A Business Consultant works with clients on
strategy, planning, and problem-solving and helps clients develop business
skills and knowledge. These topics range from designing a business model or
marketing plan to determining which marketing techniques to use and how to use
them. You’ll often help clients learn how to plan and implement projects. A
small business consultant gives advice, teaches skills, and brainstorms with
the client to produce practical results and enhance strategic thinking.
A Business Coach helps clients to create
success by focusing on personal development: time management, self-sabotaging
behavior (like procrastination and distraction), finding clarity, decision
making, and getting into action. When you put on your coaching hat, you don’t
give advice. Instead, you help the client find the answers from within
There is a lot of confusion between what the ICF
(International Coach Federation) calls a “small business coach” and what the
rest of the world thinks a “small business coach” is. Don’t get hung up on
titles unless you want to strictly follow the ICF definition. You can call
yourself a consultant, advisor, mentor or coach, and most clients will
understand that it means you’ll help them solve problems and grow their
business. Pay attention to the outcomes the clients seek. (If it helps, I call
myself a “coach-consultant” to show I use both coaching and consulting
techniques when working with clients.)
It’s true: they almost never approach me and ask for
straight coaching. They ask for consulting. They ask for practical advice and
brainstorming. But in the search to find solutions and to map out a strategy, a
small business owner will stumble unless they do both the personal development
work and the business development work that leads to success.
So you want to start your own business. Maybe you’re
really knowledgeable and passionate about something, or you’ve found a way to
fill a gap in the marketplace. Wherever your interests lie, there’s almost
certainly a way to turn it into a business.
This journey isn’t an easy one, though: Starting a
business requires a lot of time, effort and hard work, and many would-be
entrepreneurs end up failing. But if your company survives, the
rewards are well worth the obstacles you’ll face on the road to success.
There’s a lot to consider and plan before you launch, and
it’s important to prepare yourself for entrepreneurship. If you think
you’re ready to start your first business, here’s a step-by-step overview of
what you need to do to make it happen.
If you’re thinking about starting a business, you likely
already have an idea of what you want to sell, or at least the market
you want to enter. Do a quick search for existing companies in your chosen
industry. Learn what current brand leaders are doing, and figure out
how you can do it better. If you think your business can deliver something
other companies don’t (or deliver the same thing, but faster and cheaper),
you’ve got a solid idea and are ready to create a business plan.
Another option is to open a franchise of an established company. The concept, brand following business model are already in place; all you need is a good location and the means to fund your operation.
2. WRITE A BUSINESS PLAN
Now that you have your idea in place, you need to ask
yourself a few important questions: What is the purpose of your business? Who
are you selling to? What are your end goals? How will you finance your startup
costs? These questions can be answered in a well-written business plan.
A lot of mistakes are made by new businesses rushing into
things without pondering these aspects of the business. You need to find your
target customer base. Who is going to buy your product or service? If you can’t
find evidence that there’s a demand for your idea, then what would be the
Conducting thorough market research on your field and
demographics of potential clientele is an important part of crafting a business
plan. This involves conducting surveys, holding focus groups and researching
SEO and public data. A guide to conducting market research can be found on our
sister site Business.com.
A business plan helps you figure out where your company
is going, how it will overcome any potential difficulties and what you need to
sustain it. A full guide to writing your plan can be found here,
and when you’re ready to put pen to paper, these free templates can help.
3. ASSESS YOUR FINANCES
Starting any business has a price, so you need to
determine how you’re going to cover those costs. Do you have the means to fund
your startup, or will you need to borrow money? If you’re planning to
leave your current job to focus on your business, do you have some money
put away to support yourself until you start making a profit? Find
out how much you’re going to need.
Experts generally agree that startup businesses often
fail because they run out of money too quickly before turning a profit. It’s
never a bad idea to overestimate the amount of startup capital you need, as it
can be a while before the business begins to bring in a sustainable revenue.
If you need financial assistance, a commercial loan
through a bank is a good starting point, although these are often difficult to
secure. If you are unable to take out a bank loan, you can apply for a
small business loan through the Small Business Administration (SBA) or
an alternative lender. [See related story: Best
Alternative Small Business Loans]
Startups requiring a lot more funding up front may want
to consider an investor. Investors usually provide several million dollars or
more to a fledgling company, with the expectation that the backers will have a
hands-on role in running your business. Alternatively, you could launch
an equity crowdfunding campaign to raise smaller amounts
of money from multiple backers.
You can learn more
about each of these capital sources and more in our guide to startup finance options.
The journey of entrepreneurship begins with a single
step, but the ones that follow often determine how successful your small
business will be. One person who knows that path well is David Albright. David
is an active SCORE business mentor with extensive experience in the consumer
products industry including being President of Pepperidge Farm, Inc.; Godiva
Chocolatier Worldwide; and Glacial Confections, a start-up venture.
