if you’re passionate about your business endeavor, but it’s worth stating. While it may be tempting to step away from the day-to-day operations of your business, be careful when you disengage.
The early days of your business can be some of the most meaningful, and you may look back and regret not being present.
In addition to the personal significance, you need to consider your level of involvement from a monetary standpoint. If you don’t pass the material participation test, you could be classified differently by the IRS, meaning you get higher taxes and fewer deductions.
Listen to Your Gut
You probably heard this phrase over and over again when you were younger. Surprisingly (or not), this adage becomes even more relevant in adulthood and can be easily applied to business ethics.
For example, don’t pursue a business idea because it’s in line with the latest fad. Like fashion trends, your trendy product will soon fade out of the spotlight, and you certainly don’t want to experience financial hardship so early on in the game. There are also many moving parts to consider before owning a franchise.
That being said, also listen to your gut when it comes to multi-level marketing opportunities. While some of these opportunities may be legitimate and worth your time, others may simply be too good to be true. If something doesn’t sit right with you, then go with your gut.
Many entrepreneurs apply a SWOT analysis to any potential business ventures before making a final decision. In simple terms, this means examining the strengths, weaknesses, opportunities, and threats that would be involved with said venture.
Work (and Whistle) as You Wait
This doesn’t mean you aren’t going to observe immediate success in the first few years – this is just a guaranteed income safety net in case your business does tank.
Maybe you studied a foreign language in college and you want to provide interpreting services, or you’re good with your hands and could take on home improvement projects for friends or family.
Sometimes it’s best to find a side hustle that’s not in your target market so you avoid pigeonholing yourself. Or, maybe you just want to sit back and invest in stocks in your spare time.
Either way, be productive as you wait. You could end up fostering some important business relationships that contribute to your entrepreneurial success in a meaningful way.
No matter if you end up making a fortune from your small business or not, stay true to your vision and convictions – remember why you started your own business in the first place.
Today, you may only be able to afford to work from your kitchen table. But in a few short years, you’ll be signing the papers on an office building, sitting at that same table as you list out things to consider when you move offices. Treasure both the good and bad experiences you have along the way and observe how these formative moments molded and shaped you into the aspiring entrepreneur you are today.
If establishing your own enterprise interests you, then go ahead and research different low-cost business ideas.
Identify problems that need to be solved, and conceive tangible solutions to those problems.
Establishing a small business is often not a walk in the park, and there are tactics you should avoid at all costs. Nevertheless, it’s never a bad idea to see where your creativity takes you.
If the price is right, you may just end up hitting the jackpot overnight.