Things You Must Consider Before Starting Your Own Business

I’ve heard a ton of business ideas. I’ve listened to and read many business plans. And the one thing that always strikes me is how little most people think about the viability, profitability and end goals of their small business. Is the goal to become a millionaire? Is the goal to just make a living? Is the goal to just do something fun?

outofbusiness

Photo By Reinvented

Perhaps this explains why in just the past year alone, I’ve seen many brick and mortar businesses open up their doors only to close down just a short while later. Perhaps this is why I know of several acquaintances who are in limbo with their business. They don’t make much profit yet they are literally working their butts off for the equivalent of minimum wage.

Granted, a lot of this might have to do with the current economy and the fact that people aren’t spending as much money but more realistically, the problem is probably fundamental. Either the market is not there or the business idea is just too costly to implement. So how do you avoid creating a dead end business? How do you create a business that meets your own personal goals? Not everyone is out there trying to make a billion dollars. How much business is going to satisfy your needs?

Think About Profitability First And Foremost

The single most important factor leading to the success of any business is profitability. You have to focus your planning on how you are going to make money. Duh! Seems like a really obvious concept but you would be surprised at how many people decide to throw up a business just for the heck of it.

For example, a go-kart racing place near my place of work closed down within a year of opening. And I’m sure the guys who decided to start it were thinking to themselves, “Wouldn’t it be cool to run a go kart racing track?”

But I’ll bet that once they opened, they quickly realized that the amount of business couldn’t support all of the overhead of maintaining the gokarts, the racetrack and a full staff of people. And it was probably too late at that point because they spent a whole wad of cash on the facility already.

Just because you think that something is cool doesn’t mean you should start a business around it. Just because no one else has implemented your business idea doesn’t mean it’s going to be successful. Chances are that if you don’t have competitors, your target market is not that large to begin with.

The only way to know for sure is to do research and do some testing. Thanks to the internet, performing experiments is relatively easy to do. If you want to sell something, throw it up on Ebay or a similar website first. Want to know what people are looking for? Use Google’s keyword search tool. Whatever you decide to do, just make sure that your business is viable first.

How Much Do You Want To Make?

The second question that most people forget to ask themselves is how much they want to make in order to be happy. And you’d be surprised by how many business owners have no idea what this number is. Do you want to make six figures a year? Do you want to make millions? Billions?

Knowing how much you want is important in order to set your expectations. If you throw up a business without an end profit goal, you could be in for a world of hurt when it comes time to make key decisions regarding how to spend your time and money.

For example, with our wedding linens business, we have no intention of turning it into some multi-million dollar business. Obviously, if it happens, then that’s fine with us but all of our decisions are based on making a solid mid six figure a year salary.

Our goal is not to make millions of dollars. Instead, I want my family to just be comfortable. I want my wife to stay at home and spend most of her time playing and raising our kids and not on running and overseeing a business.

Knowing our goals allows us to make decisions more efficiently. Now that we’re pretty close to where we want to be, we can turn down extra business and pain in the butt customers without flinching. After all, why should we waste our time dealing with people that we don’t enjoy dealing with? Why should we waste precious time and energy on customers that aren’t inline with our business goals?

If you are having problems figuring out your “number” or the amount of money you want to make with your business, then consider this. Your magic number or profit goal should be the amount of money in which you can comfortably say “F&!^ off” to your customers. It’s really that simple.

Just Working Hard Is Not Going To Cut It

You’ve probably heard this one before but just working hard is not going to get you anywhere. You have to spend your time where you think you can make the most impact.

Let’s face it. There are only 24 hours in a day and there’s only so much you can juggle at once. If you can’t accomplish everything on your plate, then you need to work smarter. Leverage automation and computers. Learn how to do some basic programming. Don’t be afraid. Suck it up and learn or find someone to help you.

I remember one time my wife had to take on a double role at her former employer because someone had abruptly left the company. Instead of working twice as hard to fill two jobs, she noticed that much of work of the former employee was extremely manual and repetitive.

