Q5 Do you ever have problems staying focused on a task without help from someone else?
If you're like me and you obsess over every little detail, you can't imagine anyone suggesting this little failing. Of course, too much focus is as deadly as not enough. And both extremes can drive your business into oblivion very fast.
From question 2 you already realize that you may have limited time to pursue your business and still keep the rest of your life moving along.
Because of this, time is an extremely precious commodity for you. If you are the kind of person who leaps from great idea to great idea, from task to task, like a bouncy rubber ball, you may have a problem here. If (like me) you have a hard time pulling away from a task until every T is crossed and every I is dotted, you may have a problem.
You need to have a plan for your time, and make sure to allocate enough of it to all of the tasks you need to complete. If you've got bills to pay, customers to invoice, products to ship, and a web site to update, then you can't spend all of your time allotment on making new widgets.
One client of mine nearly drove herself into bankruptcy, despite having an incredibly good product, lots of customers, and good general business skills. You see, she kept getting distracted – by her new product ideas, by the calls from customers wanting to buy something, from her trips to the Post Office to ship things, and every other little task that needed doing. She jumped from one thing to the next, and inevitably, some things started getting missed. Her near catastrophe occurred because the one thing she kept putting off and forgetting was to bill her customers. And with a 30 to 45 day payment cycle, skipping a few billing months can drain your cash reserves faster than even the IRS coming by!
When we realized what was going on, we marched over to her office, sat her down in a chair, and explained the realities of life to her. Luckily, she regained her focus pretty quickly! She's still in business, still doing well, and happily not forgetting to collect her fees any more.
Focus is really a combination of balance, mild obsession, and mild relaxation. Without the ability to use all three talents together, you may find it hard to stay focused on the necessary tasks without losing sight of the big picture. Whatever you do, keep practicing.
If you have a good sense of focus, then Go for It! Otherwise, Stop and Think about this one. You can learn to focus your energies wisely. This potential pitfall is really about knowing yourself and knowing how to adapt.
Q6 Do you believe in your product or service passionately enough to stand up in front of strangers and explain why they should buy from you?
Not all of us are born salespeople. I'm certainly not. I used to be scared to death about standing up in front of strangers. I realized a few months after I started that first business that you can't sell your widgets if you don't talk to people.
Luckily, for those of us who are not naturally outgoing, there are lots of ways to "talk" to people - flyers, web sites, phone calls, sales letters, hiring a sales staff. Ultimately, though, somebody has to promote your product.
If you don't believe so strongly in your product that you can shout it to the world, get another product. If you aren't 100% proud of what you are offering, people can tell. And the only people who won't tell you what's going wrong with your sales are your friends and family, because they don't want to hurt your feelings. Sometimes you have to be ruthless with a product.
If you don't believe it in, you can't sell it. Sure, those professional sales folks can sell ice to Eskimos. But unless you're one of them, don't try to sell something you wouldn't buy – yes, buy! – for yourself.
If you love your product enough to shout it to the world, then Go for It! Otherwise, Stop and Think about your product. Why waste all of your time setting up a company to sell something you might not be able to stand in 6 months? Invest the time now in finding a product you believe in.
Q7 Will you have to train or retrain in order to run your business without employees?
Do you have the skills you need to run your business?
If you're planning on running an office supplies franchise, have you ever sold retail? Have you ever sold office supplies? Have you ever managed employees? If you're opening a restaurant, have you ever cooked? Or done all of the other jobs involved in a restaurant? You won't be the first owner to suddenly realize you have to play chef because your last chef quit in a huff right before Friday night's crowd comes in.
If you don't have the skills to pursue your dream business, you'll need to list and research the various jobs that you will need to learn or hire for. Those expenses will need to be budgeted, and you'll need to have or hire the expertise to manage employees.
If you need retraining, be sure to factor this into your startup costs and timeline. Moving too quickly could cause you problems down the road.
If you're equipped with all of the necessary skills, then Go for It! Otherwise, Stop and Think about what skills you'll need to add to your toolbox.
Q8 Do you have a written plan that outlines your product, your potential customers, the cost of creating your product, an idea of your pricing, and a cost analysis for keeping your business running?
The business experts are always spouting off about business plans. Business plan this, and business plan that. Yes, you do need a plan, but many small businesses aren't ready for the big-time business plans that the consultants want you to pay them for.
If you can't map out the necessary plans for your business by this stage, you need to do some more planning. However, that doesn't mean that you can't move forward, it just means that you need to move carefully.
You need a plan for your product or service. What are you going to sell? How are you going to produce it? Who is going to do the assembly? How much will it cost to make? How long will it take to produce each unit?
You need a plan for selling. Who is your target customer? Where will you find them? How will you tell them about your product? Will you offer special deals or discounts? How will you turn customers into repeat customers?
You need a plan for your finances. What are your costs for your products? What are your overhead costs - rent, utilities, supplies, employees, taxes, equipment, phones, business cards, advertising, etc.? Who will you purchase your supplies and equipment from? How often will you bill your customers? How will you organize paying your bills and keeping your books? How much do you have for cash reserves in case of unexpected costs, or late-paying customers?
You need a plan for your marketing. What kind of marketing materials do you need? How will you create them? Does your product need packaging?
You need a plan for growth. What if orders pick up quickly? How will you plan for expansion?
If you've got some concrete notes and ideas (or better yet, a written plan) for these areas, then Go for It! Otherwise, Stop and Think about the answers to these questions. Good planning up front can save you a lot of frustration later.
Q9 If you don't make any sales for the first six months, how long can you afford to keep the business running given your other finances?
What happens if you don't make any serious sales for the first month, or the second, or the third?
It can happen, easily. Product production delays, problems with your marketing materials, delays with advertising, a bad economy. Lots of reasons that people don't buy – or don't buy from you.
Planning for the worst, and enjoying the best, is the best way to approach any new business. Don't let your love of the idea drag you into a financial headache.
Take the results of Question 8 and do some calculations. How much do you need to make to keep your family's bills paid? How much money will your business require each month to keep running? Squeeze those numbers as tight as you can, eliminating or reducing unnecessary expenses or expenses that are based on higher production of products or services (like supplies for making a product), and then figure out your monthly expenses.
Once you know your monthly cash drain, divide that number into the total amount of money you've got saved or coming in each month. That result is the number of months you can survive with no sales. If that number is really low, you'll need to do two things right away.
First, have a backup plan to earn some money – working a second job, taking on odd jobs, or possibly bartering your services for other necessary services for your business or family.
Secondly, have a backup plan or two on how to increase your sales, and be ready to implement them if sales are particularly low. Remember, any sale that makes a profit is better than no sales with a higher profit margin. Don't bargain away the value of your product by randomly lowering the price, but you can use ideas like "One-Time Specials" or "Product of the Month" or other clearly-marked limited-time offers to keep your product or services moving.
If you've figured out your cash reserves, and are prepared to act within the limitations that these numbers provide, then Go for It! Otherwise, Stop and Think about cash flow very seriously. Good planning up front can save your business down the road.
These questions aren't meant to discourage you from pursuing your dream for your new business. They are merely designed to nudge your thinking into areas where you may not be prepared.
So where are you at are you ready to start your own business
If you missed part one you can check it out here
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