Stop! Do you really think you are ready to start your new business venture?

Did you know there are a series of steps you must take before even starting your business?

While you don’t want to spend too much time planning and researching for your business, there are certain tasks you must ensure you have checked off before starting up.

You may want to start a venture, but are uncertain of where to begin, or you have some business ideas, but need to ensure you are heading in the right direction first. Follow these steps carefully so you don’t waste any time, money or frustration after starting-up.

1. Think about the work you enjoy

Before putting together any ideas, it is very important to think about the type of work that interests you the most.

This can have a huge effect on the business you ultimately pursue, so you want to ensure you are happy with the company you end up building.

You can read more about why this is especially important here.

2. Consider your interests

While seeking the type of work you would enjoy is most important, pursuing an industry you have an interest in can also be helpful.

The greater your interest in your business, the greater the likelihood you have of enjoying your work and successfully leading your company.

Thus, you should keep your interests in mind and factor them in when sorting through your ideas.

3. Generate ideas

Utilize brainstorming and other techniques to come up with business ideas. Then, conduct some general research on where a lot of demand lies. Bonus if you can find an area with a lot of demand and less competition.

Once you have a long list of ideas, cross out those that don’t complement your work-related interests as identified in step one, and general interests identified in step two.

Also, look for the ideas that seem to be the easiest to start-up and/or have the highest demand.

4. Conduct market research

By now, you should only have a few remaining ideas. Conduct more in-depth market research online to get a better feel for the demand related to these ideas. You should also look to discover what features and benefits customers favor most from these products.

Knowing this ahead of time will equip you with the knowledge you need to develop a more favored and higher-quality product. By understanding these areas of unfulfilled demand, you can create an item that is head and shoulders above your competition.

One last but very important factor to consider is if the demand for these products are growing or shrinking. ONLY pursue ideas that have a growing demand associated with it.

At the end of this step you should either have one idea you are going to act upon, or several ideas, all of which you will inevitably sell.

5. Conduct competitive research

You want to get a feel for marketing techniques, pricing, accessory or auxiliary products, demographics targeted, and any other consistent strategies you see your competition doing.

If you see repeating tactics among your different competitors, this is because these strategies have been proven to work. Take note of these best practices and consider how to implement them in your own, unique way.

If you can obtain any sales figures or projections, great. But be very subjective if you get this information from larger competitors.

6. Answer all sourcing questions

A business cannot function without providing a product or service, nor can it function without cash.

Consider your manufacturing needs. Will you outsource? Manufacture yourself? Hire staff to do the manufacturing? Is research required first?

Then consider how much money you will need and if you will require external financing. If so, how will you get it? Through a bank? Selling equity? A rich grandmother? Or are you bootstrapping and can get by with financing the venture just through the income from a job?

7. Write a business plan…or not

Are you the type of person who needs a plan in order to move forward? Will you constantly refer to this plan and make changes whenever needed? If so, consider putting together a business plan right away.

You might also need one if you require financing from an external source.

If you don’t require external financing and putting together a business plan feels like a formality to you, don’t waste your time.

A business plan is often an excuse to delay selling your product. So only put one together if you will actually get some use out of it.

8. Write a marketing plan

This plan is much more important. It doesn’t have to be a formal plan (unless you need external financing), but you should at least have a list of different ways you are going to try to market your product.

There are a lot of marketing tactics to test and tweak, so in order to prevent yourself from forgetting any of them, it is important to list your different ideas.

9. Seek financing

Now you have to get money to fund your venture. You have already determined how much you need and where you will try to get financing.

If you have determined you need external financing, you have already put together a business and marketing plan. Seek out your potential sources and start trying to get the financing you need.

If you have decided to bootstrap, save up as much as you need now, or use your current income to fund your expenses. With bootstrapping, funding is an ongoing process until you can be self sufficient, so be prepared to utilize your current income for a longer period of time.

10. Start the venture

There are many more steps you could probably do before launch. But often you learn the most by starting and tweaking as you go along. At least you have all the bare-minimum resources you need to start.

You can always refine your practices later on. In fact, tackling issues after start-up will allow you to confront problems with a much more educated mindset.

Don’t delay! Now is the time to open your doors, begin selling, testing, tweaking, messing up and trying all over again. Good luck!

What are you spending most of your time doing?

