Start Your Own Business, Seventh Edition

Many people believe starting a business is a mysterious process. They know they want to start a business, but they don’t know the first steps to take. In this chapter, you’re going to find out whether a business idea you already have is a viable one. If it’s not, we will take you through the steps to get a feasible idea, then show you how to take action on it. This is the biggest step in figuring out what it is you want to do.

But before we get started, let’s clear up one point: People always wonder if this is a good time to start their business. The fact is, there’s never a bad time to launch a business. It’s obvious why it’s smart to launch in strong economic times. People have money and are looking for ways to spend it. But launching in tough or uncertain economic times can be just as smart. If you do your homework, presumably there’s a need for the business you’re starting. Because many people are reluctant to launch in tough times, your new business has a better chance of getting noticed. And, depending on your idea, in a down economy there is often equipment (or even entire businesses!) for sale at bargain prices.

Estimates vary, but generally more than 543,000 businesses are started each year in the United States. Yet for every American who starts a business, there are likely millions more who begin each year saying, “OK, this is the year I am going to start a business,” and then don’t.

Everyone has his or her own roadblock, something that prevents them from taking that crucial first step. Most people are afraid to start; they may fear the unknown, failure, or even success. Others find starting something overwhelming because they think they have to come up with something that no one has ever done before—a new invention, a unique service. In other words, they think they have to reinvent the wheel.

But unless you’re a technological genius—another Bill Gates or Steve Jobs—trying to reinvent the wheel is a big waste of time. For most people starting a business, the issue should not be coming up with something so unique that no one has ever heard of it but instead answering the questions: “How can I improve on this?” or “Can I do this better or differently from the other guy doing it over there?” or “Is there a pain point I can find a solution for?” Or simply, “Is there market share not being served that makes room for another business in this category?”

“Even if you don’t have the perfect idea to begin with, you can likely adapt.”

—VICTORIA RANSOM, CO-FOUNDER OF WILDFIRE INTERACTIVE

Get the Juices Flowing

How do you start the idea process? First, take out a sheet of paper and across the top write “Things About Me.” List five to seven things about you—things you like to do or that you’re really good at, personal things (we’ll get to your work life in a minute). Your list might include: “I’m really good with people, I love kids, I love to read, I love computers, I love numbers, I’m good at coming up with marketing concepts, I’m a problem solver.” Just write down whatever comes to your mind; it doesn’t need to make sense. Once you have your list, number the items down one side of the paper.

Is My Idea a Good One?

So, you’ve got an idea for a business already worked out. But is it a good, viable one? The answer might seem complicated, but there are a few markers that will tip you off, according to Neil Petch, chairman of Virtugroup, a holding company that supports startups from their early days to market entry.

1. It solves a problem. Solving a problem means delivering a solution that makes a sizeable number of people’s lives easier. The problem doesn’t have to be one that nobody else is tackling; it can just as easily be a problem no one has dealt with effectively.

2. It’s scalable. Scalability is the potential of your business opportunity to grow and be applied to an ever-increasing market. Think about whether you can expand on your idea, make it flexible and resilient, monetize it throughout, and remodel it if necessary?

3. Your doubts are few and quickly disappear. If you have a flash of inspiration followed by a handful of nagging doubts, it’s easy to set them aside because they don’t fit with the version of events you prefer. You need to be honest though. Conviction is important, but blind conviction is dangerous.

4. People want your product and service. Other people need to be as excited about your idea as you are. Start testing the idea and talking about it with friends, family members, and (as soon as possible), potential customers. Are they enthusiastic; do they love it? Validating your idea outside your own headspace is key.

Together, these four markers of success can help point you in the right direction. If you can answer all of them, great! If not, take heart and take some time to rework your concept. Not being able to say “yes” to all four doesn’t mean you should scrap the idea—it just means you have an opportunity to reframe how you approach and present it to the world.

tip

Don’t overlook publications in your search for business ideas. Books, newspapers, and magazines all contain a wealth of ideas. Your reading list should include business, lifestyle, and niche publications like pets or antique tractors. Read your local newspaper, as well as major newspapers from the large trend-setting cities like Los Angeles, New York, and San Francisco, many of which you can read online for free.

