Welcome to the LemonBlog

Why are you starting a business?

Are you frustrated in your current job? Are you annoyed with your boss? These by themselves are not good enough reasons to rush into starting your own business, though they are often strong motivators. Think very carefully about the ramifications of starting a business. In most cases, during the first few years of operation, the business owner works long hours. What implications will this have on your family life? Is your spouse in agreement with your decision? If you are not prepared to or cannot make the necessary time commitment, then you must ask yourself if starting a business is really the right step for you at this point in time.

In many cases, the business owner takes a reduction in income (from his/her current job) for the first year or two. Financially, how will your family manage?

Facts are that 33% of all new business will fail within their first six months, 50% fail within their first two years and 75% of all new businesses fail within their first three years of operation.

As you can see, the odds against you starting and operating a successful business are not in your favour. That is not to say that it cannot be done, but just think very carefully before you make a hasty decision.

Business Expectations

You should honestly ask yourself what you expect from your business. Is it to make a decent living? Is it to make a very good living? Is it to get rich? Is it to have more control over your life? Is it to have more free time? Is it to build a better product? Is it to provide mankind with some unique service? Is it to build a business that you will sell in a few years time so you may retire, invest or start another business? What do you want from your business?

Business Plan

Before you start your business, you will need to develop a plan. In its very basic form it should cover: the type of business that you will have, the product(s) and service(s) that you will offer, the markets that you will serve, how and why customers will buy from you, sales and marketing programs, management responsibilities (names and roles of team members), financial projections and an operating budget. You will need a plan that you can review on a regular basis and against which to monitor your progress. If you don’t know where you are going, how will you get there? Planning makes you a better owner / manager. It makes your company more competitive and more likely to succeed. Your company’s plan will be a constant reminder of where you want to go, what you want to become and how you will get there. If you are planning to borrow money from a financial institution, you will need a detailed business plan.

Legal Structure

Will your business be a sole proprietorship, a partnership or an incorporated company? There are pros and cons to each of these structures.

Differentiation / Unique Selling Proposition

What will differentiate your business from the competition? Will the quality of your products be superior? Will you provide better service? Will delivery be better? Will your warranty or guarantee be superior? What will be your unique selling proposition? If you do not have a means of differentiating your business from those of your competitors, why will customers buy from you? If you cannot differentiate, you will probably end up competing on price. The roadsides are littered with those companies that went bankrupt trying to compete in price.

Market

Clearly define the market that you plan to serve. Understand the demographics of your customers. Who buys; What do they buy; When do they buy; How do they buy; Why do they buy?

Competition

What do you know about your competition? How many competitors are in the geographical area in which you plan to do business? What are their strengths? What are their weaknesses? Why do customers buy from them? The more you know about your competitors, (strengths, weaknesses, how they market, how they will react to your marketing programs), the better prepared you will be to compete with them and stay ahead of them.

Financing

How will you finance your business? Do you have sufficient funds to finance your business for the first few months of operation or will you have to borrow money? If so, from whom will you borrow the money – relatives, friends, banks, third party lenders, business development organizations?

Cash Flow

You need to develop a 12-month cash flow projection. During the first few months of operation, you will be using cash. You will need cash for the premises, utilities, inventory, salaries, equipment, etc. How long will it take you to start to turn a profit and how long will it take before your cash flow is positive? Just because you are turning a profit, it does not necessarily mean that you are in a positive cash flow position. You may still require funds to build up inventory, or you may have outstanding receivables. If you are planning to borrow money from any of the above mentioned sources, you need to know how much you will need to borrow. Potential lenders will want to know how and when (what schedule) you plan to pay it back.

Employees

If your business is going to require specialized or uniquely skilled employees (manufacturing, engineering, technical sales, etc.) in order to succeed, determine how and from where you will attract and retain these employees.

Commitment

Is this something that you really want to do or is it because of frustrations in your current job or are you just having a momentary “entrepreneurial attack”? Are you prepared to commit long hours for the next few years in order to give your business the proper foundation that it will require? Or, are you expecting to work only 40 hours per week? (Most owners of new businesses work significantly more than 40 hours a week!) Realize that there will be long hours for the next few years. Not everyone can or is willing to make that kind of commitment.

Passion

In most cases, those that succeed in their own business do so because they have a strong passion for their business. They often “eat and sleep” their products or services. Try to select a product or service in which you have a great deal of interest. This could be a current hobby or something in which you want to develop further expertise. Pick something that you really enjoy doing. Your chances of success are far greater with a product or service in which you have a great deal of interest than one in which you are only mildly interested.

Advice

Who will you turn to when you need business advice? Presumably you are not yet an expert in marketing or in business. Most successful businesses rely heavily in the beginning years on the guidance and expert advice of professional services such as Business Consultants, Marketing Advisors, Graphic Design Firms, and even Financial Planning. Invariably you will encounter pitfalls and surprises along your road to success that you are not equipped to deal with on your own. Develop relationships with professionals who will work with you as you grow, who will be on hand when you really need them. Ask for references and be sure to verify them.

• home
• web design
• graphic design
• photography
• other services
• blog