Despite a tight deadline, she decided to invest her time writing a series of small scripts to automate the task. In the end, they decided not to hire anyone to replace the former employee because my wife’s scripts pretty much automated his job.

Whatever you choose to pursue, make sure you leverage the web for your business! Your server is always on and you can automate many things if you take the time to learn. Your computer server is like an employee that works 24/7. Do I sound like a broken record yet? Don’t be afraid of technology or you are going to fail!

Key Takeaway

Running your business is all about balance and being true to yourself. If you just want to start a business for fun, then focus on having fun. But if your primary goal is to make money, then profitability should be the top priority. Knowing what you want to get out of your business will reduce stress and make it an enjoyable and rewarding experience.

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25 thoughts on “Things You Must Consider Before Starting Your Own Business”

  1. With the New Year creeping up on us faster than most of us would like, I can’t think of a better way to start off the new year than having a plan where I can quit my job and be my own boss.

    Adrian Maddox

  2. Lovely article! It’s amazing how many entrepreneurs put passion first, profitability last. If it’s not making any money … then the business is not a business, it’s a hobby!

    I am a huge fan of setting intentions that allow our business to support us in the life we want – that includes intentions for income, hours spent working in and on the business, where we want to work, etc.

    In the end, our business has to serve us … and far too many entrepreneurs end up serving their business!

    Blessings,
    Andrea

    1. @Andrea
      Well said. Allowing a business to take over your life is usually the result of poor planning or incorrect assumptions. If the expectations for your business are properly set, then you will be happier in the long run.

  3. Hi Steve,

    As always, you never disappoint with your great business insight, which is why it is such a joy to read your blog. Another thing I’d add to the list is ‘Get Comfortable With Selling’. No great entrepreneur becomes a great entrepreneur being uncomfortable in selling. Even if you don’t aim to be a great entrepreneur, you’d still need to embrace selling if you were going to make any money at all in business. If you can’t bring yourself to be comfortable with selling, then it might be a good idea to just stick to your job.

    Cheers~

    Mark

    1. @Mark
      This is an excellent point. Coming from an engineering background, selling was not one of my strong points. But over time, I started developing this skill because it was crucial to our business. That being said, if you’re not a salesman, you can just find someone who is and hire them.

      @Matt,
      Would love to here your story sometime. Care to guest post?

  4. Great post. As an entrepreneur starting a company I had to figure out how to do a lot of things on my own with little time to do it in. Being able to adapt quickly and automate a lot of my work has been essential to…well…actually getting work done!

  5. Great post! This is really solid, essential stuff. As you said, it seems like a no-brainer but so many people don’t go through these steps. Here in Brazil, I watched a restaurant space be gutted and re-finished for months. It was huge – 3 stories tall space for a fast food chicken business. Before they were even finished or ready to open, they hired a motorcycle with megaphone to go down all the local streets blasting an obnoxious commercial at all of us about their chicken. (mind you – they weren’t even open yet!). Months later they opened their doors. At this point there was no advertisement being done. I never saw a soul inside their place. I think they stayed open only a month and now they are closed! It is amazing to watch what business owners will do sometimes.

    1. @Carmen
      That sounds like a crazy story. I don’t know if you have ever watched the Apprentice on tv, but I remember this one episode where one of the contestants blew their entire business budget on brand new toilets! He wasted so much money on the bathroom that he had very little left for anything else.

      @Robert
      I’m probably the only one on this planet that hasn’t read the 4 hour work week yet so perhaps I will pick it up. Thanks for the comment and I’ll be answering your email shortly. These days, practically every business idea can be tested to a good degree so it makes sense to do a few trial runs.

  6. Steve,

    I read this an immediately thought, thank you! Keep getting this out there…in todays world we can test for profitability and marketability before we spend more than a few hundred dollars on a product or idea…and that needs to be phase 1! I’m learning that and picking up on that more and more over my project as I really dig into creating passive and easily managed income ideas/businesses. I have a ton of ideas…but if they can’t be executed and make dollars..they are just…cool sounding ideas…nothing more!

