Money Smarts Blog
5 tips for starting your own business
May 23, 2022 || Craig Loken, Commercial Lender
If you’re reading this, you’ve probably thought about owning your own business a time or two. After all, entrepreneurship is at the heart of the American spirit.
Unfortunately, thinking about it is often the end of the discussion for many would-be entrepreneurs, but with advances and continued acceptance of technology, it’s never been easier to start your own business (not to say that it's easy, but you get my point).
Don’t believe me? Read on.
Before we get into the good stuff, though, ask yourself “Am I ready for the lifestyle change necessary for being a successful and happy business owner?” Think about a time you or a friend/family member decided to go on a diet or start a new workout routine. There are likely a handful of examples of long-term successes and likely many more examples of short-term successes.
A key reason many individuals don’t achieve their long-term goals is that they don’t adopt the lifestyle changes necessary for long-term success. I mean let’s face it, it’s much easier to eat healthy for a few weeks than it is consistently for several years.
When it comes to owning your own business, it's not much different. You must be strong enough to swim in a sea of ambiguity and comfortable enough to wear many hats. Just because you make “the best Philly cheesesteak west of the Mississippi” doesn’t mean opening a restaurant is as simple as providing that recipe. Unless you have help, you’ll be responsible for many of the following roles: IT, HR, Accounting, Sales, and Marketing, etc. This is all before you step foot in the kitchen.
The more experience in these support roles, the better off you’ll likely be. Do you have weaknesses in any of these areas? Perhaps you should consider courses to help sharpen these skills.
Consider the following statistics of small business owners according to The Alternative Board:
- 49% of Small Business Owners work > 50 hours a week
- 97% of Small Business Owners work weekends – 40% working always or often
- 32% of Small Business Owners take < 10 vacation days a year
So, again ask yourself, “Am I willing to make the lifestyle changes necessary?” If the answer is yes, then let’s keep going.
5 tips for starting your own business
1. Define your purpose
Why do you want to start a business? To make money is certainly a goal worth considering, but it shouldn’t be your sole reason. Most successful business owners tend to pursue something they’re passionate about.
I’ve heard it put another way “Successful and happy business owners pursue something that burdens them”. Yes, you read that right. What I mean by that is, people will continue to have passion and energy for things that burden them until they solve them. This passion will help provide them with the energy needed to navigate the challenges of starting and running a business.
2. Do your research (market research, that is)
Harvard Business School recommends starting your research with a question/hypotheses process. What questions do you aim to answer through market research? Using those questions, you can make predictions called hypotheses.
- An example question you may ask is: “What’s the user’s biggest pain point, and is my product meeting their needs?”
- Your hypothesis could be: “I believe the user’s biggest pain point is needing an easy, unintimidating way to learn basic car maintenance, and I predict that my product meets that need.”
You’ve now answered the what and why at this point, so it’s time to focus on the where and when.
- What does my product or service solve?
- What are my competitive advantages?
- What about competition and is this a short-lived fad or does it have long-term potential?
There are generally two different types of research – primary and secondary. Primary research includes any data that can be learned about your specific customers or target market that you can personally collect like surveys, focus groups, polls, etc. Secondary, on the other hand, is all the data that you didn’t collect yourself like industry reports or public databases. There are endless amounts of secondary research available but determining what is valuable data and what is not can be difficult.
Essentially you want to figure out where your potential customers are and gather as much information about that location as possible. This could be locally, regionally, nationally, or globally – what factors could affect your chosen market?
Some helpful public data resources include: U.S. Bureau of Labor Statistics and National Bureau of Economic Research
3. Know your resources
There are so many resources out there, you just have to look:
SCORE List of Startup Resources > 50 mostly free start-up resources and links
Illinois Small Business Development Centers
Iowa Small Business Development Centers
Illinois Small Business Development Centers are located throughout the state and provide information, confidential business guidance, training, and other resources for start-ups and existing small businesses.
America’s SBDC Iowa offers personalized, confidential, and no-cost business counseling to small business owners and entrepreneurs in Iowa.
4. Form your advisory team
What type of business structure will you choose? Do you understand the rules, regulations, and taxes governing your chosen industry? This can include business licenses and registrations, local zoning rules, labor and immigration laws, IRS rules etc. What services will my business need to manage cash flow?
- Advisory “Tripod” – CPA, Attorney, Banker: In a perfect world, these three parties work seamlessly together. This is very often not the case so if you can get all three on the same page, you will put yourself in a much better position.
- Get yourself a business mentor: This can come in so many different forms, shapes, and or sizes. Think outside of the box here and don’t get caught up in making formal arrangements. This could be an industry expert, a certified SCORE mentor, or even a future competitor of yours. This relationship can function as both the gas and the brake but caution you in finding a cheerleader.
According to a survey of 544 Small Business Owners, the majority of business owners said they would've benefited most from a better coach/mentor when starting their business.
5. Reach out to IHMVCU
Schedule an appointment with us at one of our convenient branch locations by going to IHMVCU.org and clicking “Schedule an appointment” at the very top. Then select “Open a business account”. Don't worry if you're not ready to actually open a business account. We'd love to sit down with you to talk about your goals to understand how we can help you reach them.