Start your First Business the Right Way Right Away

Many small business start-ups fail.  Some succeed.  What is the difference between the ones that fail and the ones that succeed?  As an owner of several small businesses I want to share my insights of what I have noticed to be the critical points when starting anything with the intend to make money.

Be realistic and do not aim too high

As with all things in life it is best if you take off those pink-eyed goggles and look at things realistically.  If you want to start a business that will make you, let’s say, $30,000 profit per year, go in with the assumption that it will only make you $15,000.  Reality is always different from what you hope for.  There are many potential problems that you have often no control over that can slow down or halt your business growth.  So, be conservative in your expectations and you will protect yourself from an emotional let-down if things don’t go as well as you hoped for.

Have a Plan that Simple and Easy to put into Action

First of all you need a plan.  Complicated business ideas are more likely to fail, so the plan needs to be as simple as possible.  On top of being simple it also needs to be able to be realized fairly quickly.  Business plans that involve months of set-up time, for example, are less than ideal.

Example of a basic 3-step Plan:

1) Research a niche product that sells well through online channels

2) Make a website to sell your product (should not take more than 2-3 weeks to set-up)

3) Buy ‘Product A’, buy ‘Product B’, put them together and sell the resulting ‘Product C’ on said website

Keep it Small

Do not hire any employees – do it all yourself.  The more people you have to manage, the more problems and issues will arise.  In order to keep 100% control of day-to-day activities, which is necessary for optimal efficiency, you need to be able to handle all aspects of the business yourself.

Do not Invest a large amount of Money at the Beginning

Do not, I repeat, do not invest a lot of money at the start of the business.  Ideally stay under $5,000 as the initial investment.  There will be less pressure which will keep you more relaxed to make good decisions.

Never borrow Money to start the Business

Yes, you heard right – do not borrow money from anyone to start the business.  Do not get the start-up capital from angel investors either.  The only way you will be earnestly invested in your own business is if you use your own hard-earned cash as the start-up capital.  If you use money that comes easy, you will tend to be less serious about everything because it does not hurt as much if you should fail and lose everything.

Be Frugal

I cannot stress this point enough.  Do not buy a lot.  Do not buy expensive equipment (a simple plan would not need it).  Buy used equipment and supplies if possible.  Make things last by treating them gently.

In summary:  Spend little – earn much.  Your profit is the difference between the money that goes out and the money that comes in.  Sounds simple but most first-time business owners seem to be oblivious to this truth.

Always do your own Taxes

There is a saying:  “It’s not what you make, but what you keep.”  This is extremely true.  I have seen people waste thousands of dollars at the end of their fiscal year on accountants.  Doing your taxes is easy and with a little help from the internet (and tax software) anybody can do it.  This way you have the ability to play around with the numbers as long as you want until you get as close to the “ideal scenario” as possible.

Concluding Thoughts

If you want to go big right away, you will most likely fail or be much less efficient than starting small and simple.  Doing everything  yourself (marketing, accounting, manufacturing, sales, deliveries, service, repairs, etc.) teaches you a lot of new things and makes you stronger and tougher in the business world.  Be afraid – yes, be very afraid to lose money.  The result will be that you will keep a closer look on your profits and efficiently increase them over time.  There is nothing worse than” spend-happy”, fearless, first-time entrepreneurs that squander their capital with, at best, a vague idea of what they are actually doing.

Author:  Owner of Tilt and Turn Windows Edmonton , Frameless Doors, Invisible Doors, Tilt and Turn Windows Calgary