What should I do to start my own business?
I'm currently working for a company, but I want to start having my own small business, probably a restaurant, cafe, or even a food truck. What should I do to prepare before starting my own business?
a. make a business plan and a financial plan. That will clearly show you how much funding you are going to need and when. It will show you what your monthly expenses are and then you can play with sales estimates to understand how much revenues are needed to a. pay the expenses, and b. pay your salary.
b. a business coach is also a very good idea. It will prevent you from falling into the abyss making the mistakes beginning entrepreneurs always make.
See my profile to see where you can get the software and the business coaching you need.
Starting a business is easy - it's a matter of follow-thru. Here's what no one else tells you to do.
Be clear about who your first fans will be.
They may not be your ultimate tribe - your 1000 fans as Kevin Kelly puts it. But unless you start somewhere - the worst thing you can do is use the "build it and they will come" approach.
Years ago, we started a non-profit, and it turned out to be a movement - http://bit.ly/tangotribe
You never know what will "take," and I'm not advocating the plan & design to death strategy either.
Get that "minimum viable product" out there - test, adapt, and repeat.
If you're thinking of a restaurant, try a food truck first. (I've seen this done successfully over and over again..)
If you're looking at a food truck, set up a booth at your local farmers fair.
If you're planning a booth, make / bake your recipe and let your circles try your product.
We tend to think of success or failure - in reality things either go as planned or you've learned a lesson.
Your passion seems to be in the food/restaurant related services- you know where does your calling rest and that is a good starting point. Important changes from being salaried employee to an entrepreneur are:
1. Monthly pay cheques stop coming on the designated date, while
2. Fixed expense payouts continue , and this results into
3. uncertainty, self doubts and question marks.
You may like to do a thorough financial assessment and arrive at your ability to sustain without fixed income coming in. You got to have reserves to support your committed expenses and maintain decent lifestyle for a minimum 12 months to max. 36 months. (Decent = meeting sustenance needs+self & family's education and health cost + moderate entertainment without extravagant and unnecessary spends)
12 months is a minimum time for business to start revenues and by third year, you would possibly break-even. These are of course thumb rules and there deviations and exceptions to both sides of the curve.
Once you create reserves, invest in a manner that you get a monthly or quarterly cash flow through interest through term or fixed deposit. Financial worries can be the biggest source of stress and you certainly don't want getting distracted by it.
Second important aspect is getting the real handle of the life 'out there'. You may work part time even on a pro-bono basis to learn how this trade works. No amount of reading can substitute the learning that street provides.
Involve your dependent family and dear ones. Sound them of about your thought process. They have a right to know and you may discover wonderful source of support and ingenuity in them.
And once you start getting your customer orders, don't forget to share the good news with your friend and well wisher, yours truly, Rajesh Vaidya :-)
Wishing you the very best and success in life!
Robert gives very good advice and if you do not know how to go about doing what he suggested you can locate organizations in your area who will help you. I would add that you should investigate if your business is need in the area you wish to function. Everyone needs food but they can be picky about what they eat. You are not creating a new mouse trap so you will need to steal customers from existing food services. Setup costs are high even when you use pre-owned equipment so having a good bank roll to start with will help to keep you going long enough to establish the monthly cash full to cover expenses.
I recommend you interview some owners of like business as if you were doing research for your masters degree or management class in college. Learn from the mistakes of others and avoid some of the pain that will come your way.
Ask why the market needs another restaurant, cafe or food truck?
What makes you food so unique over my restaurant, cafe or food truck?
Who will purchase what you prepare?
Do you have a menue?
Do you have a chef?
Will you do the cooking?
How do you know your food is good. RedBull tastes AWFUL, but it sells and people mix it with other stuff to kill the taste - The company is profitable.
Are you the next Redbull?
Market test the audience and ask about what they would like to eat that is not found in a restaurant, cafe or food truck?
Invite some friends over and cook your menue for them. Get the feedback.
Do not invest any resources or start until you are certain you have something people will eat. Test your hypothesis first. Measure your results. Test again.
This is an iterative process. Your due diligence will contribute to becoming partly successful. Partly successful because if you cannot scale the idea, then you are trading employment for a hobby.
Hope this helps, Danny.
If you don't have experience running a food-related business, then find someone that you can trust who has such experience and discuss your thoughts with that person. You're looking at a very time-consuming industry and a very competitive one. Most restaurants close within the first year of operations. So make sure you know what you're getting into.
Danny, I have helped dozens of people to start businesses of their own, as well as, having owned many my self. I can tell you that the most important strategy to put in place first is your mental strategy. You need to think through your plan and all the how's, why's etc to be prepare and make sure you do things the way you want them to be done; not the way stress steers your ship to go! And it's always nice to put some real thought into who you want to be in the public eye; what you want your lifestyle to be ultimately and on. It take work but the good news is their are proven ways to do it right. You just have to be disciplined and passionate! Best of luck, I have been in the restaurant business and loved it!
Danny, You should first look at what your motives are for starting your own business. Many times, people simply want to leave a job they are frustrated in without having much passion for the career they want to begin. Are you passionate about working in the restaurant/food vendor business? Think about how you will make your transition from your day job to your dream job. Can you work at starting up your business while still being employed or if you must leave your current job, will you have the income saved to pay expenses until your entrpreneurial venture takes off.
