Many aspiring entrepreneurs believe a formal business plan is the crucial first step. However, for most beginners, especially those bootstrapping their ventures, it’s one of the last things you should focus on initially. This guide is for those eager to start a business but unsure where to begin. Here are 10 practical steps, learned from experience, to help you avoid common mistakes and launch your business effectively, particularly if you’re starting with minimal capital.
1. **Read:** Start by reading these four books in order: *Cash Flow Quadrant* by Robert Kiyosaki, *The Art of the Start* by Guy Kawasaki, *Burn Your Business Plan* by David Gumpert, and *The E-Myth Revisited* by Michael Gerber. These offer foundational insights.
2. **Dream:** Before the practical steps, envision your business at its best. What does it look, feel, and sound like? Entrepreneurship is challenging, so your business needs to genuinely excite you. Write down these dreams and goals. This isn’t a formal plan, just brainstorming.
3. **Research:** Before investing heavily, thoroughly research your idea’s viability. Ask crucial questions: Does the market support it? What evidence backs this? What problem does your business solve? Who else is doing it, and how successful are they? How will you differentiate yourself? Is there a readily identifiable market? Do market trends support your idea? Do you need funding, and if so, how much? What technology can you leverage? What skills do you need to acquire?
Hands-on experience is invaluable. Consider launching your business on a small scale to gather market feedback.
4. **Form an Entity & Ensure Legal Compliance:** Once convinced of your idea’s potential, establish a business entity. This is crucial for legality, tax savings, liability reduction, and control. Options include sole proprietorships, LLCs, S-Corporations, and C-Corporations. Consult an attorney and CPA to determine the best structure for your needs. The cost ranges from around $125 for self-filing to $200-$500 with professional help.
Ensure you comply with all legal requirements, such as worker’s compensation insurance if you hire employees. An attorney can guide you through these legal complexities.
5. **Generate Revenue:** This is critical. New entrepreneurs often focus too much on branding and marketing materials before generating income. While branding is important, it should be funded by revenue. Focus on generating sales immediately, even if it means direct selling. No dream materializes without cash flow.
6. **Create Financial Systems:** Manage your cash flow wisely. Track every income and expense meticulously. Maintain accurate records for tax purposes. Use accounting software like QuickBooks or Quicken, or hire a bookkeeping service to assist with payroll and taxes.
7. **Begin Writing an Operations Manual:** An operations manual lets you systemize and scale your business. It provides step-by-step instructions for every task. Systematizing is crucial, and it’s never too early to start. Refine systems over time, but always document them. Consider hiring a professional writer for this task.
8. **Create Marketing Systems:** Avoid expensive advertising initially. Marketing, which takes time, is often more effective for startups with limited budgets. Focus on direct selling strategies, such as telemarketing, door-to-door sales, or customer referral programs.
Ideally, your business will market itself virally if your idea and delivery are strong. Find a marketing approach that works, stick with it, and document the process in your operations manual.
9. **Refine Systems, Replace Yourself, More Refining, & Document Religiously:** In the first year, you’ll likely handle most tasks. This allows you to learn the details. However, you’ll need to delegate to grow. Use your operations manual to train others to replace you. Continuously refine systems. Document everything, including sales data, customer interactions, and operational metrics. This data is invaluable for system optimization.
10. **Write a Business Plan:** This final step is often mistakenly considered the first. A business plan is best written after you have proven traction and real numbers. Investors want to see a track record. This allows you to create an accurate plan based on facts, not assumptions. It also reconnects you with your initial vision after navigating the challenges of launching your business. Like the operations manual, consider using a professional writer for your business plan.