[The following post is by guest author Bert Doerhoff of Accubiz.]
Are you aspiring to be a business owner? Do you know what kind of business that you would like to own? If not, that is okay. There are many different paths that you can take, and it takes a significant amount of time to decide. Choosing the right business for you can be an overwhelming process. It is a decision that will affect the rest of your life, so it’s perfectly normal to take time to make your choice.
You need to be certain that you are suited for owning your own business. Having characteristics that will help you be successful as an owner is very important. These characteristics may include a strong drive to achieve, creativity, integrity, and so on. This will help you spot your weaknesses so that you can begin working on them and select a team that will help you overcome them. Having people in your organization that complement your abilities with their own talents is a huge step toward success.
When brainstorming types of businesses that you would be interested in owning, it is important to generate an extensive list. Meticulously address each type with a pros/cons list of owning it. Next, narrow your results and go through them again. Below are seven criteria to help you make your final decision:
- Test Your Ideas: You do not want to go to your parents or your friends to get opinions on your ideas. They are generally more biased and more apt to tell you what they think you want to hear. This will skew your perception of how successful you believe you will be in your business. Rather, you need to bounce your ideas off of professional advisors and other business owners in related industries. Be honest and open when talking about your ideas, and get their opinions on how they view your abilities to succeed on your own. After this step, you should either have a very short list of options, or you should have landed upon your business of choice.
- Identify Your Customers: Your success as an owner relies heavily on how many customers you can attract to conduct business with. Identifying who these customers are and what their business looks like is crucial. Knowing whom your target demographic is will be very helpful in projecting your financial results. This will also be useful when marketing your new business, as you will begin to understand how to tailor the ads towards your demographic.
- Give Them What They Want: Confirming that your clients are willing to buy what you’re selling is critical. Conducting a focus group with members of your target demographic is a great way to obtain potential customers’ feedback. Ask them to be honest in their opinions on your ideas and products, and listen carefully to them. Incorporating their comments and ideas will help make your business more successful.
- Count the Cost: You need to be aware of the amount of money needed to begin your business and survive the first year. Keeping your books in order and monitoring and following your budget is extremely important. You do not want to fall into the trap of spending more money than you have or have money unknowingly flowing to another part of the business. Consulting a professional accountant for your bookkeeping services makes for a wise decision. They will be able to guide and assist you with your books and budget.
- Determine Who Is On Your Team: You want to surround yourself with people who share your goals in achieving success. However, they should bring skills to the table where you may be lacking expertise. It might take a while to bring your dream team together, but this step should not be overlooked. Your employees can have a big effect on a customer’s decision to do business with your or not, so devoting time to find the right people for your company is very important.
- Consider the Short Term Versus the Long Term: You obviously want to be set up for the long term. Preparing for only the short-term sets your business up for failure. Having a well-thought-out business plan is very important to the success of your company. You need to consider how long your product or service will be viable to consumers. If technology is changing rapidly in your industry, will you be able to keep up? Also, how competitive is your market? Consider these factors, among others, and then devise a plan of action in the event of your current product becoming obsolete.
- Plan An Exit Strategy: Ask yourself how long you want to own your business. If you want to own your business for more than ten years, then make sure that your idea is capable of longevity. It is up to you as a business owner if or when you want to sell, so every owner’s exit strategy is different. You should, however, have an idea of when you will want to sell your business, so when devising an exit plan, tailor it to the time period that you are working with.
Having the right amount of money available is critical for your success. Many businesses that struggle and fail are underfunded. Do not underestimate the amount of money you need when financing your loan. If you do, the bank will typically not lend more to a new business that has not accrued any equity. Using the above criteria will help you land on the right business and put you in a great position to succeed.
About the Author
Bert Doerhoff is owner and founder of Accubiz, a firm providing accounting services out of Jefferson City, Missouri. Accubiz specializes in small business accounting, bookkeeping service, and wealth management. Prior to opening his own firm, Doerhoff worked for Peat, Marwich, Mitchell & Co, which is currently known as KPMG. Frequently, he speaks at state level and national conferences on various business management topics.
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