Do you have the skills to run a business? Do you even have an idea? Before becoming an entrepreneur, you need to know what you are getting into. Follow these 4 steps to find out if you’re ready to be your own boss.
I’m one of the few people who believe that everybody should have their own small business, whether it be a full-time business or part-time on the side. I’ve done almost 500 workshops on how to start a business and there is a four step approach to deciding whether to start a business.
Step One: Are You a Self-Starter?
First, decide if starting a business is right for you. Are you a self starter? A lot of people have been employees for a very long period of time. If you’ve always been an employee, you may be used to having a boss which automatically means it can be really hard for you to start your own business.
You also have to worry about whether or not you can handle the responsibility. There are a lot of people who don’t like responsibility and would prefer to pass on the responsibility. However, you can’t get away with that in an entrepreneurial environment.
Starting The Right Business For You
The second step is deciding on the right business to start. I discover that about 50 percent of the time, people may have a lot of creative ideas when they’re first starting out, but it’s difficult for them which business to start working on.
I encourage a pre-plan sheet—something you can do in 15 minutes—that breaks down each of your businesses into the metric of how many customers you need in order to make what you want to make. That customer number helps you determine what is the best business for you to start.
The Business Planning Process
The third step is the business planning process. I have always taught business planning the traditional route: executive summary, background information, competitive analysis, SLOT analysis, marketing plan, three to five year projections, management team, appendices. Most people have a negative view of a business plan, but you have to commit to one if you want to be successful.
Four years ago, I was called into my office at the college where I was teaching, and I was told to start putting a lot of my classes online. I decided to put my business plan class online, but I had to somehow condense all the sections of the class into seven weeks. I couldn’t figure out how to do it until I realized that I had to change the way business plans were done.
The 21 Questions Success Plan
I came up with the idea of having my students do 21 assignments in the form of 21 questions, and I knew immediately what the 21st question would be: what proof do you have that your business will succeed? Proof is everything—yet in a traditional business plans never use the word “proof.”
Before I started teaching, I had to raise over 6 million in angel funds for a product I created and I did over 300 one-on-one investor presentations. So I got my other 20 questions from all the questions that bankers and investors would ask me. The students loved this business plan, and so now I use this teaching format and even published a book called 21 Question Success Plan.
You should review your business plan once a month. Spend 15 to 20 minutes at the beginning of every month creating a rap sheet. A RAP sheet is a two page document that stands for the following:
- Review your sales, customers, and prospects in the last 30 days
- Answer seven questions about your pricing, marketing tactics, etc.
- Project out 30 days.
By creating a RAP sheet, suddenly you are always in control of your business.
Determine Your Legal Status
Finally the fourth step is going over how to legally form a business depending on whether you’re an LLC, a sole proprietorship, or whatever structure your business may be. Take a half hour to go over what you need to do and know and you’ll have gone through the four parts of starting a business.