Here, David shares his thoughts on that most important of
all small business tools—the business plan—and other aspects of starting a new
enterprise on the right track.
THERE ARE MANY GOOD REASONS FOR WRITING A
BUSINESS PLAN. WHAT TO YOU ARE THE MOST IMPORTANT ONES?
Creating a blueprint for growth. Tie your aspirations – your sales and earnings goals – to a set of pragmatic action plan priorities. Otherwise, everything looks urgent. You risk spreading your limited time and money over everything and risk achieving nothing.
Aligning the organization. If you’re not clear on your objectives and priorities, how can you expect your team to be? The business planning process is a great opportunity to engage your key people, reinforce their critical roles and accountabilities, and align them accordingly.
Tracking progress and adjusting as needed. Because we don’t control external factors like customers, competitors, and the economy, the business plan is about being adaptable, revising the “how” rather than the objective. Clear objectives and priorities broken down by month enable you to face reality, and adjust as necessary.
SIMILARLY, ARE THERE ADVANTAGES TO HAVING A
GOOD BUSINESS PLAN THAT ARE OFTEN OVERLOOKED OR NOT IMMEDIATELY OBVIOUS?
Providing guidance for day-to-day execution. Too many small business owners view a business plan like a “term paper” – do it once and put it in a binder on the shelf. The real focus should be executing the plan, measuring your progress, and making adjustments to stay on track. The business plan kicks off a “process.” It’s not a one-off event.
Making a “no/go no” decision. The structure of a typical business plan forces a potential business owner to think through all phases of business – sales and marketing, operations, management, and financials – and enables you to make your “go/no go” decision regarding starting a business in a fact-based way. After going through the planning process, hopefully, with a SCORE mentor as a sounding board, you will have a far more realistic view of what it will take to succeed.
Providing guidance for investment decisions. Deciding how to invest your time and money is daunting for any company, large or small. But, you have to say “no” most of the time in order to say “yes with commitment” to fewer, bigger ideas. A business plan with clear priorities will help you make informed choices.
ALL PARTS OF A BUSINESS PLAN ARE IMPORTANT,
OF COURSE, BUT WHAT MAKES THE MARKETING POSITIONING AREA PARTICULARLY
Marketing Positioning asks a very basic question: Why
should your ideal prospects buy from you rather than any of your competitors?
There are three critical building blocks that, combined, will define your
Target market. No market is homogeneous or one-dimensional. It’s a combination of many sub-segments, like pieces of a pie. Clearly define your target customers by demographics, geography, customer benefits, distribution channel, etc., so that you know where to focus sales and marketing efforts.
Competitive set. You don’t compete with everyone; you compete with those companies appealing to the same customer segments you are.
Competitive advantage. This is the “promise” that you make to your customers. One of the truisms of competitive advantage is that customers don’t buy product features or attributes; they buy benefits. So what do YOU promise current and prospective customers that your company does best? Is it the best quality? Best customer service? Whatever customer benefit you say you stand for, it’s got to be an obsession in your company. It’s what you build your company around.
ANOTHER ASPECT THAT OFTEN DOESN’T RECEIVE
SUFFICIENT CONSIDERATION IS OPERATIONS. WHY IS THIS AREA IMPORTANT?
Operations is the engine room of your business – a kind
of crossroads where execution meets promise. When businesses are started in
industries in which the owner has no significant experience, it tends to be in
the Operations area that some of the problems become most acute. For example:
Production, logistics, inventory, and supplier management. For a product-based business, these areas demand experience because they devour cash.
Customer service. This spans every customer touchpoint – how your company answers the phone, invoicing, etc. – as well as delivering products or projects on time.
Billing and Accounts Receivable. Even if you do outstanding work, your chances of staying in business are slim without a tight process for both billing and receivables.
Office space/retail location. Your first priority is identifying where your customers hang out and buy, then try to negotiate the cheapest rent. The sequence is important. Cheap rent can be the most expensive mistake a retailer makes if it’s not tied to a location that appeals to your prime customers.
The prospect of investing time and effort to
thoroughly research a business plan can be intimidating sometimes. What can one
do to make the process less frustrating?
You need an informed sounding board of advisors experienced in
the market in which you compete. SCORE is an obvious candidate because it is a
national organization of executives who provide free and confidential mentoring
for small businesses. Chances are that they will have mentors with the relevant
experience to provide valuable guidance.
Also look to your local business librarian.
Libraries have databases that few can afford to buy for themselves. The
business librarian can also point you to the relevant market research resources
that will help you quickly zero in on the critical information.
WHAT ARE SOME GUIDELINES FOR CHOOSING THE MOST APPROPRIATE LEGAL STRUCTURE FOR A SMALL BUSINESS (E.G., SOLE PROPRIETOR VS LLC VS S/C CORPORATION)?