Pretend you recently started a new business. What do you picture yourself doing?

Are you cleaning up your new office? Sorting your staff into departments? Ensuring all of your equipment and computers are up to date or planning numerous meetings with your accountant and banker to talk about financing?

I hope you are doing none of those things, or at least spending very little time doing them. You should be dedicating at least 95% of your time to one thing: sales.

Yes, sales. Nothing will keep your business alive for long if you don’t have sales.

You can organize your employees all you want, you can talk about financing with your accountant for hours on end…you are just delaying the inevitable: sales will keep you in business.

Sales are so important for some very obvious reasons, but it still needs to be said.

Sales will bring you cash

Yes, that’s right. You business NEEDS cash. Cash is the lifeblood of your business. Your business cannot run if it doesn’t have cash. In fact, you cannot do anything if you don’t have cash.

This is why it is so important that in the beginning stages of your business, you need to focus on bringing in cash more than anything else.

The more you grow and the more cash you begin to bring in, the more you can start to delegate, organize and the like. But this can’t happen unless you hit the ground running and make a beeline to bring in sales.

You need cash for your operations to continue

Sales will bring you cash and cash will allow you to continue to fund your business operations.

You cannot manufacture products or provide services without cash.

If you cannot fund your business operations, your business shuts down, period.

This is why it is so important for you to gun for sales, and bring in cash FAST. The faster you starting bringing in cash, the faster you wont need to heavily rely on outside sources for funding.

You need cash flows for financing

This is slightly less obvious. Unless your bank offers start-up financing, the only way you will be able to get any funding from your bank, be it a line of credit or a loan, is if you have income.

If you have sales, you have revenue. If you have revenue, banks will be more comfortable lending you money, since there is a greater chance that you will pay them back.

You need cash to free up your time

This is especially true if you have started from scratch. You cannot be doing everything in your business for too long without burning out and quitting.

You are going to have to hire staff as soon as you can so you can start acting as the leader and chief marketer of your new business instead of the lead salesperson.

The only way your business is going to grow is with you at the helm, not on the front-lines. In order for you to remain at the helm, you need cash to hire a staff to handle the day to day sales and marketing for you.

. . .

If these points are so obvious, why do they need to be said? Of course you know that you need cash, but you need to consciously recognize how high of a priority sales should be to you at the early stages.

You should always be consciously looking at what you are doing and ask yourself if this is contributing to generating sales for your business. If your current activity isn’t, quickly switch gears and move on to an activity that does.

New businesses especially need a culture that is centered around bringing cash into the business. You want everyone to prioritize sales so that bringing in cash is in the forefront of everyone’s mind. If this remains a priority in everyone’s mind, your staff will remain committed to bringing in the lifeblood into your business.

The beginning stages are going to be messy and disorganized. Some work well in that type of environment, others (like myself) do not. It is important to adapt if a messy and disorganized environment bothers you, because you are going to have to get used to it for the next five years.

So your business has failed, huh? It seems as if all hope has been sucked down the drain.

What do you do? Learn! Learn from your mistakes so you wont make the same missteps in the future and instead become a better leader and entrepreneur.

Here are some very important points you should take note of after a business failure so you can emerge from the rubble as a stronger and more savvy business owner.

In what areas did you spend too much time and/or money?

It is important to examine where you allocated most of your resources. Allotting most of your time and money to an area of your business that wont yield positive returns is an inefficient practice and should be curtailed in the future.

Perhaps you spent too much time on designing an IT infrastructure? Maybe you spend too much money on office furniture and supplies and not enough on advertising? You might have even spent too much time researching.

While I can’t emphasize enough the importance of research, doing too much of it may be counterproductive–it may discourage you from taking any risks and may lead you spending too much time and money into preparation and not enough on action.

Either way, evaluating areas that prove to be a money/time drain for you and your business is important and will allow you to invest your resources in more efficient and effective areas of your business in the future.

In what areas did you spend too little time and/or money?

Similar to the last point, perhaps you underfunded certain areas of your business with little of your time and/or money. Look at all the vital areas of your business. Sales is a top priority regardless, but some other areas might be more important to certain businesses while insignificant to others.

For example, if you are a web design company, chances are you will need to spend more money on web design and graphic software as well as more powerful computers than a interior design firm will.

