The One Thing You Need to Start a Small Business
What’s the one thing you need to start a small business? It may not be what you think.
Most people think that thing is money, and since most people don’t have a pile of money laying around, they begin researching how to get a small business loan. Do a little research on getting small business loan, and you’ll discover that you need a business plan.
Starting down the wrong path
That starts you down the wrong path, because writing a business plan is no quick thing. It’s a many-page document that explains how you intend to make money. Who your customers will be, how you’ll market and sell to them, how much you’ll sell your product or services for, what your experience in the area is, who will be working with you and what their relevant experience is, etc.
Don’t get me wrong, you should know those things. But a “real” business plan — the kind you could take to a bank — can take a long time to write. In fact, one small business site even gives this as their example of using the phrase in a sentence: “JoAnn spent months researching and writing a business plan for her new business.”
Don’t waste months
So how do you know those things without wasting months on a business plan document? Well, first off, know that you may never need to write a 30+ page document at all, especially if you’re thinking about the types of businesses you can start for $100 or less. I’d also highly recommend not going in debt to fund your business idea. You want to make money, not owe it.
But even in cases where a detailed business plan is an excellent idea, to my way of thinking you shouldn’t do it first.
What you really need
No, what you really need to start a small business are clients. The people who pay you money. After all, in order to stay in business you’ve got to make money. And there’s no point in starting a business that you aren’t pretty darn sure you can make money at. (Unless you just want an excuse to continue spending money on a hobby. But that’s not a business — just ask the IRS.)
Sure, do a little bit of research — enough so that you have some idea of what people might pay for the product or service you plan to offer, and enough so that you won’t be breaking any laws.
But then get a customer. Or ideally, two or three.
Don’t just ask people “is this something you would pay for?”. No, ask them to really pay for it.
What people say and what people do
“Sure!” they may say. “That sounds like a great idea! Go for it!”. But that may be because they love you or know you and don’t want to hurt your feelings, or because they think it’s probably a great thing for someone else to spend their money on.
Or you might get people who tell you that you’re insane, and that there’s no way you could make money doing xyz. (Do you think you could make money by sticking people’s cats in a carrier for them? I bet not. But this lady is making $80 a shot catching cats.)
It’s not like people will be out to lie to you and see you fail. It’s just that there’s a difference between what people say and what people do. And it’s what they do that matters.
Start a small business that’s primed for success
So if you really want to know if your business has a chance at success, you’ve got to ask people to buy.
Get real, paying clients. Who are not your friends or relatives.
Then work out the details of your business plan.