What You Need To Know Before Starting Your Business

A few years ago, I decided to start my own business in coaching and consulting. Despite being a business admin major, there were many things I didn’t know about running a business, and I also received some pretty bad advice about how to start one.

One such advice I was given was, “a business plan is not needed when starting your business so long as you know the needs of your target market and can solve it for them.” How do you know who your target market is without having it written as part of your business plan? How do you know there is a problem that hasn't been looked into by potential competitors already without doing some research on it? I noticed many people in my circle had started their businesses without a solidly researched business plan in place. Of course, that resulted in many of them losing money their first few years of being in business because they didn't have a plan which would project their financials for the first five years. They also didn't do a complete market analysis of the industry they were tapping into to see if this was a viable business for them to do. Unfortunately, many entrepreneurs who follow this advice go into their business completely blind folded with regards to their financials, industry and other projections that need to be made for the business to see actual success in the first year. That can be fiscally and emotionally detrimental, especially in the first few years of starting a business. 

Another advice given to me was to charge whatever I thought I deserved because I was being paid for my time in coaching (providing a service) even if I didn’t have the experience. In the coaching industry, for example, asking for about $100 - $150 per coaching session is the norm and is what we’re taught in our coaching courses (be sure to choose those coaching schools that are reputable and accredited by the International Coaching Federation – ICF). However, there were some business coaches in whose programs I was in, and the one thing we were taught was that even if we didn't have a service to offer yet, or didn't know what we were doing in our businesses, we should charge clients $500 per month or more and put them on six month contracts. This would be an easy $3,000 per client and we'd start making money quickly while solving their problems – that advice never sat right with me. The sales pitches some of the coaches taught us also didn't feel so good to me. One thing I've learned overtime is to do what feels best to me, and is in alignment with my personal and professional values.

Finally, the last advice I received was not to focus on finding a full time job. In fact, entrepreneurs, as I was told, had a lot of flexible time because they were looking for freedom to do whatever they wanted and set their own working hours. The freedom to travel, and make your own income is what makes the entrepreneur life so lucrative, and it is once you have made it to be that way. However, the reality is this - when you start a business, you'll find there's no real free time. You have to work many, many hours during the first six months to a year and yes, while time is flexible in the sense that you are not having to work every day from 8am – 5pm, you still have to work the same amount of hours in your day to get clients, and make a decent living at a financial level. It can be stressful if you're starting a business with little income to invest, and see debt pile up.

A side note – having a full time job to build financial stability is a very good thing if you want to start your business and eventually gain financial standing before moving into your business full time. A mistake some people make is to start a business with more debt and no finances to take care of their own basic necessities - they just jump in and have no job or money to speak of. A job provides stability that is needed as you break out into your own, and it lets investors and banks know you have the ability to pay them back when you get loans from them for your business. Once you start to make the money in your business that you would make in your full time job (or more), you can break away from your 8-5 job to focus on your business full time. This is when you can start creating your own schedule and work the hours you want to work because you're bringing in the moolah.

Here are the most important things you should know if you are beginning a business:

• Know that building a business will take time. It will not happen overnight no matter how many Facebook and Instagram ads you see telling you that you’ll be able to make your first 10K in six weeks if you sign up for their programs, etc.. The reality is that it takes time to build a solid business and acquire clients since you have to spend much of your time networking your services. And, if you do your networking right (please see this article about servant leadership and networking), you can get loyal clients because it’s about creating strong relationships with others and being in service. I can tell you right now, if you do not have a relationship with people you want to work with, they won’t work with you. You are selling yourself no matter if it’s your product or service. If you don’t think you can work with someone, be upfront and be a connector. Refer the potential client to someone you know who could better serve them and their needs.
• Before beginning your business, you must be very clear with what you want to do. Clarity is important. If you are focusing on too many things at once, you will confuse people. I know because I’ve been there. I was trying to be a health coach (I became certified in 2014 with this), and then at the same time, I wanted to coach people with business, and life planning, stress management, etc. I even did a one year hypnotherapy certification program (yes, it was paid for by FAFSA) and add hypnotherapy as another service. The problem was I kept putting my foot in different doors that although they seemed to merge with one another, did not make sense. As a result, I did not get clients and suffered financially as well.
• Have a business plan in place. Once you’re clear with what you want to do, (it will take some time to gain clarity) and have an understanding of the needs of your niche, it’s a good idea to start doing research on your industry, and do a market analysis. Writing out a business plan is imperative because you can get a snapshot of how your business will do in the first three years of being open. The business plan is a living, breathing and ever changing document. You can create a business plan by paying a small monthly fee on websites that have programs that help put things together, such as BizPlan, or LivePlan. If you’re looking for investors or ways to finance your business through a bank, your business plan is what the banks and investors want to see. If they think your business is a viable business, they can become a venture partner and provide the capital needed for you to run your business. Think SharkTank (if you happen to watch that show).

