Are you an Entrepreneur?

In all the years that this author has been working with start-up businesses I can honestly say that there is no such thing as a typical “Entrepreneur”.   Many articles attempt to answer the question; “Is entrepreneurship right for you?”  And, many proclaim to have the answer listing characteristics such as decision making skills, planning and organizing skills, motivation and being a self starter. 

While many of these guides ring somewhat true they should be taken with a grain of salt.  The number one characteristic that sets apart those who start a business from those who don’t is determination.  The real question should not be “Is entrepreneurship right for you?” but, “Are you determined to learn how to be an entrepreneur and follow through?”  So, now that we got that out of the way lets take a look at the process.

Idea Phase

Opportunity knocks in many different ways but for most entrepreneurs once they let that opportunity in, it bounces around in their head for most hours of the day.  For some of the more creative people, this can happen several times a week.  Spotting an opportunity is the first phase of starting a business.  Recognizing an unmet need will have you finding yourself saying; “Why hasn’t anybody done that before?” and your next thought should be “Let’s find out why”.

Preliminary Research

The definition of a feasibility study is debatable.  For the purposes of this guide lets say that a true feasibility study is a well researched, well written business plan with financial projections that are backed up by the information in that plan.  For this step in the process, completing a full feasibility study would be jumping the gun.  

A more appropriate approach would be to complete preliminary market research to answer three questions.  Is there a desire for my product, is there a need for my product and can those people afford my product.  To launch a successful venture the answer to these three questions must be a resounding YES!

Business Planning Articles

Market Research Outline

Marketing Plan Software

The Business Plan

Business planning serves four main functions: Raising Capital, Strategic Planning, Feasibility Testing, and Opportunity Discovery.  Entrepreneurs who take the time to go through the process have a greater chance of success then those who do not.  Something magical happens when you put an idea down on paper in black and white.  The process forces you to work through your idea and justifing the assumptions you made in determining the opportunity’s potential profitability.

Business Planning Articles

Capital Business Plan Basic - Free

Business Planning Software Ratings & Reviews

Financial Projections 

Financial projections spell out your business plan in dollars and cents.  The numbers are not pulled out thin air, but rather extrapolated from the information in different sections of your business plan.  The Market Potential or Market Study (if one was completed) holds valuable data for estimating a reasonable range of projected sales over the first years of business.  The Operating Plan has key information regarding start-up expenses, cost of goods sold from suppliers or production and operating overhead.

Much of the process of projecting financial statements is art rather than science.  Many assumptions must be made for unknowns such as utility expense, repair costs, and bad debt.  But, others are based on factual data like production costs, employee costs, and rent expense. 

Three years of financial projections are the standard.  Any projection beyond three years amounts to “shaking the magic eight ball”.  The first year should be easy to substantiate with relevant data.  Years two and three are typically based on revenue and expense growth rate assumptions with exceptions made for fixed costs.  A financial projection program is a must for projections beyond 12 months. 

Capital Business Plan Basic - Free 

Financial Projection Software

Raising Capital

According to a 2003 SBA study, 65% of business owners cited personal funds as their main source of capital to get into business.  Other sources of capital are personal loans, cashing out assets, business loans, investor financing, and credit cards.  While there are many sources of capital typically only personal funds (if available) can fund 100% of a start-up business.  Personal equity or “down payment” is required for most other forms of financing. 

Financing Your Business Articles

Find Startup Capital at GoBigNetwork.com

Business Registration

Once you obtain the funding you need the first step is to select a legal structure, taking into consideration ownership, liability and taxes.  The second step is to obtain an Employer Identification Number or EIN from the IRS.  Finally, you register with other relevant agencies for items such as sales taxes, licensing and employee paperwork.

Business Registration Overview

Selecting a Legal Structure

The Company Corporation

American Incorporators

Legal Zoom

Implement the Plan

Now that you are in business it is time to implement the plan.  Too often entrepreneurs find that they are overwhelmed by the hectic days and various hats they have to wear as a business owner.  Throughout this process you need to find the time to keep going back to your plan to ensure you are implementing properly.  Don’t throw your plan in the bottom drawer to collect dust.  Pull out the sections that are relevant to day to day operations and use it as a strategic plan. 

Time management is essential.  Create a set of short term goals written out on paper to stay on track.  Most of all take a moment to relish the feeling of being a small business owner and have fun living your entrepreneurial dreams.

Managing Your Buisness

Marketing Your Business

Small Business IT