Therefore, consider all areas of your business that added value to your product and determine if these areas were receiving enough support. For some businesses, this may be fairly obvious, while for others this might require some thinking. The important thing to remember is that you are trying to determine the optimal funding that each area of your business requires so that your operations will be as efficient and effective as possible in the future.

What strengths of yours were utilized while this business was running? Which were underutilized?

Are you naturally a good manager? Salesman? Leader? Visionary? Wherever your strengths lie, leverage them! Especially in the early stages when you need these strengths the most. If your business failed, you should determine whether or not you used your strengths to your best advantage.

Take this one step further and make sure to determine what your strengths actually are. Maybe you thought you were good at something but your performance in this area proves otherwise. Knowing what strengths of yours to leverage and what weaknesses either need improving or avoiding are very important skills a leader should have.

Knowing this will allow you to produce for your next business more effectively.

What weaknesses of yours, as an entrepreneur need improving?

Do your leadership skills need some work? Maybe you need to become a better listener? Or perhaps you have hang-ups on certain little things that aren’t as important as you think they are.

Whatever your weaknesses are, it is important that you locate them and either improve upon them or ensure someone else handles them. Again, delegating something according to skill (even to yourself) is an important ability for any leader or manager to have.

What particularly missed the mark? Was it targeted customers? Bad branding? Bad product? What could you do to improve this in the future?

Try to pinpoint the exact reason why your business missed the mark. Perhaps it is fairly obvious, perhaps not. However, knowing this will allow you to, in the future address these problems more effectively, more quickly and allow you to notice them before they actually arrive.

Does anyone else have any important lessons from business failures that they would like to share?

Four out of five new businesses fail. This is a frightening statistic.

However, there are many simple reasons why this can happen and as long as you approach your business with a level head, take calculated risks and know your market and industry, you have significantly less to worry about.

Below are some reasons why your new business wont end up as a statistic.

Everyone else’s capabilities don’t reflect yours

There are a lot of pessimistic people out there who don’t believe in their success. Even among the optimistic ones, they probably have only moderately ambitious goals.

You on the other hand, have high aiming goals. You aren’t aiming just to succeed or even being profitable, your goal is to grow as large as you possibly can and/or have an operation that runs without you. Since you aim to accomplish so much more than the basics, failing shouldn’t even be on your radar. Just remember to be patient and persistent.

Your product is profitable

You conducted your market research and your competitive analysis, so you not only know that your product is profitable, but you also have a rough idea as to what marketing and advertising mediums work best for your target market.

Even if your marketing doesn’t work right away, you know the problem doesn’t lie with the product you are selling, so all you have to do is continually tweak your promotions until something works. Again, it’s only a matter of being persistent and patient.

You are delegating when necessary

It is extremely important to delegate and outsource when necessary. There are two instances where this is especially important: a) you are a new business and your marketing requires specialists in order to advertise properly (ie: web design, SEO), or b) you are starting to attract a lot of business and you need to ensure you have the time to dedicate to leading your business as opposed to working in it.

As long as you delegate and outsource during these critical periods, you will be in the optimal position as leader and visionary of your business and you will ensure that you are steering your business in the right direction.

A word about debt and other fixed, recurring costs

You know that there is demand for your product, however until revenue is guaranteed you want to avoid taking on too much debt. If you are still in the marketing test phase where you are still figuring out the optimal marketing mix for your product, revenue is still very unreliable. It could be very dangerous if you take on debt that you don’t know that you can pay back. The same is true for other fixed recurring costs such as rent for office space.

Being unable to afford these commitments every month causes many promising businesses to fail. Please don’t let yourself be one of them. I can’t tell you not to take on debt (if you can even get a loan in this environment), but I can only ask you to use discretion when borrowing money that you aren’t sure you can pay back.

When starting anything, be it writing, learning or starting a business, we often fail to plan enough, and instead we dive right into whatever project it is we are taking on.

What we don’t realize, however, is that putting together a plan of action will help us stay on task and accomplish what we hope to more effectively and efficiently.

I have noticed that my writing is always better, clearer and more focused when I plan and outline first, and the same is true when starting a new business. If we set steps and milestones for things we need to accomplish in the start-up stage of our businesses, we will find that we will become more equipped to make informed decisions more quickly, and profitability will come sooner than if we hadn’t planned.

