I often attend events to see what I can learn from other business owners. At a recent panel presentation featuring five seasoned women entrepreneurs who had been in business ranging from 8 – 25 years, I was appalled by the bad and overly simplistic advice these women shared. So in that vein, I will set the record straight on what start-up entrepreneurs need to know about how to start out the right way in business. Here are four questions that I want to clarify for start-up entrepreneurs.
What do I need to start my business?
Wrong Answer: All you need is a business card and some confidence.
Correct Answer: You need much more than that. You need a life plan to make sure you know what you want out of life and then build a business around that vision for your life. You also need a financial plan because the money to start your business will come from your right or left pocket! You should examine your business concept and take an assessment of your business aptitude to figure out if there are skills you need to learn in order to run your business. Then you need a marketing plan, so that you can get clear about who’s buying and why they should buy from you. And lastly, yes, you do need a business plan. You also need a supportive spouse or partner, zero debt, and a kitchen cabinet of advisors (these are people who support you and will work for food to help you with your business — and please make sure one of them is an existing business owner).
Do I need a business plan?
Wrong Answer: No, I never had a business plan; you don’t need one.
Correct Answer: Since the recession started, the nature of business has changed. You need a business plan to make sure your business is on the right track. It’s so much easier to get somewhere when you have a map to show where you are going. The exercise of writing a business plan is important for you to give your business the best possible chance for success. You need to think through what happens once you get a sale and how you are going to keep your sales pipeline filled.
How much money should I have to start my business?
Wrong answer: You don’t need money really; let your first customers fund your business.
Correct answer: The average small business needs $25,000 to start. You will need money to set up systems, your website, secure a credit card machine or online merchant account, launch your social media campaign, develop your logo and marketing collateral, get your initial equipment and inventory and open your business bank account, hire a bookkeeper to help you establish your budget and sales projections and a lawyer to set up your business. You will need to spend your own money until you are in a position to generate a client. Remember that clients are always trying to avoid risk; the more professional you are the more it can help you land a customer.
Should I consider hiring a small business coach to help me with my business?
Wrong Answer: What do coaches know? You should rely on yourself and maybe a mentor to develop strategy for your business.
Correct Answer: When you start a business you are doing 10-13 jobs overnight. A coach can help you make time to work on your business and not in the business–which is a hard thing to do at first. Small business coaches point small business owners toward alternative options for the business while remaining accountable to the business goals. A business coach can also help an entrepreneur develop a strategy to take the business to the next level. I would not engage a coach for more than 6-months at a time.
What’s the worst business advice you ever received?
Melinda F. Emerson, known to many as Small Biz Lady (or on Twitter as @SmallBizLady) is one of America’s leading small business experts. As a seasoned entrepreneur, professional speaker, and small business coach, she develops audio, video and written content to fulfill her mission to end small business failure. As CEO of MFE Consulting LLC, Melinda educates entrepreneurs and Fortune 500 companies on subjects including small business start-up, business development and social media marketing. Forbes Magazine recently named her one of the Top 20 women for entrepreneurs to follow on Twitter. She hosts #SmallBizChat Wednesdays on Twitter 8-9pm ET for emerging entrepreneurs. She also publishes a resource blog www.succeedasyourownboss.com. Melinda is also the author of the national bestseller Become Your Own Boss in 12 months; A Month-by-Month Guide to a Business That Works. (Adams Media 2010)
Wow, I hope you staged an intervention right there! I’m worried about those poor people in the room, writing down that naive, just plain bad advice.
I’ve been very blessed to have received a lot of very sound advice when my partner and I launched our business in December. I would suggest adding this to your list of great advice: Go see your state’s equivalent of the Small Business & Technology Development Centers. We were able to sit down with a counselor who walked us through incorporation, legal issues, financial suggestions, business planning, etc. etc. and it was FREE. It was incredibly valuable. Keep speaking the truth!
Jen—
I had to bite my hand to keep from screaming at the event I attended, but then I thought I need to help other people from this experience. You are correct ever state has some kind of department of community and economic development who’s job is it to assist start-up entrepreneurs. That’s a great suggest.
Continued Success.
Melinda Emerson