Getting started may be toughest step
For anyone who contemplates taking the entrepreneurial plunge, the most difficult question may be how to get started.
Having one’s own business is the American Dream for many. People have good ideas they believe can be converted to a great business, but making that first step to take the risk of starting a new business can be daunting.
Several concerns need to be addressed when deciding to start a business. One of the first issues is to investigate whether the potential new business owner’s idea makes sense to others.
The list of failed businesses is littered with people who opened a restaurant because they liked to cook or produced and sold a new product because they thought it was a great idea. No research was done to test their concepts, though.
The prospect of doing marketing research may seem to be an additional and unnecessary expense for cash-strapped new entrepreneurs. Doing some relatively informal research can determine whether an idea makes sense. Asking potential customers about a business concept or seeking their opinions by providing free samples can provide valuable feedback.
A quick Internet search can provide useful economic, product and market data for an area as well as national sources for the same.
For a fee, information is available on most industries in which an entrepreneur may want to operate.
Another way potential business owners in the Tiffin area may conduct marketing research at little or no cost is to engage students in the local universities’ marketing classes.
Marketing classes at Tiffin University and Heidelberg University may be able to collect marketing information for an organization. Having taught a number of classes that conducted these studies, it should be disclosed their quality can vary based on the commitment of the students involved.
Anyone wanting to work with students to conduct research also needs to make themselves available to work with them on these projects. They need to be willing to provide specific information about their business ideas to the students.
If it appears there is demand for the product or service, creating a business plan is one of the next steps. Financial intuitions require a business plan before they will consider funding. Revenues and expenses need to be estimated for a new endeavor.
Small Business Development Center Director Bill Auxter said most of the prospective new business owners he works with are referred to him by local banks for assistance in creating their business plans. Auxter, who conducts monthly small business seminars locally, points out the business plan does not need to be an extremely long, complex document.
The example Auxter uses in his business start-up seminar is a four-page document that plainly and clearly explains what the business wants to accomplish and how it plans to reach these objectives. The business plan also helps to formalize the management strategy for the new organization.
While it may seem obvious, the new entrepreneur needs to know something about the business he/she is planning to start. While individuals start businesses because of a passion for the work, others engage in businesses they know little or nothing about.
In that case, the prospective owner may want to work for someone else in that business before deciding to invest the money and time needed to make a new venture successful.
While wanting to make money is certainly one of the goals of starting a new business, entrepreneurs should also understand and have some experience in the work in which they will be spending many hours.
This is not intended to be an all-inclusive look at the different issues entrepreneurs need to consider. The topics discussed here and other issues will be featured in future columns.
Perry Haan is professor of marketing and former dean of the business school at Tiffin University. He can be reached at (419) 618-2867 or haanpc