As the stock markets have seen confidence, so have budding small business owners. And although that’s good news overall, it’s also creating a very saturated marketplace for entrepreneurs to find success.
We tapped Flea Style owner Brittany Cobb — an entrepreneur herself who also works with thousands of small business operators through her company’s curated lifestyle pop-ups and educational conferences — to offer seven tips to consider before starting a company to ensure your idea can rise above the noise and sing.
1. Do I love this idea?
This is the most important question to answer before you take another single step towards self-employment. If you don’t love what you do or what your business stands for, it will likely not succeed. There is no harder job than owning your own business, so it must inspire you every single day to get out of bed, stay motivated during the hard times (there will be many!), and keep plugging away toward the path to success.
2. Is there a need for this idea or business?
You love your idea? Great news. The bad news? We all have good ideas. Now you need to make sure your idea or business will have customers. Opening a coffee shop near Starbucks needs some serious consideration. The e-commerce space is extremely bloated, so make sure you’re offering something unique, desired, and that’s easy to attract engagement. Ask people you trust — a family member or a straight-shooting friend — to give you honest feedback. If you’re considering opening a clothing store, find a local one you admire and take the owner to coffee or cocktails to learn about shopper behavior, economic realities, and hardships to consider.
3. How much money does this idea take to start and operate?
This seems like an obvious question, but most businesses fail because they’re too expensive or don’t make money. Many people get so excited to start their idea that they forget to run a financial analysis to make sure it has legs to succeed. You must know your numbers if you want any business to work, and those numbers range from what it takes to start your idea — web costs, office space, supplies — to what it takes to keep it running a year from launch (think employees, taxes, tech support). Just like a home remodel, expect your idea to cost twice as much as planned to be safe. There are so many hidden expenses; a solid way to plan ahead is to ask a friend or person in a similar industry to spell out all the unseen stuff (photography equipment, subscriptions, printer ink, attorneys).
Source: Life on Virginia Street
4. How much money do I need to make and how do I get there?
A lot of people start businesses and don’t have a money trail in mind. Unless you’re sitting on a pile of rainy day pennies or have a spouse to float your income, you will need to figure out how much money your idea needs to net to keep your lights on at work and at home. The best way to figure this out is to take your bottom line salary — say, $35,000 — and then crunch the numbers your idea and lifestyle will cost to operate and see if you land in the black. If not, seriously reconsider starting your idea part-time while other income is funneling in, or have a funding backup plan in place. Most businesses aren’t successful out of the gate, but you also need to be realistic about funds from the start to have a fighting chance in such a soggy market.
5. How many people will it take for my idea to get off the ground?
Can you start your idea alone? If not, who will it take to get it rolling both as contract laborers or employees? Like most things in life, it usually takes a village to start a small business. Top of that list usually includes a lawyer (to register your biz with the state, for example), CPA (to keep you on the right side of the law and file taxes), graphic designer (logo, branding help), publicist/social media help (to spread your idea), and possibly tech (website help or coding). All of these people cost money, and you need to make sure you have them accounted for in your budget. If you need part-time or full-time help, you will want to seek out your wing people early and snoop out rates. Cut costs by bartering with friends for help or trading a skill set for theirs. “Hustler” should be your middle name in the early days.
6. Is my idea scalable?
We all have to start somewhere, and often in small business it’s at the bottom — from setting up our own FedEx account to taking out the trash. But early on it’s crucial to know if your idea has legs to scale. Depending on your hopes for the company, this is one of the most important questions to ask early on. Many companies get up and running and then hit a plateau and can’t figure out ways to break through the ceiling and grow. This isn’t always a bad thing, but if you want to own a flourishing company, it needs lots of room to cultivate and a nimble operator that’s willing to figure out the best path to get there.
7. What lifestyle do I want?
Not everyone may agree with me on this one, but I actually believe it’s one of the most important questions of all before taking the entrepreneurial plunge. The small business world is a hard place. It requires more hours than are in a day as well as serious time management, people, communication, and financial skills. It usually requires waking up with the birds, restless nights, forgoing vacation time, hiring childcare, living lean, and taking harsh criticism. Are you ready for that? Do you want to give up perks you may love at a normal 9-5 for long term success? There really isn’t a right answer for this question, but I really believe you need to be honest with yourself early on to make sure this is the life and lifestyle you want to live.