Purpose of this stage is to complete an adequate amount of planning and advance preparations. Part of this planning should limit the cash expenditures needed to start a business.
Refining the product
You will offer just the basic services described for your selected business idea. (You might want to expand your services later.)
For a service offered in your local area, you will use small classified advertisements in the local newspaper and/or flyers delivered to likely neighborhoods or business organizations to solicit customers. If you live in or near a city supported by craigslist, you can use their free advertising.
If you can write an interesting press release, you may be able to get free publicity.
For information or a service offered to a national market, you will use small classified advertisements in a national newspaper or magazine. Later you may use a website to sell your product.
If you provide services, you need to charge an hourly fee that both attracts customers and provides a suitable reward for your time and effort and the use of your equipment. This fee should also cover any other job expenses and overhead. For details, see the Setting the Sales Price page in another section.
However, the amount you can charge customers will be affected by the conditions in your marketplace.
One way to overcome the adverse effects of hard times is to work out some kind of barter arrangements. Often people have unwanted items that you can use or sell to others.
Designing business operations
These business ideas assume you will start a business as a single-person owner or a joint venture. This means that you, your family, or members of the joint venture will be performing most or all of the money making activities. However, you may need to hire subcontractors (not employees) to assist you on certain jobs.
It is common in this type of operation for a spouse to assist with office duties. This would include answering the telephone, doing the bookkeeping, paying the bills, and so on.
Before you start a business, you need to identify and list the startup requirements for your proposed business operations. In my opinion, the following are the most important requirements:
You need to discuss this matter with your family. They will be affected by the success or failure of this business venture.
See the Listing the Startup Requirements page for more details.
It is desirable to have immediate profits when you start a business. This will encourage your efforts and allow you to eventually attain your goals for the business.
To have immediate profits, you need to keep your startup costs as low as possible. This can be accomplished in two ways:
Method 1 -- Resign yourself to a frugal business operation at first. Forget about having a nice home office right away. That will come later, after you are making consistent profits.
The Bootstrap Methods page in another section also can help you keep these costs and expenses under control.
Purpose of this stage is to get serious about your desire to start a business. The previous two stages were all about preparing paper work that incurred only some small expenses. Now that you have proved your business concept and your ability to get things done, the stakes will be higher.
Being able to produce the product
You must be able to provide your service to the satisfaction of your customers.
Gathering the needed resources
During this step, you insure that you have all the equipment, facilities, supplies, and tools needed to start a business of your choice. If you lack the funds needed to acquire some items, you can do one or more of the following:
Besides having cash and other resources, you need a personal commitment to do whatever it takes to get the business started.
Setting up a home office
I recommend a frugal style of business operations at first. Thus, you could use the kitchen table and chairs, and the office equipment specified above. You could use file folders or large manila envelopes for storing business documents.
As your business picks up, you probably will need a business telephone. You don't want to miss important business calls because your personal telephone is in use.
You eventually will need all the office equipment specified under the startup costs for your selected business idea.
Setting up an accounting system
Continuing with the recommended frugal style of business operations, you could use hand written journals and ledger to keep track of business transactions. These would be mostly cash receipts and disbursements. The reference book on bookkeeping should help you set up and use your hand written accounting system.
Eventually you should open a business checking account and run all your business receipts and disbursements through this account.
You could use a daily cash report showing beginning cash, cash receipts, cash disbursements, and ending cash to monitor and control your business operations. (Cash means both cash on hand and cash in a bank.)
Completing the startup requirements
This is the last step needed just before you start a business. See the prior Listing the startup requirements subtopic for the items to be satisfied.
As a minimum, you should have discussed the business idea with your family, set up your business entity, and satisfied all governmental and insurance requirements.
See the "Putting idea to work" topic for your selected business idea.
Before starting actual business operations, you may want an overview of what is involved. If so, see the Glossary definition of business operations.
Improving customer satisfaction
Resolve any customer complaints. (With rare exceptions, assume that the customer is always right.) Then make any needed changes in business operations to avoid these complaints in the future.
Increasing sales and cash flow
Before expanding your business, you should identify and eliminate any operational problems. These might be major problems or just petty annoyances. Make a list of whatever slows things down or makes it difficult for you conduct business. Then eliminate these problems.
For help in solving any problems, you may want to download and study my free or low-cost Magic Success Secrets ebook. Then you can use the Resolve Problems chapter in this ebook.
Now you're ready to expand your business. The best way to increase sales is to test various advertising methods and descriptions of your services to find which ones produce the best results. Then concentrate on those methods and descriptions until they are no longer effective.
You also should identify and focus on those methods that appear most effective in satisfying customers. Then you can ask satisfied customers for names of other people who might need your services.