In all honesty, I did learn a great deal from this course apart from how to bid wisely on Showcase Showdown. For an entire school year, the course was dedicated to creating our very own dream business. As if there aren’t enough of them around to turn us all orange, mine was a tanning salon – the aptly named “Toucan Tan.” More importantly, we acquired knowledge of how to produce complete financial, marketing, and operations plans and goals.
So maybe you’re not the next one in town helping turn winter white skin into bronzed beach-ready skin. But if you are looking to start your own business, here are a few insider tips (even a couple from my high school class, if I can remember that far back).
Know What (and Who) You Need. Here’s the starting line-up of things you’ll need:
- Money – You didn’t think you could start a business for free, did you? Oh you did? That’s so sweet.
- Knowledge – For example: if you never mowed the lawn a day in your life and don’t understand weed whacking 101, then it’s probably not wise to invest your savings in a fleet of grass cutting machines in the hopes of manicuring all your neighbors’ lawns.
- Industry Experience – In my opinion, not always necessary…you could just watch “The Apprentice” or study Fortune tirelessly. Experience can be overrated, but in some cases this relates back to having a bit of knowledge about the trade.
- Customer Insight – Understanding your target market (and its relation to the location of your commerce) is crucial. Just think – you wouldn’t open up a rave nightclub within a retirement community or build a couture boutique out in the sticks, right? Know who you’re selling to in order to learn how you can maintain their business.
Next, assemble your key advisors (joint chiefs of staff, posse, clique… whoever they may be). Depending on the breadth of your business and ensuing liability, you will likely be making great buddies with an attorney, accountant, and insurance agent. Consider that you’ll also be dealing with vendors and suppliers if you’re starting in the retail industry.
Determine Basics. Obvious question, but what kind of business is it going to be? Keep in mind that a niche idea can be a goldmine or a flop. Let’s consider Kim Kardashian’s bold concept to produce a narrowly targeted product: pre-paid credit cards specifically marketed to kids. Niche, yes. Creative, yes. Sensible? Um, no Kim, stick to reality television and fragrances.
Well of course, you’re going to have to choose a great title for your business! After you’ve made sure you won’t be thieving it (yes, McDonalds is already taken as a name for a burger joint – sorry), register it as a trademark at a handy-dandy website like LegalZoom.
You also need to determine what type of business structure is best: sole proprietorship, partnership, LLC, or corporation? Choose a sole proprietorship or partnership if it’s going to be small (or home-based without employees), have little liability, be self-funded, and be self-managed. If you’re raising capital, have an organizational structure, and have major liability and exposure to consumers, it’s best to become an LLC or corporation. Many of the agreements you’ll need to fill out pertaining to opening the latter types of businesses can also be obtained at LegalZoom.
And don’t forget: location, location, location!
Invest Time in Research. Just like any valiant coach does before a big game, you’ve got to do a little digging into your competition. It’s the best way to tighten up your offense (marketing, advertising) and defense (sales strategies to remain competitive).
Say you’re opening up a golf superstore and driving range: find out where a few of these hotspots are outside of your marketplace to investigate their best (and worst) practices. If there is an established and similar business back in town, stop over to inspect your toughest competition. Don’t you want to research the ingredients in the secret sauce you’ll cook up that sets you apart? Peruse through some of the range rats that think they’re the next Tiger Woods – by acting as a secret shopper, you can gain valuable insight on customer needs, quality service standards, sales strategies, and functionality of facilities or amenities.
Put it all Together in a Plan. Since I’m assuming you’re not on cash-blowing and jet-setting Diddy (or whatever he goes by these days) status, you’ll likely be obtaining a loan to finance your start-up. Most lenders require the following:
- Business Plan – This typically includes a vision, mission, external assessment of competition, internal analysis, critical categories (what must happen in order to achieve your mission), and supporting goals.
- Cash Flow Forecast – Plain and simple: the lender wants to make sure you can repay the loan!
- Statement of Personal Financial Standing – This declaration will give the lender a comprehensive view of your assets and debts. You may want to include a credit rating report along with this.
If you follow these tips and I later find out you’ve overtaken Mark Zuckerberg or Bill Gates in wealth, then that is just AWESOME. In the interview for your Forbes richest people in America cover story, my only request is that you tell them where you got such financially sound and mind-blowing advice. Good luck future tycoons and moguls!
Stephanie Koske writes for Quicken Loans and loves that it’s one of the most amazing places to work. Check out the Quicken Loans YouTube page and learn more about what it’s like to work at QL.
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