Lost Your Job? Thinking of Going Into Business for Yourself? If You Do it…Do it Right!
There are a growing number of people in their 40’s, 50’s and even 60’s who have suddenly found themselves out of work, after many years of continuous employment and who are now considering going into business for themselves. Perhaps they have some severance pay. Maybe they have some savings. If they’ve lived in their homes for 10 or more years, they may even have some equity left in their homes. They would rather put these resources to work, building their own business, than burn through it during a protracted, seemingly futile job search. If you or somebody you know is in this situation, here is some simple, practical advice.
Choose the Right Business
Know thyself. What do you enjoy doing? What are you good at? What product or service can you provide, for which there is a demand in the market place? If you can not come up with a viable business idea which connects theses three dots, you are not likely to succeed.
Choose the Right Legal Form of Business
Familiarize yourself with the options and the legal and tax pros and cons of each. Will you start out as a sole proprietorship or simple partnership? Do you wish to set up a Limited Liability Company or partnership? Will you incorporate? If so, will you opt for C corporation or S corporation?
Establish a Business Model and Logistical Plan
Determine your process for producing and/or delivering the product or service and how you will make money doing it. What will your business do itself and what will you outsource? How/what will you charge? How will you grow your capacity as demand grows? What administrative and technology infrastructure will be required to support your activities? Where/how will you locate your business?
Test Your Assumptions About Market DemandDetermine if there are enough customers willing to buy your product or service from you. Seek advice from people who work in the industry but will not feel threatened by your interest in entering the market. Learn as much as you can about your potential customers and your competitors. Focus your research on how and where you will be able to fill unmet needs. Determine how the recession is effecting others in the industry. Determine how much customers are willing to pay for your products or services.
Establish Your Market Position
Based on your likes, skills, market research findings and creativity, establish how you will differentiate yourself from your competition. Are there specific segments or niches in the market to which your product or service will be especially appealing? What are the unique needs of the customers in these segments the you can fill? What is your unique value proposition?
Develop your Marketing StrategyBased on the above, define and articulate your brand profile and overall strategy for promoting your products and services. What is the public image you wish to portray. What is the message that you wish to convey to each of your target markets? How will you deliver that message to your target markets in the most cost-effective way? What mix of marketing strategies will you utilize? Will you market through the internet? How broad of a geographic reach will you pursue?
Make a Financial Plan
Build a plan that includes start-up costs, ongoing overhead costs, costs of goods or services sold, break-even analysis, projected sales and financing. How much money will you need to fund start-up costs, marketing costs and operating losses while you are ramping up your sales to your break-even point? Is this is more than the resources you have available, how will you raise the balance? How much of a salary or draw will you need to take in order to meet your personal expenses?
Get Help
Depending on your knowledge and expertise, you are likely to need help at various stages of developing your plan or at very least reviewing and giving feedback on your plan, before you jump in with both feet. Involve an attorney especially if you are setting up a corporation, LLC or any form of partnership. Get input from your tax advisor. If you have not done this before, seek the help of a general business advisor. In addition to technical expertise, you can benefit from the objective input of an independent advisor.
Lost Your Job Thinking of Going Into Business for Yourself If You Do itDo it Right - To learn more about this author, visit Kenneth C. Halkin's Website.
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