How much knowledge do you have in the food service industry? Will you need training in how to work with vendors, set prices, marketing, food preparation etc/ Will you be doing this business alone or are you planning on hiring a team?
You will need to look at the types of regulations for this type of business in your area. Frequently, businesses of this nature (involving anything the Food and Drug Administration oversees) have specific regulations. This may be in addition to state or local regulations for operating this type of business.
If you seriously see this as a business you will enjoy operating, you may want to talk to some restaurant owners, food truck vendors etc about what they have learned. Many business owners are happy to help newbies if you respect their time and experience.
Well this question is much better than asking "My business is going downhill, what do I do?" after you've been in the business for a year or so.
A lot of business now a days are started by people who love doing what they do in their current job and think why am I working for someone else and making him money, it would be great if I was my own boss. Well that is great but remember running a business means you've to step out of your comfort zone and plan/handle a lot of other responsibilities that you did not pay much attention till now.
What Colin suggested, I agree with that. That will give you a lot of insights and know-how of how things should be handled.
I also strongly recommend reading "he E-Myth Revisited: Why Most Small Businesses Don't Work and What to Do About It" by Michael E. Gerber.
This explains how a someone starting from a technicians role, can upgrade himself to Manager and then be a real entrepreneur. A perfect balance between these roles is essential to running a successful business.
Let me know if I can be of further help. Good luck!
Well, depending on where you are a food truck requires all kinds of permits and things. First and for most, start a business plan. Understand that the restaurant business is going to be int he red for the first five years of its inception, before you see a nickel in your pocket. Its literay the hardest business to run. In your business plan consider all the overhead you;ll incur, liquid license if you have a bar, food prep costs, waste, employee salaries, refrigeration costs, rent for your space, everything you can think of. If you need help with this, I am always available via email or you call 914 920 9828
Bob Donnelly's advice is excellent as are all the rest...Focus heavily on sales and positioning your company or business as a unique business with a tag line that is very catchy...Much competition out there in the food business
Great answers here. But Danny why do you want to start your own business? What is your dream? You need to start with your vision on what you want first. Then the rest will follow progressively. Start by working on you first by knowing what you want and why you want it. Then an action plan will be put in place toward the dream that is yours. Clarity in what you want first. Good luck
Danny, deciding to move from employment to self-employment is a big decision, and worthy of careful thought. Besides my work for existing businesses, I volunteer to advise people in your situation for SCORE, which offers free expert advise to small businesses. I'd strongly advise you to schedule a free counseling session with SCORE at a location near where you live.
Start with WHY you want to do this (goal, expectation, commitment), WHAT you know about running a viable business (since you mentioned food businesses, their very high failure rate is mostly because talented cooks do not know or appreciate the need to manage cash and people), WHO is supporting you (advisors, partners, family, investors), and WHAT is your risk tolerance (how long and how much can you invest cash before you make a penny back, and your will to face not having a steady paycheck, benefits, and weekends).
If you decide to go for this, then start with a clear financial goal (hobby funny money, part-time supplemental income, or total income replacement), develop a written plan as Robert suggests (SCORE can help and has a free planning template), and decide your need for a legal entity (consult with an attorney and CPA).
Robert is spot on with his advice. I have helped many small businesses start up so there are 2 people you need to get with right off the bat, your accountant and your banker. You should do it in that order too so that the accountant can help you do what Robert said and then the banker can assess your credit line needs and opportunities. I started my business working nights and weekends until I built the clientele that would support a full time effort. This took me 7 years. If you are doing a food truck this may be the way you want to go. restaurants and cafes usually need a lot of working capital until they get past the "sweet spot" to continuously generate a profit because brand recognition is usually slow to develop.
Robert is totally right. At the same time get a complete handle on your personal cash flow. How much do you need to contribute to keeping a roof over your head. And, secondly, do you have enough personal money saved to put toward the business start-up phase as lenders will not loan you 100%. Plus do not drain personal funds at start-up. Have one or two savings accts to fall back on if the business checkbook needs more cash than planned.
Before you even think about a business plan, you need to decide whether you could cope with the uncertainties of running your own business. It's very different from getting a pay cheque every month! (apologies for the spelling, I'm in England!)
You will also need to discuss your plans with your wife/partner/close family as it will affect them as well.
They need to be OK with you spending a lot of time and energy getting your business off the ground.
Then you can do the things that Robert has already listed, especially the part about working out just how much cash you will need!
Most small businesses fail because they run out of money, not because they run out of customers. I have seen businesses fail with their order books absolutely full, but they just didn't have the cash to fund day to day activities.
Do your research and plan well.
I think Robert has aswered it very well and doesn't need any addition. While looking at the cash generation potential, it is good to look at the best case and worst case and look at the cost structure plus the cash inflow ramp up.
Great Question Danny;
I would start by doing your research on the industry that you wish to enter into. Begin to have an understanding of where the industry is now and where it is going.
Ask yourself why? Why do you want to start your own business?
Begin developing a Business Plan.
I think if you start with these 3 things you will be well on your way to being a 21st Century Entrepreneur..
Leroy Mckenzie Jr.
"Bringing Visions To Reality"/Building The 21st Century Company
To start up a new business, first you should know about the business statics A - Z. Without proper knowledge or experience makes you to fall in vain. So choose the right and well know profile which interests you and work on it.
As you mentioned above,is you want to start a restaurant, cafe, etc...you need to get enough man power and also need to choose a right place.
So think before you start and make it profitable.