Tuesday, June 4, 2013

In the Business of Starting Small and Smart

By:  Denise Mendiola-Hertslet, Guam SBDC Senior Business Counselor and Bank of Guam Women in Business Program Coordinator

Starting your own business can be an invigorating but somewhat anxiety provoking experience. You are about to leave the comfort zone of college, your home, a big company or any other type of salaried employment. In exchange you have independence and the chance to pursue your dream. The flip side is you no longer have large resources --money, manpower, credit, expertise, contacts, name recognition-- all you have is....you. You also have the rent or the telephone, the travel, marketing, research, direct mail and whatever else to pay for. If you have a payroll, that's your responsibility too.

The thought that keeps most entrepreneurs motivated at those first insecure moments is the firm knowledge that great risk can reap great rewards. Entrepreneurs come in all shapes and sizes, all temperaments and work methods. Some are deliberate and painstakingly meticulous in drawing up their 5 year business plan. Others fly by the seat of their pants and say "Let's just do it." Some are excitable, some quiet. Some extroverts, some introverts. Some are workaholics while others just spend enough time to delegate the work to the right people whom they've had the ability and insight to select. There is only one thing all entrepreneurs have in common and that is the ability and willingness to take risks. 

So when you start your own business and begin to feel butterflies in your stomach, it helps to understand, that is part of the package. People who are most comfortable being entrepreneurs are those who have a high tolerance for the unstructured and learn to accept ambiguity. No, they don't know if they'll hit the big time, or even win the contract they're trying to land today. But they have decided to take each day as it comes, do their strategic planning, tend to the marketing, be obsessive about details, produce the best quality product or service they can, and the business will come.

Now that you have figured out that you are an entrepreneur true and true, how do you begin?  The Guam Small Business Development Center’s mission is to provide assistance to aspiring and current entrepreneurs on Guam.  Equipped with state-of-the-art equipment, up-to-date resources, and experienced and qualified counselors and trainers, Guam SBDC is a starting point for potential business owners.  Guam SBDC even partnered with companies to provide business planning via the internet. Clients can sign up for Pitch-then-Plan and have the convenience of writing their business plan online or Virtual Advisor that provides FREE online workshops in business planning.  In addition, they recently purchased assistive technology equipment to provide the first “Accessible Workstation” for people with disabilities on Guam who also need to research and write a business plan.

And you will definitely need a business plan. This will become your road map.  When completed, it will tell you how to take this business where you want it to go. It may even convince your bankers to take the ride with you. But the really important point about a business plan is the act of producing one. The most important element is that the act of creating a business plan assures that you address and think through the issues confronting the industry you want to enter; how is it regulated; who are it's customers; is the customer base growing or shrinking; who are your competitors and what competitive advantage do you perceive you will have to allow you to compete successfully with them; all the details of your operation, whether its capital or labor intensive, seasonal and, ultimately, how you are going to see a profit from it.  A business plan doesn't have to be a long or complex document; it can be a fairly simple paper of several pages. The two important elements are that it provides evidence you have thought this venture through and also you can turn back to it time and again to test your assumptions.

Starting your own business, whether home-based, strip mall, business incubator, or at a seriously impressive office space, requires some serious thinking about whether you are ready to accept certain realities.  You will be making some serious decisions that will include lease agreements, promissory notes and contracts. Here are some suggestions to start small and smart:

·         Keep overhead costs to a minimum. Rent a modest office or work from home.

·         Keep your desks and equipment functional not "showy".

·         Buy second hand.

·         Forget support staff.... call don't write... use your email...avoid paper.

·         Answer your own phone.

·         Work until seven and eat a little later. You can do all your "support" chores after regular office hours.

·         Don't skimp on business cards, letterhead stationary or phone service. They are part of your direct dealing with your potential customers and come under the category of marketing, which should always be first rate.

·         Market, market, market!

Here are few last notes. It is critical that you know your financial situation at all times. Remember that when you run out of cash, you run out of business.  Finally, when you start small, you start smart!