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While waiting in a long grocery store line last week, I listened to a 20-something couple behind me as they planned their future. The man was in danger of losing his construction job. And his wife worked in a retail store, where business was slow. They were discussing what they would do if they were unemployed. The man, Bobby, a dreamer, said they could start a business and they’d be better off.
The woman, Laura, obviously the practical side of the couple, laughed and asked, “What kind of business do you think we could we start?”
He said they could sell stuff on the Internet. In the less-than-progressive Gulf Coast region of Alabama, where I live, this conversation sounded out of place. It seemed more like an exchange I’d hear in California.
It turned out that Bobby had a plan for buying small pieces of furniture at garage sales, painting or refinishing them in unique ways, and selling them via an online store. He is, apparently, very handy — and his wife has a degree in art.
By the time we had inched our way to check-out and I was talking with the cash register jockey, Bobby had convinced Laura to start this as a part-time venture, with items aimed at holiday season shoppers so they’d have an enterprise established, which they could ramp up over time.
They seemed to be an average young couple — nice, responsible people who work hard and want a more secure life. But neither of them had business management experience. And as I walked away, I considered what basic advice people need in order to decide whether to bootstrap a micro-business.
If you’re contemplating your own business idea, follow these five tips to help you decide whether you really are ready to pursue your concept:
- Does the real work of the business use talents and skills that you truly enjoy? In my eavesdropped conversation, it was clear that Bobby likes to fix broken furniture, has the skills to do it, and derives a lot of satisfaction from the creative repair process. Laura has painted and decoupaged furniture for years. Her friends and family all own treasured pieces she decorated for them. She loves to paint, but has no way to earn a living doing it. There’s a great book for would-be entrepreneurs in a similar situation. Marsha Sinetar’s classic book, Do What You Love, The Money Will Follow, should be available in your local library. If you’d do something without pay because you love to use an ability, you’ll probably excel by using it as a foundation for your business.
- Can you test your idea as a part-time venture? Several years ago, I started a company producing cheesecakes for high-end restaurants in the San Francisco Bay Area. I worked in field marketing for a consumer products company as I planned this venture. Work kept me on the road nine months of the year. Knowing I needed to test market, each time I returned home I’d experiment with a recipe, which a restaurateur would sell and gather marketing data in return for free cheesecakes. By the time I launched, we knew the product was solid and production ramped faster than projections. With a similar strategy, Bobby and Laura will introduce holiday items to launch their store. Could you also begin part-time?
- How will you pay your bills? When bootstraping a company, most entrepreneurs overestimate early sales and profits. It will probably take you longer to grow sales than you anticipate. Occasionally, there are exceptions, when a unique market need is filled. But you must be able to pay your necessary living and business expenses as you grow revenues from your company.
- Develop a basic business plan. Bobby had many components of a basic business plan organized in his mind. A business plan should be a living document, not something that feels as if it’s cast in stone. The Small Business Administration (SBA) provides a basic plan outline on their site. Writing what you plan to do, helps to iron out kinks that could hinder your success.
- Which federal, state, and local laws apply to your industry? The secretary of state’s office for your state will have a section on their Web site devoted to starting businesses. Your city should have a similar office. In addition, free services by SCORE, counselors to small businesses, can provide essential information. Evaluate all requirements. If you’re going to process food, you will need to do it in a health department-approved kitchen. That may mean you rent or trade kitchen time at a church or, during the middle of the night, from a restaurant. Some municipalities won’t permit specific types of businesses in a home. Each industry is unique. You want to be certain you can adhere to applicable regulations.
When passion drives an exciting idea, it can be tempting to emulate Admiral Farragut’s famed, “Damn the torpedoes; full speed ahead!” But it’s important to remember how prepared and cautious Farragut’s men were as they evaded cannon fodder and water mines to win the Civil War battle of Mobile Bay. If you pursue appropriate steps to construct a solid foundation, you’re building for the success of your business.
Next week, I’ll provide tips for decisions you’ll want to make during the early days of a startup.