Startup Masterclass Overview
If you want to start your small business right and reduce your chances of failing, you’re in luck. All across the country, there are experts who have seen firsthand what business owners often do wrong-and right-and can help you avoid similar mistakes.
Experts from the nation’s 63 Small Business Development Centers (SBDCs) are more than happy to share their advice for starting and growing a business successfully. They work with entrepreneurs every day, providing free and low-cost consulting. Collectively, SBDCs help a new business launch every 31 minutes, and provide more than 1.3 million hours of consulting services to entrepreneurs annually.
To get you started, we’ve asked some of these advisors to share their best tips for new businesses.
Experts from the nation’s Small Business Development Centers (SBDCs) are happy to share startup... [+] advice.
"Know your customer," advises Lee Lambert, director of the Alameda County SBDC in Oakland, Calif. "To succeed as an entrepreneur, you must know your customer and what they want; it’s the key to success. Spend time doing some grassroots marketing, and go out to talk to your customers before you start the business, and continuously solicit their feedback after that," he suggests. "Doing this will help you build stronger, longer-lasting customer relationships."
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While you are doing your research, make sure you analyze the competition, says Tamela Darnell, management consultant for the Kentucky Small Business Development Center. "Many entrepreneurs think they don’t have any competitors and that is not the case," she says. "You have direct and indirect competitors."
Some business owners will launch with a distinct vision of their unique niche, but for others the path to success may not be so clear. If you’re in the latter group, remain open-minded and cast a wider net, suggests Enrique Romero, regional director of the University of Texas of the Permian Basin SBDC. "You will eventually find your niche market by working through as many customers as possible, and find a certain customer base that will stick."
Do your homework before you launch, recommends Robert Bahn, lead business consultant with the Arkansas Small Business and Technology Development Center. He sometimes sees clients who think that they can launch a business as long as they have enough money to cover rent and opening costs. "Then they wonder, Where are all the customers?" he says. Whether it’s market research or information on how to prepare for and get business financing, there are plenty of resources available to help you prepare before you start your business.
What if your problem is that you have too many good ideas? Beware of spreading yourself too thin, says Marelena Sandy, program manager for the Illinois SBDC at College of DuPage. "Trying to make all of your business ideas effectively work at one time is simply not attainable," she says. She recommends you use a feasibility checklist to figure out which one works best for you. "What’s the market like? Your competitors? Do you have experience?" These are just some of the questions you need to ask. "Make one idea successfully work, and then decide whether you want to take on another venture," she recommends.
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Start with as clean a financial slate as possible before you launch, urges Romero. "Begin to get your ducks in a row," he says. That includes reviewing and working on your credit, "saving money and [getting] up-to-date on your finances, including your taxes," he says. "Why? Because as a new business owner it will be a tough road ahead and you don’t need a lot of baggage holding you back."
And speaking of money, you need to start with enough funds to cover expenses until you break even, and you’ll want to make smart decisions to protect your finances and your business credit.
If you get financing-whether from a credit card, bank, or family member-be careful, warns Bahn. Being "stupid with your own money" is one thing, he says, "but when you have members of your family giving you money to start a business, then treat it as someone else’s money." It’s the same as getting a loan, he explains. It needs to be paid back.
He also says it’s important to project the path to profitability. "Most business owners want to make money, but you need to know when you expect to break even," he says. "This way when you do not meet the timeline, you have to make some big decisions, one of which is to shut down."
"Spreadsheets are your friends," says Sandy. "Make a list of startup and operational costs, keep track of what you are spending, organize your contacts, and by all means keep them up-to-date," she urges.
As you market your business, remember everything you do has a cost. An example: social media. It’s not free, warns Darnell. "You pay with either your time or money," she says. "It takes time to build a social media presence as a Startup Growth."
Ask for help
Know when to get help. Too many entrepreneurs try to do everything themselves. "You will have a tremendous amount of responsibilities" warns Sandy. "Time management will be key to accomplishing the majority of your tasks, (but also) take a step back and determine if it is time to hire someone and/or individuals onboard to assist."
Find mentors who can "help you to navigate the myriad challenges that come with being a business owner," advises Lambert. Research from the Small Firms Economic Development Initiative found that 70% of small businesses that receive mentoring survive more than five years-double the rate of non-mentored businesses."
A great place to start is with your state and local SBDCs, which offer free and low-cost training and consulting on a variety of business issues. And this 14-step checklist can also help you set up your business the right way.
And, above all, "Be open to learning, learning, and learning," Romero says. "You will make mistakes-lots of them.