On the other side of the paper, list things you don’t think you’re good at or you don’t like to do. Maybe you’re really good at marketing concepts, but you don’t like to meet people. or you’re really not that fond of kids, or you don’t like to do public speaking, or you don’t want to travel. Don’t overthink it.

When you’re finished, ask yourself: “If there were three to five products or services that would make my personal life better, what would they be?” This is your personal life as a man, woman, father, husband, mother, wife, parent, grandparent—whatever your situation may be. Determine what products or services would make your life easier or happier, make you more productive or efficient, or simply give you more time.

Next, ask yourself the same question about your business life. Examine what you like and dislike about your work life as well as what traits people like and dislike about you.

Finally, ask yourself why you’re seeking to start a business in the first place. Then, when you’re done, look for a pattern (i.e., whether there’s a need for a business doing one of the things you like or are good at). To make the process a bit easier, we’ve provided a “Things About Me Worksheet” for you to complete, starting on page 27.

They Delivered

Here’s a business startup story that’s a great example of seeing a need and filling it. Entrepreneur’s home office is in Irvine, California, a planned community. Many years ago, there weren’t many fast-food restaurants in the area. Most were across town, where the neighborhoods were. Two young men in Irvine found this lunch situation very frustrating. Some affordable food courts were in strip centers, but the parking lots were small and the wait was horrendous.

One day, as they were lamenting their lunch problem, one of them said, “Wouldn’t it be great if we could get some good food delivered?” The proverbial light bulb went on! Then they did what many people don’t do—they did something about their idea. Coincidentally, they purchased one of Entrepreneur Press Step-By-Step Startup Guides and started a restaurant delivery business.

Figure 3.1. Things About Me Worksheet

To date, their business has served more than 15 million people! It’s neither a complicated business nor an original one. Their competition has gotten stiffer, and yet they’re doing phenomenally well. And it all began because they listened to their own frustrations and decided to do something about them. Little did they know that research cites the shrinking lunch hour as one of the biggest complaints by American workers. Some only get 30 minutes, making it nearly impossible to get out, get lunch, and get back on time. So, while these young entrepreneurs initially thought they were responding to a personal need in their local area, they actually struck a universal chord.

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Your hobbies may lead you to business ideas. If gardening or antique toy collecting is what interests you, take your passion and turn it into a real business. Sell your locally grown herbs or vegetables to restaurants or set up an online business selling your rare toy finds on eBay.

That is one way to get ideas—listening to your own (or your co-workers’, family’s, or neighbors’) frustrations. The opportunities are all there; you just need to search for them. If your brain is always set on idea mode, then many ideas may come from just looking around or reading. For instance, if you had read an article about the shrinking lunch hour, and if you were thinking entrepreneurially, you would say, “Wow, maybe there’s an opportunity there for me to do something. I should start researching it.”

Inspiring Moments

Inspiration can be anywhere. Here’s another classic startup story: Before the days of on-demand movies from cable providers and streaming video services, did you ever get charged a fee for returning a video late? Bet you didn’t do anything about it. Well, when Reed Hastings got a whopping $40 late charge, instead of getting mad, he got inspired. Hastings wondered “How come movie rentals don’t work like a health club, where, whether you use it a lot or a little, you get charged the same?” From this thought, Netflix was born. From its start in 1999, Netflix has grown into a big business with revenues topping $11 billion at the close of 2017.

“Don’t start a company unless it’s an obsession and something you love. If you have an exit strategy, it’s not an obsession.”

—MARK CUBAN, SERIAL ENTREPRENEUR AND INVESTOR

Getting an idea can be as simple as keeping your eyes peeled for the latest hot businesses; they crop up all the time. Many local entrepreneurs made tons of money bringing the Starbucks coffeehouse concept to their hometowns, then expanding from there. Take Minneapolis-based Caribou Coffee. The founders had what they describe as an “aha moment” in 1990, and two years later launched what has become one of the nation’s largest corporate-owned gourmet coffeehouse chains. Other coffee entrepreneurs have chosen to stay local.

