Published in The Tennessean April 6, 2015
By Ed Rappuhn – SCORE Nashville
“I just lost my job and have several ideas on businesses I can start. Where should I begin?”
Focus on your best idea first. Then consider the following:
- Passion. Do you have a true passion about the business or is this a reaction to losing your job? Just like romances that begin shortly after a break-up, you need to take a bit of time to evaluate your options.
- Industry knowledge. Do you have experience in the field you are pursuing? If not, get a job in the industry and learn the business before investing your time and money.
- Business skills. Do you have the necessary business skills? For example, you need to understand how to use financial reports. Are you aware of best practices and legal requirements for hiring and firing employees? Do you understand basic marketing principles and have the skills necessary to sell your product or service?
- Market. Is there a market for your product or service? Is the market willing to pay the prices necessary to be profitable? Why will your potential customers change what they are doing to buy from you? Who is your competition and what is your competitive advantage?
- Motivation. Are you self-motivated? Yeah, you can attend your kid’s soccer game without making excuses to your boss but will you work afterwards to produce necessary results? Business ownership is not a 9 to 5 job. As an owner of a startup, you may be the janitor, secretary, sales person and financial expert. Ideas are great, but the devil’s in the details.
- Financial resources. Do you have the financial backing to make the venture succeed? It is tough, in some cases impossible, to get bank financing for a start-up. You need to have a great credit history, a solid business plan, and will almost certainly need to personally guarantee any loans. Don’t expect to get a grant for your for-profit business; that doesn’t happen. Most new startups are self-funded or financed through family and friends. And it takes time to grow your business; remember the owner gets paid last!
- Business model & business plan. Can you describe your business model and develop a brief, but inclusive business plan? If not, you have substantial work to do before getting started.
If you can answer yes to all (or most) of the questions I’ve asked, then you are likely ready to move ahead. But think long and hard before losing your retirement funds in a venture for which you are unprepared. Make sure you have the support of your family and get help from a mentor or others with the skills and experience to help you succeed.
Ed Rappuhn is a mentor, workshop facilitator, and the past-chair of SCORE Nashville. SCORE mentors guide entrepreneurs in starting and growing their businesses. Sign up for a free SCORE mentor, find out about our reasonably priced workshops and other services, or volunteer to become a SCORE member at www.scorenashville.org .