The first thing you need to do is ask yourself: Do I have what it takes? Many people like the idea of being their own boss and they picture themselves calling the shots, being able to set their own hours, having ownership over the work they do. But not everyone is cut out for it. You need to be comfortable with the idea of your business taking twice as long as expected to make a profit and you should expect to work longer hours, not shorter ones. The bottom line is if you toss and turn when things don't run smoothly, then this might not be the right career path for you.
When you think this is something you can handle, you need to start talking with other people and asking them if your idea is any good. You might think you have a great idea, but the key is finding out if others agree. Talk to friends and family. But you also need to become an expert on the industry you plan to target. You need to know why your business will be different and better. And if you can, try to do a small test run before you invest everything in an idea that isn't going to fly.
The next step is to figure out how you are going to finance your venture. Many entrepreneurs get started with a combination of personal savings, contributions from investors and loans. Unfortunately, right now, lending is very tight but the Small Business Association is a great place to start. Also these days, many folks are also eying their severance packages as start-up money. No matter what, just make sure you have a big, fat emergency fund safely stashed away so you have some cushion should your business not immediately thrive.
And don't forget to come up with a business plan. Every business needs one. It's the central document that outlines your idea, your timeline for achieving certain goals and so on. Be as specific as possible and make sure you factor in the current economic environment. It should include your mission statement, the number of customers you expect in the first year, your marketing strategy, and sales projections. Once you've written it up, be prepared to revise it regularly.
And finally, don't let the recession scare you away! It may seem like a crazy time to launch a business, but it can force you into some very good habits that will make your small business more likely to succeed, like operating on a shoestring budget. You need to think about every dollar you spend and you really need to master how to get your consumers to spend.
The good news is that if you can succeed now, your business will likely really thrive once we're in recovery.
For more information on starting a small business and other financial topics, please visit www.smartmoney.com.
by Stephanie Auwerter and Jenn Eaker