Business Start-Up Packet
Step 1: Assess Yourself & Your Idea
Factors That Contribute to Success
Patience: Most successful business owners find they have to work harder than ever, do without many extras and constantly try to solve problems. They plan for a modest personal income at first and have the patience to wait for success.
Health: When you are the boss, the buck stops with you. If you do not do what has to be done, it will not get done. That means your good health is important. If you are sick, who will do your job?
Learning: Are you willing to keep learning? Perhaps the hardest part of all is having to live with your mistakes. In small business, the educational process never stops.
Family support: Another major consideration is the effect your business will have on your family. Are they willing to make the sacrifices involved? If you are a family person and do not have their support over the long haul, you may find it very difficult to persevere when the going gets rough.
Risk: You are risking your capital in hopes of gain, but face the possibility of loss. More small businesses fail than succeed, so consider fully what a loss could mean to you.
Feelings: Can you handle discouragement? If there is any trait that determines success in business, it is the ability to roll with the punches. You will be fighting for survival. Unless you can accept adversity and come back stronger, you may want to consider less demanding work.
Getting along with people: Courtesy and understanding are important. You need to get along with people, understand their needs and inspire their confidence, whether they are customers, suppliers or bankers.
Taking responsibility: As the boss, you are responsible for what happens. Long after others have gone home, you may have to stay on the job checking odds and ends, getting books in order, going over inventory, rearranging stock, meeting clients, seeing that repairs are made and handling a thousand-and-one other details.
Selling: Sales skills inspire confidence, you must be good at convincing others that they need what you offer, whether it's goods or services. Unless you are a natural, you need to develop your sales skills. Books on selling are readily available at stores and libraries, and you may also want to take courses.
Decision-making ability: Business people often must make decisions quickly. Some do this naturally; others learn through experience.
Resourcefulness: You must be able to react quickly as circumstances change, to learn quickly, and to recognize and remedy mistakes.
Organizing ability: You need to keep things organized and be able to pay attention to administrative details. You must be self-disciplined and able to arrange your own time profitably. If you have employees, you also need to plan their work to obtain the full value of their services. You must arrange to meet payments and wages on time, and plan so that you avoid having surplus funds one month and a shortage the next.
Know yourself: If you love a challenge, can accept the unknown, and want to make it on your own, starting a business may be worthwhile. Only you can decide. The greatest reward comes, most say, out of the satisfaction of individual accomplishment.
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Knowledge
Your foundation for success is a good general education, preferably supplemented by business courses. South Dakota’s state universities are ideal providers of the business courses prospective entrepreneurs must take.
Round out your business education with books and magazines. Trade magazines, which focus on specific fields, are very helpful.
You must know your business and your market. This includes potential customers, product or service demand, competition and location. Successful entrepreneurs spend months researching and preparing.
Most businesses require technical knowledge. Successful entrepreneurs often worked for someone else before starting a similar business. Some people turn a hobby into a full-time job. Others get special education in their chosen field.
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Do You Have a Feasible Idea?
A good business idea must be able to fill a need or a want of consumers. Generating this successful idea is one of the biggest steps in the development of a business. The entrepreneur, however, will find there is a great deal of work necessary to see the idea to fruition. Many underlying questions must be answered before the viability of a business idea can be confirmed. A carefully written business plan based on thorough research can answer these questions for you. If your business idea is not original or does not meet consumer needs, the key will be how the idea can be improved upon or made superior to the competition. The entrepreneur should ask: Why will someone buy from me instead of the competition? What value do I add to the business or product/service?
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Successful Characteristics
A successful business idea should have most, if not all, of the following characteristics:
- It should have a relative advantage over existing products or services.
- The idea must be compatible with existing attitudes and beliefs. It shouldn't require a drastic change in the buyer’s behavior.
- It should not be so complex that the buyer has a difficult time understanding how to use it.
- The results or benefits of the innovation must be easy to explain to potential users.
- It is helpful if users can try the innovation without incurring a large risk, such as through samples or trial usage.
- The innovation must be readily available to purchase by the consumer.
- The buyer must believe that the innovation satisfies a personal need by giving some immediate benefit.
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New Products and Inventions
If your idea is a new product or invention, it should pass the following four tests in order to be successful.
- Is the idea original? There are a number of ways to determine this. If it is a consumer product, you should check stores, catalogs, trade associations, publications and shows. If it is an invention that can be patented, a patent search can be done.
- How will the invention be produced and distributed? The extremes range from starting your own company, producing items yourself, working out of your home and selling by mail order, to convincing a big business to buy the idea. Any method presents challenges that must be carefully considered.
- Will your idea make money? This is a question that is difficult to answer with any certainty. Many factors need to be considered. Is there a market, and where is it? Could the size of the market change suddenly? Will competition drive you out? The preparation of a carefully organized business plan can help shed light on these questions.
- Can you protect your idea? If you have tentatively satisfied the question of originality, production, distribution and salability, the protection of the idea through patent laws should be considered.
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