As discussed in our last CPA blog, The American Dream of Owning Your Own Business, today we will begin walking you through the necessary steps in starting your own business. The first step has three (3) lessons:
LESSON #1 – WHY? & WHO?
Look in most MBA books and “step one” will often be: Create a Business Plan. If this is the first step you take, then I can almost 100% guarantee you that this business will fail. It’ll fail because the two “W’s“ weren’t asked first:
- WHY does someone need this widget we are selling? and…
- WHO will buy this widget?
Starting a new venture without having these two questions answered will almost 100% guarantee that you are setting yourself up for failure.
LESSON #2 – BUILD YOUR PLAN
Business plans have a defined structure with sections that you will be expected to use when creating your plan. Those sections are:
- Executive Summary
- Business Description
- Market Analysis
- Organization & Management
- Marketing & Sales
- Funding Needs
- Financial Projections
When my children were in elementary school, they were taught a concept that still resonates with me today – SLOPPY COPY. Unless you are copying someone else’s plan word for word, your first pass at your business plan will never, and let me repeat myself, never be your final copy. If you expect it to be, then stop now and go find a job working for someone else.
Start your plan by using whatever creative method you want to use to write down your thoughts – post-it notes, napkins, cereal boxes, etc. The point is to write down the ideas as they come to you then build the plan from those jotted down thoughts.
LESSON #3 – EMOTION
If you are a true entrepreneur, this will be one of the most important lessons to learn. This is the most important lesson there is – do not let emotion stop the brain from thinking. Human nature is to think that the rest of the world sees things through our own eyes. Guess what? They don’t! No one does!! That is why Lesson #1 & Lesson #2 are so important. It forces you to get outside of your aura and see your plan from the eyes of someone else. Just because you think the idea is the best thing ever doesn’t mean anyone else will. In fact, the possibilities are that almost all will not see it your way.
Years ago, we had a client who wanted to start a cloth diaper delivery business. They built their plan around this concept and wanted us to help them get funding for their start-up. As we started walking through the plan with them, it was obvious that the WHAT & WHO had not been thought about in much detail. It also became VERY obvious that emotion was dictating this whole concept. Emotion can not be the primary source for a business start-up. It will go nowhere. Use your emotion to help you each day – just don’t let it get in the way of your brain.
At Lesemann CPAs, our mission is to assist you in getting your business started and guide the entrepreneur as it grows and prospers.