In the past few years I have watched as entrepreneurs come up with idea after idea for a business they wish to start. They come with stars in their eyes…..which is great. But I caution them to make sure the stars don’t blind them, and they know where they’re going. You might recall the conversation between Alice and the Cheshire cat in Alice in Wonderland?
Alice: “would you tell me, please, which way I ought to go from here?”
Cat: “That depends a good deal on where you want to get to.”
Alice: “I don’t much care where……”
Cat: “Then it doesn’t much matter which way you go.”
Alice: “…so long as I get somewhere.”
Cat: “Oh, you’re sure to do that, if you only walk long enough.”
There are some critical lessons for the beginning entrepreneur in this brief conversation. Not knowing “where you want to get to” shows a lack of planning that can be disastrous. And if you haven’t thought it through and figured out how to get where you want to go, getting “somewhere” may be very costly, you’ll get somewhere, to be sure, but it may not be a too-happy where: folding up your venture-perhaps, at best, selling it at a loss, or, at worst bankruptcy.
Most new businesses fail because their owners don’t have balance business experience. Balanced experience requires three basic strengths:
1. Technical competence in the business you have chosen, which means that you should have the know-how to get out the product or render the service in good style
2. Marketing competence, which mean that you should know how to fine your special niche in the market, how to identify your customers, and how to sell enough of what you offer at a price that will return an adequate profit for your efforts
3. Financial competence, which means that you should know how to plan for and get money you’ll need to start and keep your business running with getting into cash troubles
You’ll have to know many other things about starting and running a business, but these three are fundamental. They make the foundation upon which you can build success.
YOU MUST KNOW THE BUSINESS
It’s hard enough to get a venture going, with a thousand matters to absorb your attention it is incumbent on you to have some experience in the business you want to start before all else. Trying to learn how to produce the product or render the service at the same time is a prescription for disaster. If you don’t have this essential know-how, you’d be well-advised to find a job in that business. Work in it for a year or so. Keep your eye and ears open. Learn everything you can about the product or the service. In other words, acquire the technical competence you’ll need to start your own company. You can use your spare time for the planning you must do to tilt the odds for success in your favor before you set up your own business. And you’ll get paid while you learn.
YOU MUST HAVE MANAGEMENT SKILLS
This blog is going to help you gain the management skill you’ll need before you start your business. We will emphasize marketing and financial planning, as these have been shown to be essential for success in small business. We will support you in the essential components of developing a business plan-the carefully drawn road map- you must have to show you where you want to go and how to get there in the shortest time with the least cost.
The business plan is the critical tool you’ll need to raise capital or borrow money. In developing the plan for your business you’ll gain a firm grasp of the requirement you’ll have to meet to start and run your business. By carefully following the procedures recommended in this text you’ll acquire such detailed knowledge about your proposed venture that even the most sophisticated investor won’t be able to ask you a questions you can’t answer. You’ll show confidence in what you want to do. And by showing confidence and knowledge, you’ll build the confidence of your prospective investors in your ability to carry through your project successfully.
DEVELOPING YOUR BUSINESS PLAN
This plan will be the road map for your business; it has been tried and tested over the years, we know many entrepreneurs who have raised money successfully on the basis of plans developed from this out line and have used the plan to achieve a successful business. Below we have created a graphic that outlines the basic themes of a business plan. We will outline ways of going after capital and presenting your business plan to prospective investors and bankers. We’ll describe ways of using credit, of turning out the product or service, and of building the organization of people you’ll want as you grow. We’ll consider the marketing requirements of your product or service. If you manage these business processes well, with a bit of luck, you’ll be able to convert your product or service into profit large enough to repay you for all the time, energy, and money you will have put into your venture.
excerpts from Arthur H. Kuriloff and John M. Hemphill, Jr.