Getting in Shape to Start a Business
Excerpt from Starting a Business For Dummies –UK edition
You need to be in great shape to start a business. You don't have to
diet or exercise, at least not in the conventional sense of those words,
but you do have to be sure you have the skills and knowledge you need
for the business you have in mind, or know how to tap into sources of
such expertise.
This article will help you through a pre-opening check-up so you can be
absolutely certain that your abilities and interests are closely aligned
to those needed by the business you have in mind. It will also help you
to check that a profitable market exists for your products or services.
You can use this section as a vehicle for sifting through your business
ideas to see if they are worth devoting the time and energy that is
needed to start up a business.
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Assessing your abilities
Business lore claims that for every ten people who want to start their
own business only one finally does so. It follows that there are an
awful lot of dreamers out there who, whilst liking the idea of starting
their own business, never get around to taking action. See whether you
fit into one of the following entrepreneurial categories.
- Nature. If one of your parents or siblings runs (or ran)
their own business, successfully or otherwise, you are highly
likely to start up your own business. No big surprise here, as
the rules and experiences of business are being discussed every
day and some of it is bound to rub off. It also helps if you are
a risk-taker who is comfortable with uncertainty.
- Nurture. For every entrepreneur whose parents or siblings
have a business, there are two who don't. If you can find a
business idea that excites you, has the prospect of providing
personal satisfaction and wealth, then you can assemble all the
skills and resources needed to succeed in your own business. You
need to acquire good planning and organisational skills and
either develop a well-rounded knowledge of basic finance, people
management, operational systems, business law, marketing and
selling, or get help and advice from people who have that
knowledge.
- Risk-taker. If you crave certainty in everything you do,
then running your own business may be something of a culture
shock. By the time the demand for a product or service is an
absolutely sure-fired thing, there may already be too many
others in the market to leave much room for you. Don't confuse
risk taking with a pure gamble. You need to be able to weigh
things up and take a calculated risk.
- Jack-of-all-trades. You need to be prepared to do any
business task at anytime. The buck definitely stops with you
when you run your own business. You can't tell a customer their
delivery will be late, just because a driver fails to show up.
You will just have to put in a few more hours and do the job
yourself.
Discovering a real need
You might be a great potential entrepreneur but you still need to spell
out exactly what it is you plan to do, who needs it, and how it will
make money. A good starting point is to look around and see if anyone is
dissatisfied with their present suppliers. Unhappy customers are fertile
ground for new businesses to work in.
 One
dissatisfied customer is not enough to start a business for. Check out
and make sure that unhappiness is reasonably widespread, as that will
give you a feel for how many customers might be prepared to defect. Once
you have an idea of the size of the potential market, you can quickly
see if your business idea is a money-making proposition.
 The
easiest way to fill an endurable need is to tap into one or more of
these triggers:
- Cost reduction and economy. Anything that saves customers
money is always an attractive proposition. Lastminute.com's
appeal is that it acts as a "warehouse" for unsold hotel rooms
and airline tickets that you can have at a heavy discount.
- Fear and security. Products that protect customers from any
danger, however obscure, are enduringly appealing. In 1998, two
months after Long-Term Capital Management (LTCM), one of
America's largest hedge funds, was rescued by the Federal
Reserve at a cost of $2 billion, Ian and Susan Jenkins launched
the first issue of their magazine, EuroHedge. In the aftermath
of the collapse of LTCM, which nearly brought down the U.S.
financial system single-handedly, there were 35 hedge funds in
Europe, about which little was known, and investors were rightly
fearful for their investments. EuroHedge provided information
and protection to a nervous market, and five years after it was
launched, Ian and Susan Jenkins sold the magazine for £16.5
million.
- Greed. Anything that offers the prospect of making
exceptional returns is always a winner. Competitors' Companion,
a magazine aimed at helping anyone become a regular competition
winner, was an immediate success. The proposition was simple.
Subscribe and you get your money back if you don't win a
competition prize worth at least your subscription. The magazine
provided details of every competition being run that week,
details of how to enter, the factual answers to all the
questions and pointers on how to answer any tiebreakers. They
also provided the inspiration to ensure success with this
sentence: You have to enter competitions in order to have a
chance of winning them.
- Niche markets. Big markets are usually the habitat of big
business - encroach on their territory at your peril. New
businesses thrive in markets that are too small to even be an
appetite wetter to established firms. These market niches are
often easy prey to new entrants as they have usually been
neglected, ignored or ill-served in the past.
- Differentiation. Consumers can be a pretty fickle bunch.
Just dangle something faster, brighter or just plain newer, and
you can usually grab their attention. Your difference doesn't
have to be profound or even high-tech to capture a slice of the
market. Book buyers rushed in droves to Waterstones for no more
profound a reason than that their doors remained open in the
evenings and on Sundays, when most other established bookshops
were firmly closed.
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Checking the fit of the business
Having a great business idea and having the attributes and skills needed
to successfully start your own business are two of the three legs needed
to make your business stool balance. Without the third leg, though, your
stool isn't stable at all. You need to be sure that the business you
plan to start is right for you.
Before you go too far, make an inventory of the key things that you are
looking for in a business. These may include working hours that suit
your lifestyle, the opportunity to meet new people, minimal paperwork,
and a chance to travel. Then match those up with the proposition you are
considering.
(The
above is an extract from Starting Your Own Business For Dummies)
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