How To Start Your Business The Wright Way
Editor’s Note: The following is an excerpt from the second chapter of our book in progress. As usual, you won’t see the whole chapter (tentatively titled: Trim Down To Start Up) here, because we want you to read the book when it’s finished and not just poach all the good stuff off our blog.
Still, if you enjoy what you read here, want to know more, or violently disagree, we’d love to hear from you. You can leave a comment or schedule a call to shout at us in real time. -Seth
The steps necessary to start a business: 1) write a business plan and budget, 2) get a loan, 3) buy some stuff, 4) name the company, 5) secure the right licenses, 6) put out an ad, 7) wait for the money roll-in.
Wrong. Wrong. Wrong. Wrong. Wrong. Wrong. Wrong.
1) Business Plans (and Budgets)
More often than not, business owners get caught up in laboring over a 14-page business plan outlining their mission, vision, operational strategy, marketing plan, budget, earnings forecast, etc…
Don’t do that.
A business only needs three things to be successful:
- A customer who wants to buy something from them
- The ability to deliver that product or service
- Then another customer who wants to buy something from them.
Rinse and Repeat.
For a business to be successful AND healthy, they do need plans and budgets, and so on. But in the beginning, all the planning in the world won’t change the fact that the first iteration of your business will not be appealing enough to trigger a stranger to buy.
And the budget? All budgets hinge on accurately forecasting income. If you don’t have customers there is no way to know what they are willing to spend.
Now, if you feel compelled to create a business plan, try this:
1) Fold a piece of paper in half
2) On the top half answer the following:
- What am I selling?
- Who would want to buy it?
- Why would they buy it from me?
- After my first sale, how will I get more customers?
3) On the bottom half fill out something like this:
|
A |
How much money do I need to barely survive? (per month) |
$ |
|
B |
How much money do I need to to thrive? (per month) |
$ |
|
C |
How much does it cost to deliver one ___________ to a customer? |
$ |
|
D |
On a bad day, how much will that customer pay per sale? |
$ |
|
E |
How many monthly customer sales do I need to barely survive? A / D |
# |
|
F |
How many monthly customer sales do I need to thrive? B / D |
# |
|
G |
Will you be able to pull in F customer sales per month? Be brutally honest. |
Y / N? |
|
IF G = YES, move forward. IF G = NO, crumple up the sheet and start over. |
Work this sheet over, and over, and over again until you can figure out how to push forward without borrowing money.
Why not borrow? Stay tuned.
