Checklist On Starting a Small Business

There are many good reasons to start your own business from the independence it can bring to your lifestyle to the noble role you can play in creating jobs to other, helping to grow economy and many others. In fact, the hardest part about becoming an entrepreneur is figuring out where to start. Especially in today's economic climate most probably having a small business maybe the best source of income. Whether you have some knowledge already or are going on a vague notion that this option may be for you, we hope that this checklist will be useful to start with.

Build a business plan

Having no business plan is too risky when putting a startup business or even for existing business establishment. For any start-ups, a business plan allows you to gain a better understanding of your industry structure, competitive landscape, and the capital requirements of starting a small business.. Every business plan should include something about each of this area, Mission/vision, business name, marketing plan, competitive analysis, financial plan and products and services. It can attract potential investors and secure a loan. For investors this will show whether or not your business can make a profit.

Name your business

It is as simple as it can be but naming your business is the hardest part of building a business. Business name should sounds good and at the same time should be unique so that you have an impact against your competitor but not so unique that potential customers won't know what you're selling. You may want to consider Mr. Webster as your best friend for this part and play around with name ideas. Once you have a few you're happy with, test them out with family and friends. Before ordering letterhead, though, there are a few steps you'll need to take to ensure that you legally can use the name you selected.

Choose a business structure

Four types of business structure that you can decide on; Sole proprietorship, Partnership which has 2 types, Limited and General partnership, Limited Liable Company or LLC and Corporation which has C and S corporation.

Sole Proprietorship, only one owner controls the business. This is the most common business structure available. Common proprietorship includes part-time businesses, direct sellers, new start-ups, contractors, and consultants.

Limited partnershipis limited partnership consists of at least one general partner (controls the business) and at least one limited partner (investor). And General partnership is a business owned by two or more people. Partnerships offer more freedom for business owners with shared business tasks and the potential to earn greater profits.

LLC, this is becoming more popular these days. Limited Liability Company or LLC is a type of business ownership combining several features of corporation and partnership structures Owners of a LLC have the liability protection of a corporation.

Corporationis usually the most complex and most expensive way to organize a business. Records must be kept to document decisions made by the board of directors. There are two types of corporations; C Corporations (incorporate) and S Corporations (small business). Small business is the most common corporation; C Corporation is more complicated than forming a limited liability company or a Sole proprietorship.

Set up and determine your location

Getting a location is also hard as it can be, this where your marketing strategy will fall. A good location can attract a large number of walk-by traffic while a bad location can hide you away from potential customers. It really depends to really what kind of business you will have. There are many steps in office set up including where to locate your office (home or office space), buying the necessary office equipment, designing your work space and getting supplies. Whatever location you choose, make sure you know all of the legal restrictions on your place of business.

Get business insurance

A smart business is the one will take the necessary acts to ease the risk and one valuable risk manager is insurance. Like home insurance, business insurance protects the contents of your business against fire, theft and other losses.. In many cases, there is no requirement your business needs insurance unless you have a company automobile, employees or it's a loan condition. Liability insurance, Property insurance, Business Interruption, Key Man, Automobile, Office and Director are some of the type of insurance that are commonly used today and are merely a starting point for evaluating the needs of your business. No business is immune to natural or man-made disasters and potential liabilities.

Create an accounting system

Accounting is by far, one of most important aspects of starting and operating a business. It's so easy to get caught up in the start-up glamorous tasks of designing a business card or choosing a business name, yet without a solid understanding of the numbers you will not survive. The objectives of creating an account system is to organize survival in terms of sharp competition, prevent bankruptcy and other financial risks avoidance, increase in production volume, profit and wealth maximization and expenditure minimization. Without a firm grasp of your margins and cash flow, you can price yourself right out of the market.

Remember, lack of planning is one of the leading causes of business failures. When you start a business, your only goal is to make it succeed. And to succeed, you must be able to control all the variables along the way. Research and planning will help minimize the unknowns and make you better prepared.

Effectively Practicing Credit Cards On Your Small Business

Today many small businesses are feeling the credit squeeze by banks and are facing difficult times financially. However, depending on your situation there are things that you can do. While no two small business credit situations will be the same, there are steps that you can take today to improve your credit rating and thereby increase your lines of credit and frankly, now is the time to get started. This article will discuss the benefits and some of the best methods of developing credit lines to help promote and/or grow your business.

Business Credit Good Or Bad?

Credit is like anything else in your life. Properly used it can be a real asset your business. However, improper use of credit lines can almost guarantee that you'll get into trouble and eventually even cost you your business and your personal credit too.

The first thing that you should do to establish and/or improve your business credit rating is to apply for a DUNS Number. You can Google the term DUNS Number and be directed to a site where you can get this number for your business. Once on the site, you will also learn ways to develop and/or improve your business credit rating.

Your business' DUNS rating will impact how much credit you can get for your business and frankly, you should always try and develop your business credit separate from your personal credit. To accomplish this, you need the DUNS number and you also need to start building lines of credit for your business without making personal guarantees. The best way to do this is to start out small by borrowing a small amount of money from a local bank or credit union against a small cash deposit that you make into a business checking account. I suggest making 3-4 monthly payments on time and then pay the account off in full. You'll be surprised how quickly your small business will start to get offers for everything from credit cards to signature lines of credit and/or equipment financing.

Separately, if you have any local vendors that you do business with, try getting them to extend you a small line of credit and then ask them to report your payment history to the credit bureaus in the name of your business (not your personal name). I would do the same thing here as with the bank loan. Just get a small line of credit, make payments for 2-3 months and then pay the outstanding amount off. You will be surprised how quickly your business credit rating will improve and the offers you will receive should exceed your needs.

