So, you want to start a new business?

So you want to create a new business?

Don't write a Business Plan (yet!) 

Don’t create a business because you ‘want to create a business’. Create a business because there is something that you want to be involved in and the only way you can do that is to create a business. And, make sure that you are fascinated by the business. The first years can be hard, and the rewards are few. If you do not love what you are doing it will be too easy to give up. Success with a new venture requires passion and persistence.

Do not start by creating a Business Plan. Start by creating a two-page Concept Paper: two pages is too short to be a Business Plan but too long to allow you to BS.  In the Concept Paper, be sure to include the following:

a)   The Big Idea (What is it that you want to do)

b)   The business model (How do you make money)

c)   Why you? (What expertise do you have, or plan to get that will ensure that you have the knowledge of the business/industry)

d)   Who are the customers? (Who will buy the product or service that you are offering, at the price you want to charge?)

e)   Why will they buy? (Where is the gap in the market that suggests you might have the chance to actually get customers?)

f)    What will be your legal structure? (Different countries have different rules. We will have information by country for freelancers - check it out.  In any case, you need to have an idea about how you will operate from a legal and fiscal standpoint)

g)   What will you, personally, do for resources while the new business is building to a point where you can be, at least, self-supporting? It may take a year or more!)

Write out your concept paper. Get down as much of this as you can, then share it with a mentor. Someone who will give you honest feedback. Sorry to say, but family members are often not objective enough.

Find a professional coach or mentor.  The idea is to use the Concept Paper as the basis for dialog between you and one or more mentors. Let them ask questions: "What do you mean by . . . . ?". "How does this work in practice?"

The idea of the dialog is to get inputs that will allow you to refine, improve, and clarify, your ideas to the point where everything seems to hang together and make sense. This may take three or more rewrites of the Concept Paper. Frustrating, perhaps, but better to have the frustrations now before you commit, than to go forward with vague ideas, and have mega frustration later. 

Once the Concept Paper makes sense, with no missing links, that is the time to draft a Business Plan, with some financial stuff to help validate your ideas in operational and financial terms.

More on concept papers

Discussing the concept paper approach with one of my students today (M) we agreed that sometimes it helps to jot down some numbers in the Concept Paper just to see if the concept hangs together. We were discussing an internet idea where the revenue stream depended mainly on the click-through rate from ads. A few quick numbers showed that the original concept was a non-starter. This is one of the key rationales for the concept paper. Dialog and work towards a working solution. Your comments?

Decide on a legal status

You will almost certainly need to have some sort of legal status to be able to charge for your products or services. This is especially important if you are billing an organization that will likely want a formal invoice. The rules vary by country. We will try to give some links and suggestions here for various states/countries. Please add your own ideas and suggestions.

The status will often vary from 'self-employed', through one of the various forms of partnership, to create a separate legal entity such as a limited liability company. For example, in France, one solution is to sign up with a company offering 'portage salarial' services. The service handles all the billing and collection, and manages the social security and related payments, provides a monthly 'payslip', and transfers the balance to your account.

Some ideas and links on becoming an entrepreneur:

Forbes: The Habit of Ferocity: What Every Entrepreneur Needs To Succeed
Forbes: 3 Startup Secrets From A Serial Entrepreneur