What to Consider
Before Starting a Business
How to focus your energy on a
specific product or service
Q: I’m thinking about starting
a business that will use my 20 years of general management
experience in the computer software industry. Since I began
contemplating the viability of owning a company, I’ve determined
that three key ingredients good contacts, expertise and sufficient
capital-are in place. An important fourth element, however, a
specific product or service, is still missing. My options include
consulting on software or hardware needs, programming and systems
analysis, or developing and marketing a line of software for a
general or specialized purpose. Right now, I’m a budding
entrepreneur with lots of Ideas, but no focus. How do I decide what
my business should be?
A: In defining your business
there are three critical questions:
- What would you most enjoy doing?
- Who is your market?
- What products and services are
needed to fill existing gaps for potential customers?
While making a profit by providing a
needed service or product is a business’s primary goal, your
personal sense of achievement will play a major role in assuring
your company’s success. Before you extensively research target
markets and product or service gaps, focus your choice by
eliminating things you don’t enjoy.
In thinking about your new role, how
would you answer the following questions? ·
Do you want to build a business that
produces a product?
Would you prefer giving advice to
other companies on a project-by-project basis?
Do you savor managing and being
responsible for the jobs of many employees?
Would you rather be concerned with
only your own job performance and financial security?
Would you rather interact primarily
with in house people, or does heavy involvement with clients’
businesses sound more exciting?
Are you interested in a long-term
commitment to developing a line of products for your target
Would you like to spend three to six
months of concentrated time on a project, then move on to
How willing are you to travel?
What size organization would be
comfortable for you to manage?
How much financial risk are you
willing to take?
What are your income goals?
What markets, products and services
intrigue you the most?
Picture yourself in a meeting with a
typical customer. What is he or she like?
Describe your personal mission. Do
you want to break new ground, help people, make Jots of money or
be known as the best or the biggest in the industry?
Do you need to have final decision
power over whether your ideas are implemented?
When you have carefully considered
and answered these questions, you should know whether consulting or
product development is your preference.
With your ideal job description in
mind, begin researching your product or service and target market.
Reading industry periodicals and surveys is a good way to start.
They will give you general trends, highlight successful (and
unsuccessful) companies and suggest areas of heavy and light
Professional organizations are
another excellent source of information. Their meetings often
feature speakers who discuss significant aspects of the industry or
career field. In your case, check library reference books for the
addresses of the Administrative Management Society, Association of
Information Systems Professionals, Data Processing Man agers
Association, Sales and Marketing Executives International and the
Society for Marketing Professional Services. Also check your local
Chamber of Commerce calendar for programs it may offer for owners of
Talking with other entrepreneurs will
often reduce time and error in picking your product or service and
customer base. While you may not choose to discuss your ideas with
potential competitors, entrepreneurs in every field make marketing
decisions. They can give you solid advice based on their
experiences. In fact, you may want to form a small-business owners
group (if there isn’t one in your city) to exchange ideas and
contacts for your mutual benefit.
Often, chambers of commerce,
professional or trade organizations or for-profit special event
companies sponsor conferences with expos (company booths selling
products and services) catering to specific industries, customers or
career professionals. These conventions offer a variety of work
shops, speakers and panel discussions, and booths provide the
opportunity to talk informally with other business owners about
their philosophies, customers, products, services and plans for the
future. Infomart, a computer industry showcase located in Dallas,
for example, hosts regularly scheduled events for computer
professionals and their customers each year.
After some concentrated research, you
should focus on one to five specific ideas for products and services
and their target markets. Once you’ve defined your options, describe
each of them on paper. Include their attributes, benefits, market,
ball-park cost and price, guesstimated demand, likely competition,
possible pitfalls and your personal feelings about the potential
success of each of them. Then make appointments with business
acquaintances whom you trust to evaluate your alternatives. If no
one comes to mind, the Small Business Administration sponsors a
corps of retired executives (SCORE) who volunteer free advice. Many
colleges and universities have instructors who teach courses on
starting a business. Paying them for an hour or two of their
consulting time can be money wisely invested. Some Chambers of
Commerce offer partnership programs for new businesses, matching a
well-established firm with a fledgling one as a public service. You
might consider using your banker, attorney, CPA or financial planner
as a sounding board as well.
If you receive conflicting opinions
(it’s inevitable that not everyone will agree), use your best
judgment. You may choose to ignore feedback from other experts if
your initial findings strongly point to a specific product or
service and market. Advice from others isn’t critical to the
process, but it can sometimes provide valuable perspective,
especially if you have little experience with small-business
Once you’ve focused on your product
or service and market, it’s time to develop full-blown business and
marketing plans. If you need help, both the SBA and many colleges
and universities offer courses and advice on how to prepare them.
While the process for finding your
niche is a lot of work, the end justifies the means. Owning a small
business can be exhilarating and profitable, but more entrepreneurs
fail in their first try than succeed. Developing specific plans for
your fledgling enterprise will give it a solid foundation and
increase its odds for a successful future.