The following are not specific steps to follow, but ideas you should keep in mind when outlining your own plans of attack when starting a new business:

Do market research as early as possible

As mentioned previously, market research is extremely important in determining whether or not you should pursue your business idea. While you may think your business idea is great, what is more important is what others think of the idea–this includes your potential customers and even your competitors (you’ll see why after reading the next two items).

Doing market research will give you a clearer picture of:

• If your idea will be profitable
• What your customers want
• What your customers don’t want
• What marketing causes your customers to buy
• Where and how your competitors are advertising
• What advertising probably doesn’t work

While all of these are important to know, the most important question to answer at this stage is: “will my idea be profitable?”. You will never know for certain until you try yourself. However, you will get a pretty good idea based on what benefits customers are looking for in a product, if similar products are selling and if there is a large enough demand for this type of product.

Go where others ARE, not where others AREN’T

This is extremely important, at least for your first business. While you may have heard some huge success stories of those who invented this great new product and made billions from the idea, you probably haven’t heard of the thousands of examples of those who have crashed and burned by inventing something new that never caught on.

It is very hard to do market research on something that hasn’t been invented yet. However, it is extremely easy to get information on existing products that customers are demanding presently.

Most importantly, if there are large and established businesses selling these existing products, you know these products are profitable! You know people are buying them and you know businesses are successfully advertising them.

I don’t want to tell you not to try and sell something brand new and innovative. But I do want you to understand that this is far more risky. It is much more safe selling something that is already being demanded and sold.

Furthermore, (and this is very comforting to some) if you are going into business selling an existing, successful product and you have made NO sales, it’s NOT the product that’s the problem, it’s YOU. Why is this comforting? If it’s the product that is the problem, there is very little hope for success. If the product isn’t catching on, it doesn’t matter how clever your marketing is. However, if YOU are the problem (meaning your business), all you have to do is change your marketing mix. You already know you are in a profitable industry and success is closer than you think. Changing something you are doing is way easier than changing the public perception on a new, mysterious product.

Take note as to what your competitors are doing

This is a very similar point to the previous one. So now you know that your competitors find certain products profitable. Now you want to know what kind of advertising is profitable, what marketing mix is most efficient and what product positioning causes your potential customers to react most favorably.

The answer to these questions are not that far away at all. Your large competitors have already spent A LOT of money experimenting and determining the most effective advertising for these products. They also have accumulated a TON of consumer data as to what causes them to react. Use their knowledge to your advantage. You can see the product of their research through their advertising.

Chances are if they are doing a certain type of advertising or market mix, it is working well for them. And chances are, if they aren’t doing other types of advertising, they probably have already experimented and failed.

This doesn’t mean that you can’t experiment with new things and be successful, but you know it is a safer bet by taking note of what your large and established competitors are doing right now.

Doing this is also a useful tactic when combating doubt.

Know when NOT to pursue something

As important as it is to determine the profitability of a project, it is equally as important to know when not to pursue a project. You should set up some measure or criteria to determine if a business, idea or project is worthwhile to pursue; and then make sure you follow this criteria strictly. After all, you never want to waste time and money on something that turns out not to be profitable.

Automate as much as you can

If there is research you are doing, or ANY redundant tasks that you are performing, see if they can be automated. This is important because it will save you time and make it easier for you to concentrate on other things while your computer does all of the work. This is also especially convenient in that automation, as opposed to outsourcing or delegation is free!

Take note: at this stage, the only level of automation you should be doing is basic and free automation. Don’t go hiring a programmer or spend too much time learning shell scripting or automation languages. At this point, going any further than the basics will be counter productive and only tax your time and money

Delegate and outsource as much as you can

Do this within reason. In fact, only delegate and outsource as much as you can afford. That said, if you can afford it, it is important that you do hire other firms or employees to handle certain tasks for you.

If you are getting into an online business for example, yet do not know the first thing about web design, it wouldn’t make sense to take three months to learn it and then start your business. Hire a web designer instead.

The important point to remember here is that you should, whenever possible, leave the technical work to the specialists. They will do a better job than you, their work will be more effective in accomplishing their goal and it will free up your time to make more decisions and explore new ways to market your product/service.

Invest as much as you can AFFORD

This goes along with the previous point. Be careful not to overspend and get yourself into debt. This can be dangerous and you may soon find that you will be unable to afford monthly payments on your borrowed money.

