In addition to the inspirational quotes, the beautiful images, my own personal and business blogs, the recommended reading list, and information on my consulting business, I would like to share some of the writings of various thought leaders.
WHY TOUGH TIMES ARE GOOD TIMES TO START A BUSINESS by Rieva Lesonsky
The weak economy is making jobs harder to find. One option for frustrated job seekers is to stop looking for employment and start working for themselves.
A recession is an excellent time to launch a small business. Larger companies rein in their advertising and expansion plans when the economy slows, making it easier for new companies to get noticed and capture market share.
Newer, small companies also tend to have lower fixed expenses than older, larger ones — and that allows them to underbid their competition. That’s very important during a recession, when customers are particularly price-sensitive.
The trouble is that starting a new business is risky. Sinking all of your savings into a start-up or taking out a small business loan could leave you in a deep financial hole if the business fails.
There’s no way to eliminate all the risk from entrepreneurship, but you can greatly reduce your downside if you keep your business’s expenses to a minimum. Here’s how to launch a business for less than $5,000…
THINK SERVICE
The service sector offers the best opportunities for low-cost business start-ups. Unlike retail or manufacturing businesses, service-sector companies…
- Rarely require major up-front outlays of cash for inventory or materials.
- Often can be run out of the home, eliminating the need to rent an office, factory or storefront.
- Tend to be local, so there’s no need for expensive nationwide marketing campaigns.
Four ways to come up with a low-cost service business idea…
- Keep lists of the things that frustrate you and the things that you wish you didn’t have to do for yourself. Consider both your personal life and your previous professional career. Perhaps other people would pay you to help them avoid these annoyances.
Example: Two brothers in Irvine, California, were frustrated that it took them much of their lunch hour to get from the local business district to area restaurants for lunch. They started Restaurants on the Run, a service that delivers restaurant food to office workers at their desks. The company has expanded into multiple cities and now does millions of dollars in business each year.
- Find out which service-oriented businesses (and other low-cost businesses) are thriving in big cities. Trends tend to begin in big coastal cities, such as New York and Los Angeles, and only later work their way to the rest of the country. Read the business and lifestyle sections of magazines and newspapers from major coastal cities to find out what new business ideas are thriving there. Consider whether similar businesses would be successful in your region.
Examples: Frozen yogurt franchises and bakeries specializing in high-end cupcakes are among this year’s hot new businesses in large, trendsetting cities. Buying a franchise or opening a bakery would not be cheap, but perhaps you could inexpensively open a street-corner dessert cart selling comparable frozen yogurt treats… or bake premium cupcakes at home and sell them through area stores or restaurants.
- Target a growing demographic. Open a business that serves a rapidly expanding demographic, and the odds of success are in your favor. Currently the fastest-growing demographics are seniors and children. (Make sure these national trends apply to your local region before launching your business.)
Examples: Potential service businesses that cater to seniors include transportation services… shopping and grocery delivery services…adult day-care services… and senior “transitional” services, handling the details involved in moving to a nursing home or assisted-living facility. Service businesses catering to the youth market include day care… transportation services… tutoring… college-prep classes… and college-application assistance.
- Search for service opportunities related to your professional experience. If your new business is in a field that you already know well, your learning curve will be shorter and your Rolodex will already be full of potential customers and other useful contacts. Make sure that your new business does not violate any non-compete agreements that you might have signed with former employers.
AVOID UNNECESSARY COSTS
Start-up expenses that your business can live without…
- Renting an office. Work from your home if at all possible. Meet with potential clients and other business contacts in their offices… at the local coffeehouse… or in the lobby of a hotel.
- Buying office furniture and business equipment. Try to make do with the furniture, phones and computers you already own. If you must purchase business furniture or equipment, search for used items. One advantage of starting a business in a recession is that other companies are going out of business and selling off their business furniture and equipment at low prices.
- Expensive marketing efforts, such as direct mail and television ads. Their high cost makes them too risky for your start-up.
Helpful: Turn your customers into your marketing team. Tell them you’ll give them a good discount on their next order if they refer another customer to you and it leads to a sale.
FOUR EXPENSES WORTH PAYING
Not all start-up expenses should be avoided. Do try to do the following…
- Incorporate your business. A lawyer might charge about $2,000 to help you set up a Limited Liability Company (LLC) or corporation, but it’s money well spent. If your business is not an LLC or a corporation, your personal assets could be at risk in a lawsuit.
- Launch a Web site. A Web site does not need to be elaborate, but it must look professional. This is particularly important if your company doesn’t have an office or a long track record. To learn more about how to start a Web site for your business, go to www.allbusiness.com and type “Web site” into the search window.
