There’s an old proverb that states, “A vision without a plan is just a dream. A plan without a vision is just drudgery. But a vision with a plan can change the world.” It is presumed most business-owning readers already have a vision for what their awards and custom gift enterprise should look like at year’s end. But, perhaps now is a good time to broaden that vision a bit and sharpen its focus.
Does your business plan address how the company will evolve and grow, or does it just replicate what’s been done in past years in hopes of doing it better? Many business plans do far too much of the latter and not enough of the former because growth and the possibility of failure are both scary propositions. That, of course, is assuming you have an up-to-date business plan and you refer to it regularly (hint, hint).
Have you ever thought about developing a new business from within your existing one? What about conceiving a new design or product line that could be a stand-alone business? Many large corporations are constantly developing new products and exploring new markets. Why not you?
The purpose of this article is to cause you to pause and think back to when you first hung your shingles. Did you do everything right? I’m guessing not – since I know I didn’t 15 years ago when I established mine. Take heart though: It’s not too late for a makeover. And for those entrepreneurs that have a great idea for an add-on business, I give you a five-step approach to fanning that spark into a roaring fire.
START WITH A SELF-EXAMINATION
Do you harbor self-doubt that maybe you’re not cut out to run a business successfully? There’s a free personality test you can take to determine your natural temperament. Dr. David Keirsey, author of Please Understand Me II, has developed the Keirsey Temperament Sorter that can help you predict how you are likely to react in certain situations, as well as how you relate to people.
You can register at keirsey.com and take the 70-question self-exam. Your personality portrait – akin to the Myers Briggs Type Indicator (MBTI) – will be comprised from the two most dominant traits from four pairs of behavior ranges:
Extrovert (E) Introvert (I)
Sensation (S) Intuition (N)
Feeling (F) Thinking (T)
Judgement (J) Perception (P)
While Myers-Briggs research reveals that ENTPs, ESTJs, ENTJs, INTJs, and ISTJs are more likely to either be self-employed or manage more people than other personality types, the core characteristics of what Keirsey calls the “Guardian” temperament seem most comparable with the successful business owners I’ve known.
Another personality type that shows promise as an entrepreneur is Keirsey’s “Rational” (NT) profile. Rationals are strategic leaders, yearn for achievement, and work tirelessly on any project they’ve set their minds to.
However, just because your profile may indicate you are predisposed to entrepreneurship, doesn’t mean you’re prepared to start a company. The MBTI measures preferences and potential, not ability, will, and confidence. Nevertheless, when at their best, these types embody entrepreneurial qualities that anyone who wants to own a business should emulate.
The best entrepreneurial profiles have four overlapping strengths: they tend to be curious, creative, willing to take on responsibility, and decisive. Just imagine if two people – one a Guardian and the other a Rational – decided to become business partners. They could complement each other’s styles nicely. They could even be married to one another – e.g.: the mom-and-pop shop.
FIND AN UNMET NEED AND FILL IT
Once you’ve determined you are ready to finetune and/or expand your business, you must define your niche. Take some time to make an inventory of your interests, abilities, and experience. Often successful business ideas spring from the founder’s passion or convictions. Look closely at what you’ve done in the past and what occupies your time and thoughts today, and you will likely find some business ideas or untapped markets that you can develop.
Regardless of the results of your self-examination – both physical and mental – you must identify an unmet market need of a geo-demographic group of prospective customers. You must find a piece of the globe that is inhabited by people with money they are willing to part with in order to satisfy a particular need.
Some people get into the awards and engraving industry from the point of sale, then expand laterally. For example, let’s say your forté is in design and you create a series of unique, trademark-worthy designs that look fantastic laser engraved onto a wide variety of substrates, but you don’t have the right equipment. After showing the concept to several prospective customers, they express a strong interest in placing an order. You take sizeable orders from several clients, have the pieces produced by a contractor, upcharge the job, and pocket the profit.
After several iterations of such transactions – and the gradual building of a stable customer base – you should have enough seed money to backward-integrate and tool up to produce the pieces yourself. I know this is easier said than done, but the advantage here is not having to shell out a large sum of money from the get-go.
This next statement may seem harsh, but it has proven to be true time and again. If you do not have a unique idea that satisfies an unmet market need, keep searching until you find one. If you are going to create a new enterprise that simply emulates a well-established business, you are, at worst, likely to fail and, at best, be gobbled up by the competition.
