The dos and don’ts of opening a small business
“How do I start?” That’s one of the first questions to go through the heads of entrepreneurs when they first begin thinking about opening their own business.
For those just beginning, knowing what steps to take first can be hard to figure out. It can be even harder to tell which steps you should not take.
While a business might be a complex thing to fathom sometimes, Dr. Rebecca Reuber, professor of strategic management at the University of Toronto, believes that all of them need to share a simple start: An idea you believe in.
Once you get that, though, it gets more complicated. So, to help out budding entrepreneurs ready to take that leap, here’s a few tips on what to do (and what not to do) when opening a small business.
1. Do research the industry
Your first priority when starting up a small business should be obvious: you have to learn about the business itself. This means doing research to familiarize with your future clients, your product and your competitors.
“Before launching a new business…entrepreneurs should validate their assumptions,” said Dr. Sean Wise, assistant professor at Ryerson University. He says the questions they should ask themselves include: “Do they have a innovative solution for a real problem? Is the product they wish to sell in line with what the market wants to buy?”
“You have to do a lot of research,” Reuber said. “You have to do market research with target customers, understand the industry — it’s a lot easier to go into a business in an industry that you know.”
Reuber recommends taking a look at established businesses in your industry and asking yourself what they’re doing right and what you can offer instead. You should also think about what your target clients want and find ways to satisfy their needs.
“You’re not going to be better than your rivals at everything, but you want to be better on the things that your target market values,” Reuber said.
2. Don’t set out without goals in mind
Once you nail that first step, you should start planning your long- and short-term goals. Setting up a business plan will help you to keep track of those goals as well as what you’ve done toward them.
“I’d recommend having a business plan along with the goals and lay out what the first three years should look like,” Chris Chong, co-owner of the Vancouver-based wedding photography business Butter Studios, wrote in an email.
“You need to be as detailed as possible and monitor your progress towards the goals.”
A business plan is a helpful tool not only for planning, but for keeping yourself in line. Reuber said that start-ups sometimes focus too much in a few aspects of their business, like their product or their clients, and that prevents them from seeing the whole picture.
“Those aspects really loom large in [the business owner’s] imagination,” she said. “Doing a business plan gives them the discipline to sit down and look at their business from 360 degrees.”
3. Do get to know your community and make sure they know you
Being in touch with your community can be useful for a small business because some of the people within it might want to see you succeed. Chong thinks building a presence in your community is a good way to get useful contacts that will help you evolve your business.
“Not only does it make you feel good and create better PR for your business, but you can also network with other community members and potentially gain leads [or] clients,” he said.
Chong recommends new entrepreneurs to get involved with business and commerce groups as well as non-profits and other institutions that can help you at the beginning.
Reuber agrees. She believes that surrounding yourself with people who want your success is an essential step to create a business.
“Nobody can do it on their own,” she said.
4. Don’t stop networking
Having key contacts inside the industry will alleviate a ton of weight when trying to find things like providers and other helpful contacts. But it doesn’t have to stop there.
Chong advises talking with people outside of your industry. He said that it has proven an effective tool when trying to move his business forward.
“We love to get together and network with each other,” he said. “But where we have seen the most success is networking with people outside of our industry.”
Chong said talking to outside people is a great way to get potential clients and helpful people who can help you when you need outside expertise. Don’t underestimate the people inside your industry when you’re just starting out, though: they are the ones with a lot of experience in the field.
5. Do learn time management
“Time equals money” might be a cliché, but it holds true. Learning how to manage your time efficiently and knowing how to spend your downtime to help your business are key skills.
“It’s so easy to let time slip away when you have a personal life and running a business,” Chong said.
Chong said that down-time doesn’t mean that you should sit down and do nothing. Instead, take advantage of the time to do helpful things for your business.
“We do not have the luxury of multiple departments [and] staff like in a big corporation,” he said. “Use your time wisely and do not procrastinate.”
6. Don’t rely on external financing
External financing from lenders such as banks and other investors can be helpful later on, but relying on it for your business plan when you’re just starting up is never a good idea.
“You need to think of your own personal resources,” Reuber said. “The credit cards you can use, if you have personal savings, if you can take out a personal loan, if there’s family and friends that would be interested in supporting you until your business gets some track record.”
Reuber said then you can use that track record as leverage that will allow you to get outside investment.
“At that point, you’ll be able to approach the bank,” she said. “It’s important not to be naive and think they’re going to support you right from day one.”
© 2015 Shaw Media