On the flip side, NEVER spend too little either. Being too cheap will cause you to: a) do everything yourself and b) under invest in the important operations of your business (such as advertising and product quality). This will ultimately result in wasted time, lack of success and the realization that you need to spend more money.

Brainstorm ways to SELL your product

The sooner you have a strong list of possible ways to sell your product, the better. You will have more flexibility to experiment with ideas earlier on in the start-up process and you will open up more creative avenues to explore new ways of advertising.

Making a list of different marketing ideas will also allow you to start putting together a marketing plan, allowing you to more tactically advertise your product.

ALWAYS look for opportunity

Put your capitalist hat on, you are an entrepreneur after all. Look around you. Critique any business that you interact with on a day to day basis that has set some sort of status quo. Do they do something inefficiently? Is there something that they don’t do (or do) that you can do better?

Look at these status quos that these established businesses have set as an opportunity. See how their operations or products can be improved. If you can come up with a better way, or a more efficient way of doing something, consider looking into it.

The key here is to always use this lens when viewing these businesses. If you critique these businesses as often as possible, you will never be out of good business ideas!

Consider all of these factors when putting together a business plan, or a start-up outline. It will help focus your actions and smooth out the start-up process. Taking these points into account will give you a better sense of “business direction” and point you towards the right path to profitability.

I never realized how important market research really was until I actually did it. Unfortunately for me, I conducted this research after I had already began marketing my product.

Luckily, in my case, it wasn’t the end of the world and I only had to work to tweak the positioning of my product. The same isn’t true in every case and not conducting sufficient market research can prove to cost business owners a lot of wasted money.

The reason market research is so important is because it gives business owners a better insight into what the customer is demanding and if the niche you are trying to market to is a profitable one.

Yet so many business owners fail to conduct enough market research because entrepreneurs believe they understand their product and their market’s needs more than they really do.

I know this because I was one of these business owners. I began marketing my product, believing that there were certain features and benefits that my market was looking for in this product and I decided to research later.

Upon finally conducting my research, I found that my product positioning was all wrong, I was emphasizing the wrong benefits and my customer’s needs were different from what I expected.

The good news about making this mistake is that it is correctable and it is a mistake you can learn from. The bad news is that this is potentially a very expensive mistake to make. The longer you wait to perform market research, the longer your marketing mix will be inefficient, costing you lost sales and wasted advertising expenses.

However, the amount of insight you get from well conducted market research and how easy it is to do today means there is no good excuse not to do it. By spending just a few hours online, you can learn what exactly your customers are looking for in the type of product you are selling, what they don’t like, how much they are willing to spend, what marketing causes them to buy, if the product is rising in popularity, how much your competition is spending on online advertising, how they are advertising, along with a plethora of other vital information that I haven’t mentioned.

As mentioned previously, AdWords for Dummies author, Howie Jacobson discusses the use of Google Trends, Google Keyword Tools, Google Sponsored Links, user groups and many others that give you access to all of this information for free!

Since this information is so revealing, easy to obtain and free, it is very important to start researching as soon as possible. In fact, this is one of the first things you should do when considering getting into a new business. You wouldn’t want to waste any of your valuable time working on a product that there is no market for.

Furthermore, you should be sure to conduct market research on a regular basis during your normal business operations to ensure that your marketing efforts remain efficient.

Has anyone had any past successes with well conducted market research? Any blunders? Does anyone have any other good online resources for market research?

The beginning stages of starting your own business is tough. It is both time consuming and financially difficult.

It is easy for business owners in the very beginning stages of starting a business to get discouraged and consider re-entering the workforce, since chances are that you are bringing in little revenue.

While this may seem tempting, it is also important to re-evaluate all of the reasons you initially left your previous job to start your own business.

Steve Pavlina, a blogger on personal development, wrote an incredible article on why getting a job is a bad idea. This posting really motivated me to quit my job and start my own business, and I would imagine it is equally useful in keeping you from looking for a job.

Among the reasons Steve points out, I would like to add some additional reasons as well as add to his points a bit.

1. Our time, as workers, is getting cheaper

With globalization and outsourcing as a common business practice, the workforces that are in danger of being outsourced (and that pretty much is everyone who hasn’t been outsourced or automated yet) needs to become more and more competitive and productive in order to keep their jobs.