And don’t overlook the tried and true. Hot businesses often go through cycles. Take gardening. For the last few years, gardening products and supplies have been all the rage, but you wouldn’t consider gardening a 21st century business. The same goes for cleaning businesses or pet care and dog walking, for instance, with people ever more time-pressed and looking to outsource parts of life they don’t have time for.

In other words, you can take any idea and customize it to the times and your community. Add your own creativity to any concept. In fact, customizing a concept isn’t a choice; it’s a necessity if you want your business to be successful. You can’t just take an idea, plop it down and say, “OK, this is it.” Outside of a McDonald’s, Subway, or other major franchise concept, there are very few businesses that work with a one-size-fits-all approach.

“Plan your hunches and use your head.”

—LILLIAN VERNON, FOUNDER OF LILLIAN VERNON CORP.

One of the best ways to determine whether your idea will succeed in your community is to talk to people you know. If it’s a business idea, talk to co-workers and colleagues. Run personal ideas by your family or neighbors. Don’t be afraid of people stealing your idea. It’s just not likely. Just discuss the general concept; you don’t need to spill all the details.

Just Do It!

Hopefully by now, the process of determining what business is right for you has at least been somewhat demystified. Understand that business startup isn’t rocket science. No, it isn’t easy to begin a business, but it’s not as complicated or as scary as many people think, either. It’s a step-by-step, commonsense procedure. So, take it a step at a time. First step: Figure out what you want to do. Once you have the idea, talk to people to find out what they think. Ask, “Would you buy and/or use this, and how much would you pay?”

Understand that many people around you won’t encourage you (some will even discourage you) to pursue your entrepreneurial journey. Some will tell you they have your best interests at heart; they just want you to see the reality of the situation. Some will envy your courage; others will resent you for having the guts to actually do something. You can’t allow these naysayers to dissuade you, to stop your journey before it even begins.

In fact, once you get an idea for a business, what’s the most important trait you need as an entrepreneur? Perseverance. When you set out to launch your business, you’ll be told “no” more times than you ever have before. You can’t take it personally; you’ve got to get beyond the “no” and move on to the next person—because eventually, you’re going to get to a “yes.”

One of the most common warnings you’ll hear about is the risk. Everyone will tell you it’s risky to start your own business. But what in life isn’t? Plus, there’s a difference between foolish risks and calculated ones. You can mitigate your risk if you carefully consider what you’re doing, get help when you need it, and never stop asking questions.

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Is there a household chore or annoyance that drives you up the wall? Common sources of frustration or irritation are great idea generators. The woman who invented the now-ubiquitous spill-proof Snack-Trap for small children (they can reach their little hands in to grab a treat, but no matter how much they shake or drop the snack cup, nothing falls out—usually) was simply tired of cleaning up Cheerios from the floor, amid the couch cushions, and in the crevices of her toddler’s car seat.

You can’t allow the specter of risk to stop you from going forward. Ask yourself, “What am I really risking?” And assess the risk. What are you giving up? What will you lose if things don’t work out? Don’t risk what you can’t afford. Don’t risk your home, your family, or your health. Ask yourself, “If this doesn’t work, will I be worse off than I am now?” If all you have to lose is some time, energy, and money, then the risk is likely worth it.

Fit to A “T”

Every year in Entrepreneur magazine, the hottest business trends for the coming year are profiled, representing a lot of research and a lot of homework. But that doesn’t mean these businesses will work for you. After all, you may not be good at these businesses. Or you could live in an area where the business is already saturated or not viable. Or they simply may not suit you, and you’d end up hating your business. And chances are if you hate what you’re doing, you’ll fail doing it.

Determining what you want to do is only the first step. You’ve still got a lot of homework to do and a lot of research in front of you. Buying this book is a smart first step. Most important: Do something. Don’t sit back year after year and say, “This is the year I’m going to start my business.” Make this the year you really do it!