Week 1: Get the ball rolling
Week one is the first step toward actualizing your business. In this first week, you’re going to focus on research, strategy, and making the business legal.
Taking the first step is probably the hardest. The rest is just going to build off of this step. Take it day by day and don’t worry if you need an extra day here or there.
Day 1: Identify yourself and your business. Figure out what you’re selling and who you’re selling it to
You’re going to start by figuring out what it is that you do best, what you enjoy doing, and what you’re good at.
At this stage, you may want to start working on your SWOT analysis. You can finish it up later this week when you dig into the market research.
You’re also going to figure out what “success” looks like for you. Is it about becoming a millionaire within a year? Or is it about running a non-profit soup kitchen for the unemployed?
Once you’ve figured out what matters to you and what you’re skilled at, you need to think about the type of business you’d like to run. Many people reading this guide will already have an idea of what that is—perhaps a tutoring agency, or a restaurant, or a software company.
If you don’t have a business idea yet but you do know you want to run your business, you might start by looking at our guide on coming up with business ideas. Or, you could consider turning a hobby you have into a full-time business.You could even pursue something in which you have a lot of experience. If you’ve been working in retail for 10 years, why not consider opening a boutique?
Now, depending on what business you’d like to run, you should start thinking about what you’re going to sell and who you’re going to sell it to.
Remember, at this stage nothing is set in stone. You’re using this day to think of those things you’d like to do. The market and industry research will come later in the week. When you do that, you’ll have the chance to look at your desires more objectively.
Day 2: Get started on your strategy
Now you’ve figured out what you’re good at and the type of business your skills are best suited to, you need to think about strategy.
Let’s be clear: This is NOT the overall business strategy that will dictate what you do for the next five years, but an outline of the things you are going to focus on, what your mission is, what your vision is, what you’re going to do, and what you’re not going to do.
You will need to tie your strategy in with your own personal values so that you don’t lose interest over time. If you decided to start a digital marketing agency, you might figure out from the start where you draw the line at customers. For example, do you want to tie your name to an oil company, or offer a service that you may not be brilliant at, but that will attract a lot of customers?
Figure out what you will do and what you won’t do. Who will you serve? Who won’t you serve? How will you grow? What won’t you do?
Your “strategy” is really meant to focus your idea so that you don’t swing off in a different direction if cash gets tight, or so that you don’t do something you are morally at odds with—like serving non-vegetarian food, for example, if you are a vegetarian.
Lay it out from the start and you’ll find it easier to plan and harder to put things on hold. As the saying goes, you can’t please everyone!
Day 3: Establish your business location
The business location you choose has to be appropriate to your business and your business strategy.
Tim Berry, founder of Palo Alto Software, suggests asking yourself the following questions:
- Will your customers ever see your space?
- How will your customers get there?
- Will they have to park a car when they visit?
- Can you work from home or will this negatively affect your personal life?
- What kind of location matches your strategy?
- Are you going to be hiring employees?
- How will space affect your employment strategy?
- Are you getting carried away with ideas about your workspace?
As you think about the type of space and amount of space you need to get started, be realistic. If you’re not going to have employees and you’re not going to see clients at your office, why not have the office at home?
If you’re worried about being able to concentrate at home, then perhaps consider a shared workspace. Tim says, “Don’t get space to build your ego unless that’s part of your business objective.”
If you do decide you’re going to need space, consider the number of employees you’re going to need and the equipment that will fill the space—chairs, photocopying machines, a fridge, a coffee machine, a reception area, a meeting room, and so on. Furthermore, how quickly do you expect to grow? If rapid growth is in the books, rent a space where there is room for growth and so that you don’t have to change your business address.
When it comes time to sign the lease, don’t be afraid to negotiate, though keep in mind that most places will want you to sign for at least a year.
If you’re still unsure about the location you’ve chosen for your business, continue researching the topic.
How do others in your industry go about business? Will you be at an advantage or disadvantage if you start the type of business you’ve planned in one location or another? Do you think there is demand for this type of business in your city? Or are you living somewhere where people can’t afford to buy whatever it is you’re selling?
Day 4: Figure out how much money you will need to get started
Part of the reason we spent a full day researching and figuring out location has to do with what it will cost you to start. If you’re working from home and not seeing clients, you may find your startup costs are limited to marketing, stationery, any supplies, and legal. If not, you’re going to need enough to set aside for at least the first months rent and utilities of the new space, including all the amenities to outfit your new office.
Either way, it’s a good idea to break your costs into two distinct types of spending. This is largely because it will affect your taxes:
- Expenses—expenses include things like payroll, rent, consulting, travel, meals, and various legal costs. Expenses are considered deductible against future profits and will eventually reduce taxes if you do make a profit.
- Assets—assets include things like furniture, signs, fixtures, cars, trucks, buildings, land, inventory, and so on. Assets are unfortunately not deductible against taxable income, so your bookkeeping on them will be different.
You should not mix expenses and assets. When you create a worksheet to record your startup costs, keep expenses and assets separate.
Day 5: Start “business planning,” not the “business plan”
Coming from someone who works for a company that makes business planning software, that may sound odd. The truth is, you’re going to do the “official plan” a bit later in week two, when it comes time to sort out where your funding is coming from. And even then, you’re going to first start with something we refer to as a one page pitch.
The point of planning is to give yourself a sense of direction. A plan itself before you’ve started out is useless, but the act of planning before you start is essential.
A few things you should consider at this stage include:
- Your identity as a business
- Your market and the needs of the people within it
- The steps you need to take and when to take them
- Startup costs
- A sales forecast
- An expense budget
Day 6: Do your market research
If you don’t feel you can fit this step into a day, I don’t see any harm in taking a couple. After all, you do want a good understanding of both your industry and your market.
There are a number of fantastic resources you can use to research your industry, including research you manually undertake yourself like sending out surveys, speaking with people on the phone, sending emails, and generally getting in touch with others who are or have been in similar situations to you.
Market research is important because it will help you figure out whether or not there is demand for the service you’re offering or the product you’re selling. It will also help you when it comes time to write your business plan, especially if you’re pitching an angel investor or a venture capital firm. They will want to see there’s a market for your idea, otherwise, it won’t scale as rapidly as they need it to in order to make a return on their investment.
There are a number of ways you can go about gathering this information:
- Perform web searches—see who is operating in your location, search for statistics on your industry, find out who is selling something similar to you, what they’re doing, and how they’re doing it. Are they doing well? Could you do the same thing and succeed or could you do better by doing something else?
- Go shopping—do both online and offline shopping or “research.” See what people are paying and how they’re rating products and services.
- Talk to people—including customers.
- Gather information—from government sites like the U.S. Census Bureau or the national Small Business Development Center (SBDC) network, your local chamber of commerce, and relevant industry publications.
- Gather your own research—by undertaking telephone and email interviews, running focus groups, and asking people to fill out surveys.
Day 7: Make it legal
This will include choosing and registering your business name and choosing a business structure. Many small business startups will choose between a sole-proprietorship, a partnership, and a limited liability company. However, you can also start a corporation or a non-profit company. Each of these structures will have different pros and cons and be treated differently when it comes time to file taxes.
It’s wise to work with an attorney at this stage to make sure you’re covering all of your bases and taking the right steps.