“I am looking at starting my own business.”
“Great what type of business?”
“I am not exactly sure. I am leaning heavily in the direction that will use my leadership and IT skills.”
“What type of research have you done?” “I have done a little. I’ve talked to a colleague of mine who has an IT business on the side and a couple of business owners in my area.”
This is a real conversation I had with a coaching client. Many of these conversations result in creating a business. So how do you go about starting a business?
The purpose of this blog post is to give you an overview of the areas I coach around to help clients get their business off the ground.
There are really two big broad categories in starting a business; 1) The Research Phase and 2) The Execution Phase.
The Research Phase is where you build clarity around why you are starting the business, what problem the business is solving, and how you plan on putting the business in place.
The Execution Phase is all about action. Writing a business plan, building relationships needed to execute the business, and prototyping and testing your ideas.
This will serve as an overview and follow-on blogs will have more details of the specifics.
The Research Phase
This phase has three areas. Drivers, Vision, and The Business.
Drivers
What is driving you to start a business? This question can be harder than you think. A common answer; “For the freedom, independence, and autonomy it brings. I want to be my own boss.” “Okay how is your business going to create freedom and autonomy for you? Are you buying a business that is profitable and running well or starting something from scratch?” We all have to answer to someone.
My goal is always to assist my client in building clarity for around why start a business then how. I am always curious to get to the root of their ambition.
What I found is, most entrepreneurs have one or two key values driving them. Once identified, defined, and articulated the path forward begins to clear.
Vision
What do you want this business to look like in 1, 2, and 5 years. Having at least a rough vision of the future is another key. It provides a destination and therefore a path forward.
What Business
Most individuals start with a concept or category they want to get into. Others start with their skill set and want to create a business that will capitalize on their strengths. Either approach works. Starting with a category will lead to how your strengths will make you successful. Conversely, starting with evaluating your skill set will logically lead to a category or type of business where there is a good fit.
Your assessment will build more detail and clarity as you get deeper into your research. It will also solidify your purpose for pursuing entrepreneurship. Your “Why” becomes clearer.
Next is to begin looking at “How” which is the Execution Phase.
The Execution Phase
This phase is about taking action.
Business Plan
Your business plan forces you to stop talking and start writing. Putting your thoughts and plans in writing commits you to an initial path. As you write you will vacillate between clarity and uncertainty, driving further research and action. Exactly what you need.
Your plan has multiple purposes, the two most important are to hold you accountable to yourself and as a tool to justify funding by investors. It is your metric to measure progress.
The most important area of the plan is your financing. Startup costs, pricing, and 3 years of revenue projections. Once you create this model you are forced to confirm your assumptions, which makes the driving force for your education.
Here are a few questions to start your education. Do you know the rate of self-employment taxes, the requirements for payroll, or workers compensation? You will now.
Support
You will not build or run this business on your own. Even if you are a one-person professional services enterprise such as a consultant. You will require a team to support you. Off the top of your head who do you think will comprise your team?
The bare minimum team will be your Banker, Accountant, Insurance Broker, and Lawyer (BAIL). “What! Are you kidding me, I don’t have that kind of money to fund those folks.” Yes, you will. They are not full-time employees however, they are key components of your business, particularly as you are getting started.
Summary
The above five areas are the starting point. My sense is that after reading this you have assessed yourself in each area and put yourself on the spectrum of: clarity – uncertainty. More details in the next post.