    Glad see you broke this down and gave us the essentials…you’re even a little less cut throat than me…you suggested that if you want to run a business for fun, make sure to focus on fun…I guess my practical side screams out, who would run a business for fun if it didn’t make any money! but good job at being well rounded.

    I also was reminded of the 4 Hour Work Week when you touched on how much do you want to make. I think this is super important…don’t set out to “make billions” … instead think…hmm it costs me 4k a month to live…so lets shoot for 6k a month for a successful business…it’s real and practical and you can always re-evaluate later!

  7. Very good post-

    It seems that many people these days are looking for “other” opportunities, whether it be a home or online business or conventional brick or mortar business, people are tired of exchanging TIME for MONEY.

    Especially with the plethora of online SCAMS (data entry, typing and answering e-mails from home, and pyramid schemes which are ASCAM), people are very aware and dubious with any home business venture. If it sounds too good to be true-more than 99.9 percent of the time it is.

    Unfortunately-the majority of onlne job opportnities or work at home businesses are BOGUS.

    For the benefit of others, let me provide your readers some sound advise that I have learned regarding working at home, starting a home based business or online opportunities. I should know as I was scammed almost 5 years ago for nearly 10K-but I have learned from that “water-shed” moment.

    Rule 1: Make sure any online work at home business that you decide to get involved with provides TRUE value for the product or the service that you are promoting (iresepective of the home business/online business you are promoting). The product and or service is KEY-if they do not provide TRUE Value then you need to ask yourself, what are you promoting?

    Rule 2: Would you purchase the product and or service EVEN if you were not in the business? Think about this for a moment? If you wouldn’t purchase the product or service yourself-how in the world do you expect to be succesful marketing and promoting a product or service you wouldn’t buy yourself-yet alone promote to others?

    Rule 3: After all your monthly fees for the internet work at home business you are interested in doing, including website, domain name, e-mail costs, website hosting costs, merchant account fees if your’re selling products, advertising costs, phone and fax, and memebership costs for the program you are in; after removing all these costs/fees does the product or service stand alone?

    Rule 4: Make sure the business system you get involved with provides at LEAST a 30-60 day unconditional money back guarantee. Respected and reputable companies should provide this as a minimum.

    Rule: 5 Check with references of customers who ae doing business with this company. The compnay should be 100% transparent so you can call and find out for yourself whether it is legit or not. And lastly check with your chamber of commerce or local BBB in your area to determine if there are/have been any complaints with the company in question.

    Good luck-

    Best-

    Wayne

    1. @Wayne
      Thanks for sharing your advice. I don’t really consider those scammy work from home opportunities businesses perse. To me they sound more like jobs that you can do while at home. In any case, I’m sure my readers will be thankful for your advice and experience.

  8. I am going to end up spending a whole day reading your articles, haha. That won’t be productive…or will it? Anyways, thanks again for the tips. I am going to send this to some friends as usual. Cheers!

    1. @Casey
      Thanks bud. Just don’t get fired from work:)

  9. Chi says:

    Great article Steve!

  10. Steven, the part on working hard is not going to cut it is so true. Great article!

  11. Great Post! I believe in using the web as much as possible when researching a business idea. Selling on eBay, as you mentioned, works – as does buying some Google AdWords in order to test your product and messaging before a wider launch. You can even use this to A/B test website templates/designs as well as geo-targeting tests to see where your products/services might perform best.

  12. ocasiog says:

    Great insight, but I don’t think you really want to say “F&!^ off” to your customers, lol. After all, customer word of mouth travels fast on the internet these days.

  13. Set a big goal and a small goal, vision which you trying to achieve and reasonable. If you make fun with it, then you won’t ever hit your mission because you do not have the motivation on it. Set a small achievable mission , after achieve it then set a higher mission . Do not stop to set a goal for yourself because you will never satisfied with what you get and hunt for more. Human is greedy. Motivation will occur once you start earn money .

  14. i think this is very usefull tips for new business man. but motivation is very big factor to handle these type of business.

  15. Rashita says:

    it has alot of useful information :)

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