With flat job numbers and few solutions to get Americans back to work, starting your own business can be your path to financial recovery.
In fact, despite the economic turbulence, new data from Manta — the world’s largest online community for promoting and connecting small business — finds 500,075 new businesses were created in the second quarter of the year. That’s a 27 percent increase from the first quarter 2011 and nearly 2,000 more new businesses than were formed in the same period last year.
1. Be Clear on Why You want to Start a Business
While the idea of starting a business may be daunting, the fatigue of looking for a job may be even greater. Taking control of your working life by venturing out on your own may be scary, but doing noting can be worse. That said, don’t start a business because you’ve run out of options. If you’re truly interested in doing your own thing and you’re ready to go for it with gusto, then small business ownership can be the most frustration and the most freeing avenue–with the possibility of the greatest financial security.
2. Determine Your Business Type
You don’t have to reinvent the wheel. The best idea for you may be tried and true with your personal twist. When I started Women For Hire 12 years ago, career fairs were a dime a dozen — still are. I put my spin on the category by focusing on women and I created a very successful business. Today I’m doing the same thing with my new venture — Spark & Hustle. I’m putting my twist based on my experiences on helping current and aspiring small business owners to launch and grow their businesses. Take a look around and you’ll see no shortage of repeatable ideas: People buy cupcakes, we all get haircuts, everyone likes some kind of jewelry, at some point plenty of homes need plumbers. Competitors can co-exist quite successfully. You just have to execute your version really well. So nail your idea — and keep in mind that a service business (a service you provide based on your expertise) is much less expensive to launch than a product business where it costs money to create a tangible good. (For basic business advice on the legalities of getting started, click here for a Q&A with Rocket Lawyer.)
3. Create a Simple Business Plan
Most new aspiring businesses owners think they’re supposed to sit down and write a detailed and lengthy business plan, making all sorts of wild assumptions about how much money you’ll make in five years, and so on. Some people worry so much about dotting every “i” and crossing every “t” until their plan is just perfect, they never start their business. For a basic business, I favor a one-page business plan that covers what you offer, who you’re targeting, how much you’ll charge and what you’ll do to make it happen. It’s a fluid process that will change once you dive in, so keep it simple at the start. CLICK HERE FOR GUIDELINES FOR WRITING YOUR BASIC PLAN.
4. Nail Your Target Customer
Determine exactly who your customers are with great specificity. If you’re creating a skin cream, don’t say “all women” or “everyone with skin” could buy from you. Is it targeted to women who visit a dermatologist for monthly facials or to women who grab anything from the drug store aisles? Your ingredients, process, packaging and pricing will all determine who the customer is. Be specific: I’m going to provide bookkeeping services for restaurants; I’m going to create social media campaigns for self-published authors. The more you can pinpoint your targeted client, the more focused your marketing efforts will be to reach them. You’ll be able to ask for the right referrals and you’ll know who and what to search for on the Internet.
Your pricing shouldn’t just cover your costs; it must also generate a profit for your business. Don’t undervalue your time and talent, which is a classic mistake. One option is to work the numbers from the top down: What are you looking to make annually? How does that break down monthly and weekly? How many products must you sell or how many clients will you need to bring in to meet those numbers? What are all of the costs associated with delivering that product or service? None of this requires fancy charts or advanced accounting skills. Plan around with the numbers so you know what’s realistic as you get going–and revisit your numbers monthly.
6. How to Find Start-Up Money
Until you start bringing in sales, you must keep costs down. Think creatively: it would be great to rent a fancy commercial kitchen to bake those cupcakes, but use a cheap or free church or community kitchen in off-hours instead. I worked with a woman to launch a series of art classes for kids, but she didn’t have money for supplies. The solution: she required parents to purchases the supplies and pay local small business owners for the courses upfront. Forget hiring a full staff; ask friends for help and train interns. Barter for key services.
If tapping personal savings isn’t an option or if you need a more creative financing option, one of the fastest growing now is crowdfunding, which allows your network of friends and family to contribute to your start up costs if they like you and want to support your small business idea. (Click here to learn more about how that works.)
This is where the magic happens. Nothing else matters if you don’t have customers. The majority of your time and effort must focus on sales. Having a smart marketing plan to attract interested people, and then convert them to customers is your number one priority. Don’t get overwhelmed about how to dive in: just start where you are. Create a list of 50 potential prospects that you’ll go after and begin making calls one by one. Build a serious social media presence for your business where you can engage directly with your target market.
Dreaming about how fabulous your business can be is good; but doing some to get it there is sensational. It’s all about the hustle: the decisions you make and the actions you take each and every day – that’ll get you where you want to go.
Tory Johnson is the workplace contributor on ABC’s “Good Morning America.” She’s the founder of Spark & Hustle and Women For Hire. Ask her your small business questions anytime at Facebook.com/Tory or Twitter.com/ToryJohnson.