As a new potential business owner, you have the advantage of getting it right the first time with the right Model, Management, Marketing and Money. The “4M’s” of business are common to all size businesses.
San Francisco (PRWEB) May 13, 2015
Whether a recent graduate, a middle-aged person seeking a new career opportunity or a recently retired senior looking for a second, third or fourth career, consider starting a new business. The recovery of the economy, capital availability and the support from organizations available for small businesses makes this an opportune time to create a new business. The principal challenge for most people is the decision of the type of business to start and how to take the first step.
According to Dun & Bradstreet reports, businesses with fewer than 20 employees have only a 37% chance of surviving four years (of business) and only a 9% chance of surviving 10 years. Restaurants only have a 20% chance of surviving 2 years. Of these failed business, only 10% of them close involuntarily due to bankruptcy and the remaining 90% close because the business was not successful, did not provide the level of income desired or was too much work for their efforts.
Microbusinesses (firms with 1-9 employees) are the most common kind of company in the U.S., but they account for a relatively small share of employment. America’s 3.7 million microbusinesses made up 75.3 percent of all private-sector employers in 2013, and they provided 10.8 percent of the private-sector jobs.
So where to start?
Money and clients are attracted to confidence, enthusiasm, value and service and the knowledge that the business owner actually cares and values the business. Despite all the technology available, there is no replacement for personal service.
As a new potential business owner, would be entrepreneurs have the advantage of getting it right the first time with the right Model, Management, Marketing and Money. The “4M’s” of business are common to all size businesses. To avoid being one of 700,000 business failures during the year, ask the following questions:
1. Model: Is the business the “right” business for you and does that match the needs of the market?
- Have a hobby or personal interest that could be turned into a homebased business? Many new businesses are based on the interest of the entrepreneur or their personal situation. For instance, there are a number of new home based businesses around gluten-free foods, most of which were formed from the entrepreneurs own personal gluten intolerance experience. Etsy is an online marketing site focused on providing a market channel for entrepreneurs who have started craft type businesses. Consider that Ebay was started from the founder’s passion for collecting Pez candy dispensers.
- Do you believe in a product or service? Passion is contagious – passion about a product or services as compared to just “selling” a product or service is critical - that passion comes through to the customer.
- Start a business serving who and what you care about the most. Many people are involved in non-profit organizations serving segments of the population. Many product and service offerings come out of the non-profit industry. For instance, many of the recently established commercial home health care services serving the rapidly growing “senior at home” industry started with the concept of Meals on Wheels America. If you like animals and volunteer at the local SPCA, consider the “doggie hotel” pet care industry, a rapidly growing segment providing higher quality care for vacationing pet owners.
- What is on your resume and is that sellable? Look first to what you have done in the past and consider the “adjacency” to that career as a new business. For instance, if a cook in a restaurant or a frustrated at home chef, consider food truck micro franchising, a concept of the subject of the movie Chef!
2. Management: Founder, CEO, CFO, salesperson or marketing person? Although there are literally millions of sole proprietor entrepreneurs, at some point, a business will add employees and begin to expand. Remember that as good as you think you are, there are people that you will need to rely on to build your business and who, like you, will bring their specialized expertise to your business. Staying focused, establishing the best organizational form, attracting and retaining employees, choosing the right partner, being creative and flexible and building a strong company is the end result. Pick employees carefully and instill a sense of commitment and culture in the business to retain them.
3. Marketing: Marketing is critical for any new business – Unless the business has a “killer” location, how will customers know that the business exists? Focus on a marketing niche and a specific type of customer. Consider new ways of growing the business such as using social marketing networks sites such as Facebook, Linked In and Twitter to draw traffic to your website. Social networking and marketing can save you enormous sums of money marketing your company.
4. Money: Don't underestimate the time to raise capital, manage the cash and budget for costs. Small businesses are a very diverse group and as a result, their financing needs vary greatly. Startups depend about equally on the owners’ cash injections and bank credit. The most common sources of startup dollars are owners’ and relatives’ savings. Two studies give quite different answers to the question of how much startup capital a business needs. The Wells Fargo Small Business Index study found that the average small business owner uses about $10,000 as startup capital. The Kauffman Firm Survey, which consists mostly of high-tech firms, found that startup capital averages $80,000 a year, and it consists of debt and equity. However, about one-third of new non-employer firms and 12 percent of employer firms use no startup capital at all. sba.gov
Starting and successfully growing your own business is typically the entrepreneur’s key life achievement. New business opportunities are being created every day as a result of consumer trends and demands, technology advances and economic changes. No matter how young or old you are, there is never a better time to start your own business than now.
Michael Evans is the National Managing Partner for the Newport Board Group