So, you’ve had this brilliant idea for a new business. It hit you like a ton of bricks at 3am. You jumped out of bed and started furiously dumping your brain onto paper or the keyboard.
But is it any good? Or is it total crap?
Jumping in with both feet is good. But, sometimes you aren’t really thinking clearly. Especially when all you want in life…all you crave…every cell in your body wants to tell off your stupid boss, delete all of your contributions to that stupid place and walk out the stupid door at 9am with your coworkers cheering and patting you on the back. Yes, especially then.
Those are times when you need to force yourself to step back and think. Really think.
But think about what? How do you think critically when you’re brain is in fight or flight mode?
You get help…someone to lend an ear…or maybe just a handy dandy checklist.
So, here’s your first checklist. Just take the weekend to answer these five questions.
Just five? Really?
Well, actually there are more than five, but I’ve arranged them nicely into five simple categories of questions. It’s fine. All you need to do is THINK and this will definitely get you started. Oh, and since not everyone wants to start an online business (I promise, not everyone does) these questions will cover all kinds of possibly hair-brained business ideas.
Is there a need?
You’d be surprised how often people don’t think of this. Or maybe you wouldn’t. Please consider the following:
- Does your product or service solve a problem or fulfill a need?
- Is this something people want?
- Who, exactly, wants or needs your product or service?
- Is this need long-term?
- Where can you find these people who need what you’re selling?
Will anyone really pay money for this?
…because if they won’t, you’re going to starve, or worse…you may have to ask your stupid boss for your job back. Yikes!
- Are people willing to pay for your solution to their problem?
- Will they pay enough for you to make a profit?
- How often will they need/want to pay for this solution?
- What business model will your “needy people” be comfortable with?
Is it legal?
Um, yeah. Another damn good question people try really hard to avoid.
- Call your attorney, your accountant and your insurance agent. Don’t have one? Ask your friends. They don’t either? Ask the Internet gods.
- What kind of licensing do you need, if any? Business license? Something more?
- Do you need any professional certifications?
- What are the zoning & permitting requirements in your area?
- Can you get all of the necessary order forms, contracts, agreements, etc?
- Will the cost of all of this legal crap make it hard (or impossible) to turn a profit?
How much will it cost?
Please think about this early on. While your little baby of an idea is still in diapers. You can save yourself loads of grief and stress.
There are two levels of costs: Start up costs & operating costs. You can make an educated guess at most of these for this first number crunching session.
Start Up Costs
This is the cost of everything you need to get started. Includes equipment, inventory, insurance, supplies, rent or deposits, software, paper, pens, hosting, everything.
How much time is all of this ramping up going to take? Because there’s no money coming in from that work. Not yet at least. Look at each task and estimate how many hours it will take. 2? 20? Write it down, total them all up.
This is what it costs to run your businesses day in and day out. If you think of your home as a business, your operating costs probably include mortgage/rent, food, utilities, phone, cable, internet, etc. So, if you’ve ever made a budget for your family, you’ve done this. Just use different numbers. Here are some things to consider:
Fixed costs – These are expenses that stay the same regardless of your sales, such as rent, utilities, salaries. This stuff costs what it costs, no matter what happens.
Variable costs – These are expenses that will change depending on your sales level, such as inventory, commissions, supplies. The more you sell, the more of this stuff you need to buy.
Your Time – Don’t forget to factor in your time! In reality, as a solopreneur, you have two budgets: the business & the home. Your business needs to bring in enough to cover its own expenses plus the expenses to run your home. While there are ways to cut costs at home (and I’ll go into that stuff in future post), the point is your time is easily the most valuable thing you’ll put on this list. By all means, don’t leave it out!
Is this something that you’ll enjoy?
This should probably be first on the list, but I want you to remember it….so I put it last. Take the time to really live with the idea of actually running this business. Dreaming about it & starting it are very, very different from running it.
Know the Industry – Hit up Google and research the industry. Become an industry expert. Seriously. If this homework assignment bores you, then this is the wrong idea for you.
Know the day to day business of your new business – Reality is a bitch. Don’t let her sneak up on you. Right now, running a coffee shop may sounds like a kick-back, casual way to make a living. But then you talk to a few shop owners, write down all of the tasks that have to be done and stew in that reality for a while:
Getting up a 4am, working 10 – 12 hours a day because you aren’t making enough to pay a staff, spending your one day off shopping for the rest of the week…at 5 different stores, counting inventory, burning shots, spilling hot coffee on yourself, spending your evenings crunching numbers to find out you’re sales have almost covered the cost of paper cups this month and getting up tomorrow at 4am to do it all again.
If you’re faced with all of that damn reality and it still sounds wonderful, then this might just be crazy enough to work.
Understand the nature of self employment – This isn’t going to go according to plan. Period. When you’re self employed the days get shorter. They really do. They get sucked up by a wonderful thing called “life.” Add to that, the friends who will ask for your help in the middle of the day since “you don’t have a job.” Don’t forget about your dad who’s going to be asking every few weeks when you’re going to get a real job. Or your neighbor who will tell you its all doomed to failure because they couldn’t make a go of their business. That stuff is really hard to ignore when you’re landlord’s calling and you know paying the rent on time might mean getting the Internet shut off.
Be honest with yourself – Now, look at all of that thinking you just did: Industry, day-to-day, reality of being self-employed. There is a lot of potential here for boredom, risk, fear, stress, tears, frustration and failure. Are you cool with that?
If you are, welcome! You’re in for one wild and wonderful ride!