There are five basic forms of business organization which
have different advantages and disadvantages. There is no “perfect” way to
structure a business, but here are some general guidelines:
Sole Proprietorship. Simple to set up, and simple to maintain and operate. But, you have unlimited personal liability for claims against the company.
General Partnership. Also simple to set up, maintain, and operate, but a legal partnership agreement is strongly recommended. Here again, the major disadvantage is unlimited personal liability.
Limited Liability Company (LLC). The most popular organizational form for small businesses. Low start-up costs, simple to operate, and owners have limited personal liability. This form of organization is widely recommended by SCORE.
S-Corporation. More complicated to set up and maintain, though limited personal liability a key attribute. Fewer small businesses are using this option.
C-Corporation. Very expensive to set up and maintain, and subject to “double taxation” – both the entity’s earnings and its dividends distributed to stockholders are taxed. Not recommended for small businesses.
RUNNING A BUSINESS ALSO MEANS CHANGES IN
ONE’S LIFESTYLE. WHAT SHOULD BE DONE TO PREPARE YOURSELF AND YOUR FAMILY FOR AN
Most people considering a start-up dream about what
they’ll “get” from running their own business. However, it needs to be balanced
with recognizing what they will have to “give up” as well – the sacrifices that
one must make to become an entrepreneur, such as long hours, having many bosses
(your customers and investors), and wearing many functional hats. Here are some
suggestions to those preparing for an entrepreneur’s life:
Get your personal finances under control. That includes credit card debt, credit rating, and 6-12 months of savings to cover living expenses, especially if your spouse does not have a steady income.
Make sure you can afford health insurance for your family. This is particularly important if you’re losing corporate coverage.
Build your support team. Spouse, family, friends, business colleagues, and mentors.
Do a business plan. This will help you understand the cash flow implications of both “seed” capital and/or cash reserves requirements.
Get a true sense of what it means to be an entrepreneur.Network with entrepreneurs, preferably in the industry you intend to enter. Shadow an entrepreneur or volunteer at an entrepreneurial company to see the reality.
IS THERE A DANGER OF BEING OVERCONFIDENT
ABOUT A SMALL BUSINESS’S PROSPECTS, ESPECIALLY IF ONE HAS EXPERIENCE AS AN
Too often, entrepreneurs with limited industry experience
“don’t know what they don’t know.” That is why working on a business plan
upfront will help drive insight and understanding. The process will give an
entrepreneur a better-grounded view of the challenge – and opportunity –
What good habits should one develop before
and during that critical first year?
Know who your customers are and what they need. Get frequent customer feedback.
Face reality by measuring your progress monthly. When you’re clear on your sales and earnings goals and your action plan priorities, you can time-frame them by month to create the success milestones every business requires. It allows you to identify problems early and adjust accordingly.
Create a talented, accountable team. You cannot do everything yourself, both for competency and time reasons. You can hire resources full-time, part-time, on a retainer basis, or for specific projects. But in any case, your company cannot be greater than its people.
Does a small business always need an attorney
or accountant when starting out?
Most small business people will need legal advice for a
variety of issues– leases, contracts, trademark registration and protection,
franchise purchase, and so on. Law, like all industries, is getting more and
more specialized. So selecting the right lawyer for the right objective is key.
An accountant or bookkeeper is one of the most critical
resources to tap early and ongoing. Getting a part-time bookkeeper to help set
up your books (via QuickBooks or other software) and generate monthly financial
documents is a critical part of running a fact-based business.
In addition, I would suggest business mentors such as those
available through SCORE. A relationship with a local banker is also helpful as
a critical source of funding and lines of credit as you build your business.
SCORE offers so many valuable resources to
prospective entrepreneurs. Which ones do you feel are most important to someone
just starting out?
The most valuable resource SCORE provides is free and
mentoring. Entrepreneurs need a sounding board, someone with the relevant
experience and judgment to guide them as they strive to build their company.
The other valuable resource we offer is the whole body of
educational workshops and
webinarstargeted at start-ups and ongoing businesses. The opportunity to
learn about every phase of running a business is a critical component for a
small business owner’s continual learning and growth.
You’ve counseled all types of people as a
SCORE mentor. Is there a certain “attitude” or personal trait that provides a
greater chance of success?
I think client potential is an unusual combination of
these attributes: business intelligence, humility, and an urgent commitment to
get things done.
Business intelligence doesn’t mean that they are fully developed business people; rather, they have common sense and a business perspective beyond their functional specialty.
Humility and openness is not as rare but still not the rule. Some people come to us to confirm what they are doing rather than being open to new thinking and direction.
Most refreshing and rewarding is the commitment to get things done and a sense of urgency to get them done quickly, as opposed to slow, incremental progressthan doesn’t have an end in sight.
David Albright is an active SCORE mentor with
extensive experience in the consumer products industry including being
President of Pepperidge Farm, Inc.,
Godiva Chocolatier Worldwide and Glacial Confections, a start-up