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What needs to be prepared before you start your business

on Tue, 11/13/2012 - 14:31

"Entrepreneurship and Small Business" series, #1 (#2 What you should do before you quit your full time; #3 Things to consider when you start your business; #4 How to manage your business; #5 How to pay yourself effectively; #6 The advantage of a business account; #7 Business budget made easy; #8 Last minute tax saving for corporations; #9 The federal disaster to small businesses and working class)

More and more people are starting their own businesses nowadays. There are a lot of reasons behind this, such as: becoming frustrated on the job or fed up of working for someone else, or following their dreams to do what they have always been passionate about. There are many things you need to look out for when starting your own business venture (even beforehand, if you can afford to). 

 
I ran a few workshops and discussions on what to watch out when you run a business; some on entrepreneurship. I decided to start a series of articles let people who are looking to start their own business to understand: what needs to be prepared; what kind of decisions they will face; how to get funding; how to get paid in a tax efficient way; how to choose banking partners; what to do to control risk; how to keep business liability out of personal assets as a business owner… 
 
If you are looking to run your own business (haven’t started but had been thinking to do it), I hope this article will help you think it through more thoroughly.
 
What needs to be prepared before you start your business.
 
1. Build an emergency fund
As an individual or as a family, we need to build an emergency fund. Although it is hard, I can only say, it is necessary (please check out my other blog post on budgeting). Normally, we need an amount of 6 months' expenses as an emergency fund, so that the normal operation will not be affected when we need extra money for emergency. You need to explore what kind of expenses you are getting into when you start your business and be well prepared before you jump into it.
 
2. Do your homework
Believe it or not, someone, somewhere, in some other conference room or perhaps even in a quiet little coffee shop may have thought of your exact idea, and sadly, they may have done something before it was even a spark in your mind. Do research and see if there is anything out there close to what you are about to offer. The last thing you want to do is jump right in there, work on something and find out that the idea may not really belong to you. 
 
3. Find out who your target market is
Figure out who are you selling to or servicing, you cannot service everybody. Nobody can service everybody. If you are pushing a new product idea, find out who are your early adopters, open to different business models, position your product/services - make sure it is "market-fit". Try to keep yourself as "lean" as possible (on both the company and products/solutions).
- check out Entrepreneur's Guide to Customer Development, use promo code BOOK10
 
4. Try before you start
Volunteer for a company within the industry you desire to work in, or seek a job with someone you already know in the industry. You not only gain insightful experience by doing this, but you also become more connected with people who may prove helpful to you down the road. By doing this, you can also get a much better comparison of what your vision of the business is like, vs. what really happens ‘in the real world’.
 
5. Make sure you like what you do
don't just start a "money making" business, be passionate about what you do. When you lose your passion, you lose the ability to perform. If you don’t like what you do and just focus on the money you can make, eventually you become a zombie. Also, if your clients or customers can only see $$ sign in your eyes, you won’t keep them long. They will leave you.  
 
6. Connect with people in the industry
Keep good connection within your own industry, don’t think it is a waste of time or keep thinking people in the same business are your competitors. You never know if you need their help one day (because they have more experiences than you, or chances to collaborate down the road).
 
This article covers only the bare minimum of what need to be prepare, next post will be on what you should do before you quit your full time. Stay tuned.

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