How to Start a Business is a big question asked by a lot of people. Why? Well, it is because a lot of people have aspirations of running their own business. It may have been something they wanted to do since childhood, or perhaps something they were exposed to in school, or an idea that came to them while working for someone else. Whatever the reason, starting a business is a lofty goal and knowing how to start a business is the foundation.
There are three basic philosophical questions to answer before starting a business. Of course, these questions are broken down into many other smaller questions, but for our purposes here, we will discuss the basics. They are:
1. The Operation
2. The Motivation
3. The Culmination
First, the Operation. The obvious and most basic question starts here. What is the business? This may seem elemental, but really, it is the most important question. Many people have a plan to start a business. Some want to start a business because the business makes lot of money. Others want to start a business because the business is something they love.
These may appear to be good answers to the first question, but in truth, they are not. Not at all. Why? Because making money is a benefit but doesn’t necessarily give you a life. Doing something you love is a benefit but won’t necessarily give you income. The answer to this most basic question must be something which encompasses both.
Making money in a business that is boring and monotonous is a mistake millions have made. A life of making money in something you have no concern for or even despise will make a bitter person out of you. So you may have money, but if you cannot enjoy the making of it, where is the benefit?
Running a business for a product or service about which you are imbued with passion but can barely pay the bills is an exercise in futility. Ever known someone who did this? I have. They struggle to remain in a business simply because they like the doing of it. These people have confused a business with a hobby. One makes money; the other is for kicks.
The right answer to this most basic question is a business for which you really care or enjoy, and has potential of making good money. If it has both these qualities, it may be the right choice.
The second question in the quest to find how to start a business is the Motivation. What is the motivation for your venture?
In other words, if you had to summarize why you are taking on debt, working endlessly, depriving yourself of free time, and bearing substantial responsibility, what would the answer be? This most crucial step is one which cannot be ignored. Assuming you love the subject, and the business had a track record of money-making opportunities, if you can address the why of your venture you have answered many, many potential questions that will surface down the road.
Do you wish to change something about your world? How about your specific industry? Does the business provide for the particular needs of a specific group of people for which you deeply care? Does it better the lives of people, or does it increase the effectiveness of people?
Whatever the motivation, it needs to be something about which you feel you were created for. It must be “you” to the core. This concept runs far deeper than merely enjoying the subject of your business. It is more about the inner motivation which drives you onward. It is the essence of what the business is about.
If the business you are contemplating is something you enjoy, something that makes money, and something which fills your heart and mind with ideas and plans about how it can impact the world, it just may be the right choice for you.
But there is one more thing to consider.
The culmination of your business is the peak, the highest point, the “future” of your business. Put into a question, it is: where is the business going?
Someone may love the newspaper industry. They may love to write and edit. They may love to cover current news and tell stories. They may even work in an area of high newspaper subscriptions. But one who would consider starting a newspaper today is most likely ignoring the culmination step.
It doesn’t take a research team to figure out where the newspaper industry is going. It’s not up. It’s away.
For someone starting a newspaper franchise 4 decades ago, the future was bright and that person could make a lot of money if done right. But not so anymore. It might have been a wise goal at some time in the past; today it most likely a trip to failure.
So a substantial consideration in the quest for the perfect business involves looking to the future of the business, and asking the simple question: where is the industry going? While no one can see the future or know if a certain industry will still be here in the days ahead, we can make educated guesses that will greatly influence our profitability.
Some businesses never seem to fade or expire or lose their appeal. And others never seem to last more than a decade. Yet most businesses have a “peak”. They have a period during which they will produce more and have more impact than at any other time.
It is your job to determine with some certainty when that time is. Is it in five years, is it two decades, or is it impossible to know?
If you can take these most basic and fundamental steps and answer these questions with clarity, you will have likely saved yourself time and money and heartache in your search for the perfect business. Knowing how to start a business begins here. And after these first elemental steps are complete, it is then time to move into the more specific questions of tax implications, business entity structures, and other such considerations.
Rhett Kniep is a licensed real estate business broker and building contractor. For over a decade he has successfully worked in the real estate investment business, buying and rehabbing and selling investment homes, commercial real estate, and businesses. He enjoys sharing his learned insights in business sales and development with others.