Choosing and Marketing a Business
~ by Steve Throckmorton
The criteria for choice of business direction is very similar to that used to choose your employment path. You should choose a field of business in which you have experience. Technical knowledge, understanding of what motivates clients that buy your product or service, an understanding of distribution channels, a realistic evaluation of the cost of running your business and therefore what you must charge are all essential in running a successful business. These foundations come only through education and experience but more importantly through experience. If you start a business with no prior experience you will be at a severe disadvantage when facing your competition. Your chances of making your business a success when you are “wet behind the ears” are slim. Starting a new business is challenge enough without learning the business at the same time.
It is also crucial to keep costs as low as possible when starting a new business. Many new business owners spend money too quickly buying things that are not essential to the success of the business. You will need basics like business cards and letter head but these things require little investment. Don’t immediately go out and buy expensive furniture and computers. Make do with what you have but if you do need to buy furniture then buy used. New furniture depreciates rapidly after the purchase. If you can make the business work with an old computer then do so. You must learn to conserve your money because almost every new business will endure lean times in the first months and years. You must be able to endure these times until revenues finally exceed your expenses. Something to consider is the length of time it takes to get paid. Consulting businesses for example often invoice at the end of the month after a full month of work has been done. After invoicing it will typically take a client 60 to 90 days to pay the invoice. So even a business that has customers on the very first day, when the doors open several months will pass before that translates into income. Add to that the time it takes to acquire a customer and you can see how quickly six months or more can pass before receiving even your first check. You can see with this kind of delay it is important to conserve cash. Of course once you start getting paid, assuming a constant flow of business the cash flow will eventually even out. You should always carry a cash reserve though because all businesses experience fluctuations in business.
In the next post we will talk about ways to think younger.