Recently, I encountered several graduate students who were considering starting their own business. While many people dream about being an entrepreneur, a significantly smaller number are willing to put in the time and effort it takes to make their dream a reality. A colleague who has been running his own company for over 20 years said that when people ask for his advice on starting a business, he tries to talk them out of it. When he started, “the only thing that would have stopped me from doing it was if my wife had told me, No!” If you have that kind of dedication, you just might be an entrepreneur.
A great place to begin is by writing a business plan – a document in which you completely describe the business. Forcing yourself to write it down will make you step back and really plan out the venture. The living document then serves as a roadmap as you move forward and start to involve other people.
One of the first sections of the business plan will be the executive summary. You should be able to describe your business at several different levels of detail. Are you going to sell a product or a service? What is your targeted industry? What will make your offerings compelling to potential customers?
Will you start a sole proprietorship, partnership, limited liability company, C or S corporation….? The form you select will have implications for taxes, liability, staffing, and complexity. Make sure you understand all the options and implications, and choose what’s right for you.
While you may have an idea of what you’re going to sell, in a written business plan you’ll have to detail your offerings. How many different products/versions will you have to offer in the beginning? How is your offering going to be different/better from other things already on the market? Will you offer customization? How will you protect your intellectual property? Will you patent your ideas, or keep them trade secrets?
Describe the industry in which you will be working, including historical, current, and projected future size. What subsection constitutes your target market? What is the critical problem your offering is going to solve? What alternatives are they currently using? What are their geographic and demographic characteristics? Who is your ideal customer? Are there any seasonal or cyclical purchasing patterns you’ll have to work around? What market share do you expect, and why?
Once you have your product and target market, you have to get the two together. What is your marketing plan? How are those ideal customers going to find out about your offering? Will you exhibit at trade shows or conferences? Offer free trials?
Who exactly is your competition; other companies, or possibly solutions internal to your potential customers? What are the strengths, weaknesses, and market share of each? How important is this market to your competitors? What are barriers to entry to this market? What other offerings will present to differentiate you from the pack? What is on the horizon from other companies?
Organization and Management
Who is going to run the company? What is their expertise and experience? If you are going to hire employees, you become responsible for bringing in enough business to cover their salary, and taxes, while reporting requirements get more complicated. Depending on the number of employees you have and the state in which you are operating, various other regulations start to apply as headcount numbers increase. How will you address the various regulatory requirements?
How much is it really going to cost to make your product or service, and how will you price it? Are you going to compete on low cost and high volume? Or high cost and high quality? Is your offering a need or a want for your customers, and will that affect what they are willing to pay?
Will you reply on repeat customers, subscriptions, or contracts? Will you sell over the Internet or are face-to-face sales required? Will you hire your own sales force, or use distributers? Where will start-up money come from? How will you ensure enough money to cover operating expenses until substantial profits arrive? Will you seek investors? If so, how will you attract them and what will you offer them?
There are many more questions your business plan will have to answer, but if you’ve already thought about all these issues, congratulations! You are well on the way to becoming an entrepreneur. If not, you now know how to get started. For more resources, see the US Small Business Administration or SCORE for more ideas, and the new ACS Entrepreneurship Initiative (EI).
This article was written by Lisa M. Balbes, Ph.D. of Balbes Consultants LLC. Lisa is a freelance technical writer/editor and author of: “Nontraditional Careers for Chemists: New Formulas for Chemistry Careers,” published by Oxford University Press.