- Arrange for health insurance. Obtaining health insurance at a reasonable price can be a major problem for those who are self-employed. Find out if you are eligible for COBRA benefits from your last job or if you can get coverage through your spouse’s health insurance plan. If you are past your 50th birthday, you should be eligible for health insurance through AARP (888-OUR-AARP, www.aarp.org). Or find out if a health insurance plan is offered by a trade association that your business makes you eligible to join.
- Buy Business Plan Pro. If you don’t have experience writing business plans, this software is the cheapest, easiest way to do so. (Palo Alto Software, $99.95, 800-229-7526, www.bplans.com.)
Business plans are like road maps. They help you lay out your route to get from where you are to where you want to be. Good business-plan software prompts you to think about factors such as competition, pricing, staffing and marketing.
- Rieva Lesonsky
If you’d like a complimentary 30-minute business strategy session with me, for more information, please refer to my Behind the Scenes Consulting. If you have questions, please email me at Consulting@RobertFinkelstein.com. I welcome your comments below. Thank you.
WHY DO WE FAIL? AND HOW DO WE FIX IT?
So now you’re the man with the Plan…or woman, of course. The Plan is really your roadmap. It’s your guided tour of your business, and how successful you believe it will be in the near future, and even more so in the distant.
The “roadmap” does more that just describe what each stage along the way will look like. It’s a very detailed explanation of how you’ll get there. Just like a well-planned out roadtrip, know your route, and highlight the landmarks. In this case, the landmarks need to be your milestones. As I’ve mentioned before, you know your business best. Pick ones that are challenging, but obtainable. Perhaps it’s the number of customers you’ll have, the number of orders, products manufactured, or revenue generated, as you travel along your timeline. You’ll have 100 of this and 1000 of that by then…if not more.
Unless you’re reinventing the wheel, which I wouldn’t recommend, you’re going to have competition. Supposedly, one of the most common statements appearing in Business Plans is, “We have no competition.” I’ll give you three guesses who you’re kidding, and the first two don’t count.
Whatever your business, you have competition. Don’t deny it, especially not in your Plan. You might appeal to a niche market, but they’re out there. If not today, then in the future. I don’t want to rain on anyone’s parade. There are ideas out there that are original. But keep this in mind, if you’re very successful, competition will pop up. So keep this in mind when writing your Plan – what does the market look like today, and what do you think it will look like in the future. Address the competition and define your competitive advantages. If you don’t, they will.
Your I’s are dotted, your T’s are crossed, your facts have been double checked, your assumptions are well supported, you’ve found the delicate balance between vague and detailed…sounds perfect. Can’t fail, right?
I’m certainly not going to list the millions of things that can have a detrimental effect on your business, but we both know they’re out there. Here’s what I’m getting at: Know the ones that stand the greatest chance of occurring. Your Plan certainly doesn’t need to detail them out. Quite frankly, avoid them as much as you can. BUT…when the day comes to present or pitch your Plan, make sure you’ve done your homework. Have well thought out answers that clearly describe how you’ll minimize or eliminate those risks. Don’t stand there like a deer in headlights, or you and your Plan will be dead in the road.
I assume you’re assumptions from 
Remember, you don’t use Elmer’s Glue when building a skyscraper. Your facts have to be accurate (they will be checked!) and they have to be right for your Plan.
Wishful thinking, second guessing, fingers crossed, if the stars align just right, and on and on. A Business Plan is loaded with optimism and assumptions. “This business, this one, yup, this time, this one is going to succeed.”
What about all your assumptions? They need to be highlighted throughout the plan, but substantiated against industry benchmarks that make your assumptions plausible. Think each one through. The Plan won’t be effective if you’ve buried the assumptions among the facts, so no one can tell one from the other. To make the deal, you’ve got to keep it real. 
Ah, the delicate balance between too vague and too much detail. How do you know when too much is TOO much? No one knows your business better than you, so you have to be the judge.
Here’s a recommendation. Break your Business Plan into three sections – 2-3 page executive summary, 10-20 page business plan and finally an appendix (as long as necessary) that includes every detail you feel would be important to fully understand what you’re looking to accomplish. This gives the reader a chance to focus on what they’re interested in and not have to weed through what they’re not.
Your Business Plan is now well-organized. How does it read? I hope not like a mystery.
If you’re leaning toward the latter because you’re business involves confidential information (business partners, processes, technologies, etc.), then make sure the Plan includes a reasonable explanation. You don’t have to disclose any proprietary details. If they want to learn more, have them sign a noncompete and nondisclosure agreement. Keep in mind, some investors will not sign one, for a number of reasons – fear of the legal ramifications, no interest in competing anyway, or any legal fees that might arise.
If you’re Plan is very complicated, keep your audience in mind. If they can’t understand it, they won’t bother with it. That’s just a reality.
The Business Plan is lookin’ good…but is it complete? There are details you absolutely must include…unless of course your business doesn’t have any customers, products, services, staff, operations, marketing, sales, management or competitors. And if that’s case, I don’t think you have a business.