Here’s how a typical business plan is outlined:

1. Executive Summary (this is the last thing you write that puts your entire plan in place)
2. The name of your business, and your why – who are you intending to serve and the challenge you are working on solving for potential clients. This is also known as the Business Overview.
3. Market/Industry Analysis – what does your industry look like growth wise? Is the industry projected to grow in the next three to five years? What does the potential growth look like as you tap into your industry? This also includes information on your target market, demographics and who exactly you will be serving. Part of the information on your target market is creating, what’s called, an ideal client avatar. This means identifying exactly who the person is you are solving a problem with your product or service. Is this person a man, or a woman? Where does this person usually hang out at (coffee shops, libraries, schools, etc.)? What kind of job does this person do? What is their age range? What is the problem they are dealing with? How will your product or service help them solve that problem? This is very detailed but it will really help you find and attract the type of client you want to help (and it will help you write a better pitch for them on your website).
4. Competitor Analysis – who are your surrounding competitors and what will make you different than them? This is something you should revisit every six months as competitors change their marketing and branding tactics, and services. You can also learn from your competitors too, so make sure you keep them close to you and study their tactics.
5. Marketing Plan – this is another very important section of your business plan that may require you to do a bit of research on the various marketing platforms that are available. Think about your sales strategy, and the pricing of your products and services. How will you advertise your business to your target market? This requires you to know your ideal client avatar (look at #3 above).
6. Owners and Management – In this section, you outline who the people are that will be working with you in the business. For example, you can write your name and title as CEO and founder of the company. Will you have more employees? Are there any partners who will be co-founding the business with you? If so, what are they good at and what role are they going to take in the business? Human Resources? Operations? Financials? List the structure and management style of your company here.
7. The Operations Plan – If you don’t know how to operate your business, and what you need to make sure you have the right equipment, venue, manufacturing and technical support, you won’t be able to run your business. This is the section where you outline who you are using for your CRM (customer relationship management software), what internet or broadband company you will use, your inventory (if you have actual products), the location of your company, warehouses, and other physical venues, and other technical things you will need to operate your business efficiently. Sometimes, a Gantt chart, and tables will make this section look better because you can physically see a snapshot of how your business will manage its operations. Under this, you should also discuss your legal issues, and human resources (who is the VP of Human Resources) so you are compliant with the laws and regulations of your state and county (or country if operating outside of the United States).
8. Financial Outlook – this is the most important part of your business plan. Here, you’ll be able to see a snapshot of how much money it will take for you to start your business, expenses for the first year, revenues when made, and future projections of revenue and expenses. In this section, you will create the balance sheet, income statement and cash flow statement or cash flow projection. If you’re horrible at calculating finances and math, I suggest you get an accountant expert to help you with this section (because this too, is my area of weakness and I always need help by a friend who’s a finance and accounting expert).

Remember, your business plan document will change overtime, so check in on it every 6-12 months.

• Be authentic in everything you do. When you network with others, think about building relationships that will bring loyalty and trust between you and potential clients or customers. Don’t just pitch your sale to someone and hope they will say yes by being someone you’re not. Be who you are and keep your eyes and ears open to everything you see and observe so you can continue to learn and grow.
• You can have more than one source of income, and you should ideally have more than one source where you're cashing revenue into your bank accounts. Speaking can be one source of income, writing and being published as an author is another source of income. Come up with creative ways to bring revenue flow from wherever you are able to. If your only source of income is, say, consulting, then consider adding your speaking services, create workshops, do seminars, and publish books to grow your revenue.
• Financially, you should always keep your business and personal finances separate even when you are starting your business. It helps to have QuickBooks, or hire an accountant seasonally who can look at your finances and help you see where your money is going, or if you have solid cash flow to pay potential employees, and any business expenses before paying yourself. Also, personal accounts should be used for personal use and not to be commingled with business funds. If you get a business loan, put that money in your business fund. Not in your personal account.

Always document everything you get into your business, including which sources you're receiving the funds from, and the expenses you have to pay.

• Finally, a note on failure. If you failed, it’s absolutely fine. I’ve been there and have failed before, but came back up again after learning what went wrong and what changes I needed to make. Look at your failures as stepping stones to the ultimate success you’re reaching for. Without making mistakes, we can’t learn anything and it's impossible to move forward if we're not learning anything especially if we keep repeating the same mistake over again. If you failed to get a client the first time around, ask yourself what happened in that moment. You can even ask that person who said "no" why they did that. More than likely, they will be open to tell you why. This gives you the opportunity to work on improving your techniques to reach out to potential clients.

Running a business is not easy, but it is surely a rewarding experience when you put in the effort and see positive results. Be careful who you get advice from, and hire only a reputable business consultant or coach who has had a vast amount of experience in running a business. Look into getting a business mentor if you don’t want a coach. Learn from other entrepreneurs about what they’re doing to achieve the success you’re looking for and ask questions. The more you challenge yourself, the better you will do in your business and reap beneficial rewards.