As I was getting ready to get out of the "home office" and into my other office I had the Today Show on and they happened to do a piece on entrepreneurship. The piece was mainly geared towards women and entrepreneurship but I think the advice they offered can - for the most part - be applied to anyone. Here's what they recommended (I've added my own thoughts in italics):
1. Build your cash reserve - save up enough money to live without an income for two years. They basically said to figure out how much you'd need and then double it. Also take into account if you're going to have to pay for your own health insurance and other costly expenditures.
2. Strive for a FICO credit score of 750 or better to help get approved for business loans.
3. Know your financial risk - how much of your money are you willing to risk in the new venture if it doesn't work out. Keep in mind that most small businesses fail due to lack of capital, experience, and planning.
4. Don't be afraid of debt - initially use personal assets and then seek funding from institutional investors.
5. Seperate personal and business accounts
6. Base your business on what you know (this one I think is really critical. The office space I work in has other entrepreneurs in it and I see a lot of people who just thought that to open a business in that niche would be "fun" but don't have real experience in it and don't realize how hard it really is. The best story I ever heard was of a MBA grad who was working for McKinsey Consulting and had a very healthy salary. However, she really wanted to open up a clothing boutique so she quit her job and went to work at a clothing boutique with an hourly wage. If I remember the story correctly she spent a year there learning every single aspect of the business and then left to open up her own boutique in a different city. She has done exceedingly well and credits it with the fact that she went in with her eyes open after having worked in the industry for some time.)
7. Create a business plan - you have to make sure you understand your market completely (this one is also really important and it's worth remembering that the business plan shouldn't be something that's simply locked into a drawer after it's done but needs to be a "living" document. I desperately need to update my business plan since the business has shifted its strategy and am hoping to to it after the last tradeshow next month.)
8. Develop an exit strategy in case things don't go well
9. Be flexible about your idea
Resources:
Local Chamber of Commerce
Small Business Association - SBA.gov
National Association of Women Business Owners - NAWBO.org
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