To target your market niche, talk to potential customers, competitors, and suppliers. Ponder to yourself and/or ask the following questions:
- What’s next. What technology advancement is coming soon, and can you get ahead of the curve?
- Fix something that bugs you. If your business can fix a problem for your customers, they’ll thank you for it.
- Apply your skills to an entirely new field. Many businesses and industries do things one way because that’s the way they’ve always been done. In those cases, a fresh set of eyes from a new perspective can make all the difference.
- Use the better, cheaper, faster approach. Do you have a business idea that isn’t completely new? If so, think about the current offerings and focus on how you can create something better, cheaper, or faster.
Do the necessary market research, solicit feedback, and brace yourself for how brutal and discouraging the data may be. This is no time to be thin-skinned. Remember, no matter how great a new idea is, if no one is motivated to buy it at the price you have to sell it for to make a profit, you don’t have a business.
GET DOWN TO BUSINESS
At the least, every business should have a plan. A good business plan consists of a strategic, tactical, and financial overview. It should answer the following questions:
- What are you planning to do? (Goals)
- Why are you doing it? (Motivation)
- How are you going to accomplish this? (Methodology, including a detailed marketing plan)
- How much money do you need? (Means)
- Where will the money come from? (Resources)
A business plan should help you recognize the risks and challenges as well as the opportunities and strengths of the concept behind your business. While there is no set format for a business plan, it is imperative that every business have a sound, thought-out, goal-oriented plan – then refers to, is guided by, and executes that plan on a daily basis.
COME UP WITH THE MONEY
Unless you plan to use your own money – that is, lottery winnings, unexpected inheritance, or lump-sum retirement – to fund your business, you need to secure financing. There are two types of financing: debt and equity.
Debt financing is borrowing money from a funding source with a promise to repay within a specific time period. Common forms of debt financing are friends and family, lines of credit from a lending institution, and Small Business Administration (SBA) loans. At some point, you may want to seek the advice of a well-qualified advisor from a nearby Small Business Development Center (SBDC; www.americassbdc.org).
SBDCs provide assistance to small businesses and aspiring entrepreneurs throughout the United States and its territories. They help existing businesses remain competitive in a complex, ever-changing marketplace and are hosted by leading universities and state economic development agencies and funded in part through a partnership with SBA. SBDC advisors provide aspiring and current small business owners with a variety of free business consulting and low-cost training services, including business plan development, manufacturing assistance, financial packaging, and lending assistance.
Equity financing is receiving money in exchange for ownership interest in your business. While there is no promise to shareholders for a favorable return on their investment, if the business does not deliver one, investors will turn elsewhere to invest.
Equity financing can get more exotic in its sources. Angel investors are private individuals who invest in fledgling companies. Venture capitalists are investors who take an active role in growing your business. Venture capitalists could enter the picture in any one or more of the different phases of a business’s life – at start-up, in development, for expansion, or for growth. However, the ultimate goal of the venture capitalist is to take the business public.
Other financing options include:
- Request a small-business grant. Head over to Grants.gov, which is a searchable, online directory of more than 1,000 federal grant programs. It might be a long process, but it doesn’t cost you any equity.
- Start a crowdfunding campaign online. Sometimes power is in numbers, and a bunch of small investments can add up to something major. If you think your business might be a fit for something like Kickstarter or Indiegogo, you should read up on 10 of the best-crowdfunded businesses or check out the most popular crowdfunding websites.
MAKE IT OFFICIAL BUT DON’T FORGET THE ESSENTIALS
Get all of the legal aspects out of the way early. That way, you don’t have to worry about someone taking your big idea or suing you for something you never saw coming. A quick checklist of things to shore up might include business structure (LLC, corporation, or a partnership, to name a few); business name and registering it with your state; federal and state tax ID; permits and licenses; a business bank account (perhaps separate from your existing one); and possible trademarks, copyrights, or patents. While some things you can do on your own, it’s best to consult with a lawyer when starting out, so you can make sure you’ve covered everything that you need.
All businesses, regardless of size or legal structure, need outside support. This means retaining the services of an accountant, lawyer, and financial advisor – maybe even a business coach. These professionals can best advise you on how to minimize your exposure and liabilities. The type of business entity you form determines if you can be held personally liable for any of the business’s doings.
Business ownership can be wildly rewarding and painfully stressful at the same time. If you take the time to do your homework and learn from other people’s experiences, you should be able to reap many of the benefits of owning and growing a company without the head- and heartache of trial and error. Good luck.