Keep in mind, saving money by outsourcing is not just a function of spending less capital per hour, it is also finding the most productive and efficient workforce to do the work.

Therefore, the workforces that are in danger of being outsourced have to be more productive, work long hours to get the work done and be constantly available to be contacted via a smart phone, etc.

The result? We lose time with our families, friends, doing the things we love and the workplace follows us wherever we go. At the same time, our time, valued by the hour, is reduced due to longer working hours (and since we are often paid a salary) all to just stay competitive and keep our jobs. This doesn’t sound like a secure situation now does it?

If you work for yourself, however, you make the decisions. You decide how valuable your time is. Also, you can decide to outsource the work you do and still maintain the same revenue you were producing before, if not more.

2. There are fundamental flaws with the concept of retirement

Oh? What’s that you say? Your employer offers you a 401k with a company match? What funds do they make available for you to invest in? Just one fund with a 80% weight in company stock, huh?

This isn’t really always the case, and company matching is a great deal, however, this just shows you that even your retirement savings is left to the mercy of your employer’s decision makers.

If there is a heavy weight, or even any weight in that company’s stock, that is signs of trouble. Not only does your boss tell you what to do, and how much you are going to be paid while doing it, but you are also hamster fed a retirement fund that just might not suit you.

But this isn’t the biggest flaw with working hard your entire able-bodied life and then retiring. Tim Ferriss, author of The 4-Hour Workweek (a must read), calls this a “Deferred Life Plan” (or DLP).

Basically, Tim defines DLP as working hard and saving as much as you can during the time period in your life when you are at your physical and mental peak so you have enough money to retire, enjoy life and travel when your physical and mental peak is far passed. Why wait until you are 65, 70 or 80 to finally slow down and enjoy life? Why not do it now?

Well wage slaves can’t, because the amount of money they are paid is only a function of how long they work (see item # 1 in Steve Pavlina’s post).

Entrepreneurs, however, can, since they can choose the work they do and don’t do, hire staff to do the work for them and can outsource, a concept Tim discusses in his book.

It’s important to save for retirement, but don’t plan on actually living once you retire at 85. The simple answer is to not tie your money to your time. Don’t go work for someone else, keep working for you.

3. You can choose what time you get to work

Who defined working full time as working 9-5, Monday to Friday? Why is it that this specific block of time has to be dedicated to work?

What if you are most productive at night? In the morning? What if you have family obligations on Wednesday but Saturday you are doing absolutely nothing? Or what if you are a productivity machine and can actually get all of your work done on from 10am-4pm on Friday?

Too bad. As a member of the work force, your time is scheduled for you. Doesn’t seem fair does it?

Sigh…when you were working for yourself, you were able to pick your own hours…

4. You only answer to one person

Didn’t get some meaningless report finished on time? Well now you have to quickly make up an excuse and explain to your boss why.

Maybe your boss is nice and understanding, maybe not. But still, as a member of the workforce, do you decide the importance of certain tasks? Do you have the option to ignore these tasks and not excuse yourself? Didn’t think so.

Is this stress worth going through for a fixed salary with little growth potential? Do yourself a favor, stick to working for the best boss you could have, you. You only have to worry about the meaningless tasks you assign to yourself. And if you don’t do them, you only have one person to answer to.

5. You get paid for the value that you are adding

This goes along with items 4 and 7 in Steve’s post. Step back and think for a minute about how much income you would be generating for the company you are considering working for.

There is an extremely good chance (unless you would be working in a support department such as HR) that you will be paid nothing close to the amount of monetary value that you generate.

Think about it, would businesses hire you if you were making more than the value that you generate? Knowing this, why would you devalue your time and sell your valuable abilities for less money than it is actually worth?

It may take a little bit of time to generate the clientele to earn a decent income, but your income can continue to grow as you get more clients or customers. Your pay isn’t capped, and better yet, it is no longer tied to your time. Think about it, is it better to plan only for short-term gains or long-term wealth?

The beginning stages of business are particularly expensive, so seeking temporary employment is certainly reasonable. It’s definitely better than selling some of your ownership to a VC. But if you are in need of the money, please, for your own sake, don’t lose sight of your business and be tempted to permanently re-enter the workforce.