The eventual success or failure of your start-up could hinge on the things you do at the very beginning. To make it as an entrepreneur, you'll need a good idea, a solid plan and the ability to execute on the fly.
It's not easy. But by following a few general rules of thumb -- and avoiding the key mistakes that some small-business owners make in the early going -- you can give yourself and your fledgling company the best possible chance to survive and thrive.
Here then, are the first steps to take -- and the steps you'll never want to make. Bear them in mind as you put together a business plan, study your marketplace and test your concept.
: Make one. Your plan should make a compelling case for your idea, form the backbone of your case for financing (if you plan to seek outside money) and help you understand your company and how to manage it. The best plans act like roadmaps, with a view of the whole business that can also provide the information you'll need to make decisions every day. The Small Business Administration provides a
for writing a business plan, while
offers 12-week training programs across the country.
: Jumping in without a thorough plan. Remember the old adage: "Businesses don't plan to fail, they just fail to plan."
: Know your customer, your marketplace and your competition. Outside of funding your company, market research is probably the greatest challenge you'll face as a start-up. How you do it -- studying demographic tables at the library or online, talking directly to potential customers or competitors, compiling surveys or establishing focus groups -- depends on your business, but the goal is the same. Your mission is to figure out who your customers are, where they are and how they're being served now.
: Relying solely on the Internet, or the experts. In the information age, there's no shortage of Web sites, periodicals, books and government agencies offering tips and ideas about demographics, industries and markets. Indeed, any information you gather can be helpful. Start online or at the library. And yes, visit your local small-business assistance office. But you'll also need to get out there and talk to people. Ask potential customers what they're looking for, and what they're not getting from current suppliers or providers. If your idea is limited to a particular geographical market, try to interview someone who does something similar somewhere else.
Testing Your Idea
: With some market research in hand, you should be able to design ways to test your product or service. If the results are promising, they could go a long way toward convincing loan officers or potential investors to back your firm. If not, you can regroup -- without losing a lot of money. If possible, roll your product or service out via a prototype or test run, and see how it sells.
: Jump in without checking the waters. If you're planning to sell a product, don't just order 1,000 and see how it goes. Rather, make or buy 10, and sell them on eBay, at a local farmer's market or another suitable venue. Not only will you find out if the item sells, but you'll get the chance to interact with potential customers, who will typically provide you with useful market research as well.
Mike Woelflein is a business and personal finance freelance writer. A former senior industry specialist with Standard & Poor's and managing editor of ColoradoBiz magazine, he has also written for The Denver Post and American Express.