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One of the main reasons that people cite for starting their own companies is their frustration as an employee in large organizations at not being able to put their ideas to work. How do you start your own business leaving the comforts of a regular paycheck and the other corporate benefits that come with a job? This article recommends that you have a business plan, plan your finances, possess the right skills or hire people with those skills and persevere.
Plan your finances
Before you start your own business, it is important that you have an emergency fund in place that will take care of your living expenses and any other commitments (like mortgages) for at least six months. Once done, it is time to tie up the finance requirements for your business. You may start small with savings pooled from family and friends. Or prepare a sound business plan and approach banks for a Small Business Loan. If you are planning a rather ambitious venture that requires a lot of capital, angel investors and private equity funds may be the right source to tap.
You should prepare a Business Plan that defines your target market, analyzes various scenarios and evaluates them based on a probabilistic basis. This should also have a sound implementation plan and quantify the projected revenues, profits and cash flow for a period of at least two to three years. This is especially important if you are planning to raise funds from banks or external investors. Even if your business is going to be funded with pooled savings, having a Business Plan is a good starting point.
Getting listed in the local business directories and promotions through online and social media are some of the way of promoting your new business. It is extremely important to diversify away from a single customer model early. If you have a single customer for a long time, there would be no difference between being employed versus running a business. You may start with a single customer, but moving away from a single customer also makes your business model less risky.
Getting good references
Getting positive feedback and great references from existing clients is important as this can promote your business better than most other forms of marketing. One of the key advantages that small businesses have is nimble footedness and this should translate into being responsive to customer needs and delivering great service. A committed approach would help get good customer feedback.
Having the right skills
It is most important to have the necessary skills that your business requires. If you do not possess these skills, but still have a great business idea, you should be able to hire people with the right skills and enable these people to perform their jobs.
It is important to be patient, fine tune the business model where required and persist. Even businesses in services sector may not be cash flow positive in the first six months and you should not give up early. Remember, you left a comfortable job and a regular paycheck to be independent, implement your own ideas and choose your area of work. Being patient and making adjustments to your business model would pay off in the long run.
This article has been written by Daniel Guidotti from Cap Credit. Daniel is a full-time blogger and an expert on all things finance.