Having a checklist is an underrated tip many novice entrepreneurs fail to heed. They’d rather jump straight into who will manufacture what, where will the offices be, and whatnot. A checklist, despite its outward simplicity, can be a powerful medium that governs and guides you to entrepreneurial success. More specifically, a detailed checklist can highlight the key points that need to be tackled when an actual business is set up. It also acts as a meter for your readiness to take on such a demanding venture. And while there are dozens of possible business ideas and models and an equally enormous amount of industries and niches you can focus on, below are five things every aspiring business owner should cross off from their checklist.
1. The right entrepreneur
Here, you’ll have to scrutinize yourself objectively, which can be fairly difficult for those who are blinded by the luxuries afforded by a successful business but are not mentally, physically, and financially equipped to handle such undertaking. The right entrepreneur must, first and foremost, be willing to sacrifice. If you are going into a business to escape the 9 to 5 clutch of day jobs, you’re in for a rude awakening: entrepreneurship often requires more than 40 hours per week.
2. The right business idea
Few ideas come to fruition, and not because they lack a talented team to power them through or funding to make sure every material is acquired. Oftentimes, it is because the business idea is unoriginal, unsustainable, and/or has too many vulnerabilities to begin with. Such a business idea will not work no matter how much time and effort you put into it. Test your business idea by starting a low-scale project first and then attending trade shows or gaining exposure in crowdfunding websites like Kickstarter. This way, you can gauge with some level of accuracy whether or not there is a market to serve and who they are. One simple way to answer if you have the right business idea is to ask yourself, “what problem am I solving with this business?” If you cannot think of any in the first five minutes, then you’re probably looking at a business that has no potential value to consumers.
3. The right business plan
The importance of an all-encompassing business plan cannot be overemphasized. It will summarize your operating approach and your vision for the business’ future. This written guide will detail both the infancy stages and the future direction of your company. Keep in mind, nonetheless, that not all business plans are written in stone. Over time, your plan will require continuous updates and additions/omissions to adapt to changes in the commercial landscape.
4. Enough capital
A lot of promising businesses have faltered because of the lack of operating capital. But how much is really needed to open up shop? The answer varies from one entrepreneur to the next, depending on the scale of operations you are aiming for, the cash flow model, materials and supplies, etc. A good source of reliable and unbiased startup cost data is entrepreneurs who own a similar business. For instance, asking other home-based accounting firms about their initial and ongoing costs is a good way to know how much it will cost you to set up your own accounting agency. Suppliers are another reliable source of information for researching business costs. They’ll often be forthcoming since they are also looking for new clients to supply.
5. Legal paperwork
It’s one of the most hated aspects of entrepreneurship, but nonetheless an important one. Before you can officially open up shop, you’ll need to make sure you’ve filed the right business permits and have acquired the licenses to operate within your state. Have your business name registered before even trying to build a brand. Apply for both local and state licenses and secure an employer identification number (EIN). Fortunately, much of the red tape encircling startups is done by the book, so no specialized knowledge or services are necessary. Another important thing to do is a risk and hazard assessment, regardless of whether your employees are sitting in a comfortable chair eight hours a day or working in a warehouse where the probability of injury is high.
While it will take hours – if not days – to handle each of these details, it’s critical that you check off all five things of these things from your list before considering pouring in all of your resources and quitting your paying job.
For more strategies for entrepreneurs, see 8 Ways To Survive The Bootstrapping Years.