On the other end, there is the use of credit cards and/or receiving credit cards from customers.

All I will say for the moment about accepting credit cards is that it is a necessary business tool for most small businesses today. In regards to using credit cards for your business, I suggest that you keep your business and personal lines of credit separate, if at all possible. Use business credit cards for business purposes and use credit cards for personal use on your personal credit cards. I know that many of you will say that this is hard to do, but the sooner you build your business credit, the less you will have a need for your personal credit cards to finance your business expenses.

Of course, this is but an example of how business credit lines can be developed and/or used for your growing small businesses. Furthermore, you will learn over time that the better you develop and manage your business lines of credit separately from your personal credit, the more your company will be worth and the more successful you are likely to be.

Getting New Business Ideas Off To A Flying Start

Did you know that a rocket uses more than 90% of its fuel to take off? In much the same way it will take 90% of effort on your part to launch any new business ideas that you may have.

With us now facing one of the worst global downturns since the Second World War resulting in higher numbers of people being made redundant or having pay freezes, it is not surprising that more and more people are now considering starting their own business.

Ironically the opportunities for starting a successful business in a recession are huge. Indeed, famous companies like apple, Microsoft and face book were all started in a recession.

However, before committing to starting your own business you will need to first of all ask yourself whether you will be suited to becoming your own boss. You will need to research what will be involved with running your own business to see if you have got what it takes to cope with... no guaranteed income, lots of hard work at the beginning, no spare time for family and the stress of controlling your own financial destiny and so on.

If you decide that you have what it takes then the following points will help you to succeed:

Write a business plan

Writing a good business plan can make the difference between your business succeeding or failing. Not only will it detail your objectives and goals but it will also help to convince potential lenders to have the confidence in your idea to lend you money on the strength of your proposals.

Many banks, if they feel confident with your business plans, will sometimes also offer what is known as a facility, which is an amount of money reserved for you that can be taken as and when you want. The advantage of this is that you will then only pay interest on the money that you have actually used which can be a massive help financially when you are starting off in business.

Research Your Business Idea

Carry out thorough research on your business idea. Find out what your competitors are offering and think how you can offer better.

Examine who you think your target audience are? Young, old, the lifestyle they have and why will they want to buy from you rather than your competitors?

Keep start up costs down

Try to keep your business start up costs low in order to keep as much spare cash as possible as a cash flow for your business.

For example do you need to go to the expense of having office premises or could you just as easily run a business from home operating from a spare room in your house?

Talk to H M Revenue and Customs who will be able to offer valuable advice about tax issues that may be able to also help you to save money.

Good Bookkeeping

Make sure that you have a good bookkeeping system.Good bookkeeping can keep track of your business progress from the onset. Make sure that you keep all receipts and invoices, even ones from before setting up your business if they relate to your business.

It is also beneficial to make sure that you monitor your cash flow weekly and that you stick to your budgets.

Make sure that loved ones are "onboard"

Starting a new business can involve working long hours at the beginning with having to make sacrifices along the way. Before you start a business from home make sure that those closest to you are fully aware of what will be involved with your venture...Working long hours especially in the first year, no extra cash for a while and a part of the home becoming an office,to name but a few.

There will be enough pressure in the first few months of starting a new business, without the stress of falling out with loved ones too.

Let your customers know that you exist

In order to get the all important customers for your business you will need to find the best ways to market your business.

This will be largely dependent on what type of business that you start. If, for example you are starting a plumbing company, advertising in local press or sending out flyers will be an effective form of marketing for your business. Whereas if you are starting an online business you will need to ensure that you have good SEO in order for potential customers to know that you exist and to find your website.

You will need to test various methods of marketing and be prepared to be flexible to change if certain forms of marketing do not work well for your business.

Have an alternative means of income

When starting your own business it is better to work it part time around your current job before taking the step to lose a regular income. This will give you valuable time to test the success of your business idea while making extra money at the same time.

If you have been made unemployed and cannot work around a current job, it is advisable to keep some money aside to cover your outgoings while you are waiting for any business profits.

It can take anything between 6-12 months before there will be any profits from your business which will mean needing an alternative means of income for that period of time. Even when you have succeeded to create a profitable business it is better not to take too much income for as long as possible in case your business suffers a temporary slump in sales.

Sadly there is no fool safe way to know how to run your own business, but the most important factors to take into account are to work hard and to allow time for your business to grow. It will not happen overnight but if you carry out thorough research and market your business well and ensure that you stick to your budget and regularly monitor your finances, you will eventually create a successful business.

Just remember actually setting up your business is what will require the most effort and hard work on your part. Once you have put in the effort, like the rocket that successfully completes its mission, you too will reap the rewards from the eventual success of your business.

Measuring the Value of a Business Between Owners

The concept of the value of an owner-managed business is best understood considering the perspective of the marketplace. Fundamental to the understanding of business value is that the value will change depending upon the marketplace - more precisely, value will change with the circumstances that create the nature of the market.

Buyers who are involved with the business will not pay for the "know-how" or "good will" of a business that a buyer outside the business would consider purchasing. Generally, an inside sale (where the market consists of buyers involved with the business) will not have as high a purchase price as an outside sale (where the market consists of buyers not involved with the business). The term "fair value" is used in legislation and court decisions to indicate the value of business interests between owners of a business. The term "fair market value" is used to indicate the value of a business to those purchasing the business and not involved in the business. Fair value, the value between business owners, results in computation of an overall business value that is less than a presumed fair market value. A minority interest in a closely-held business will be highly devalued for lack of control by a market consisting of buyers not involved with the business, while a market consisting of buyers involved with the business might place a premium on an interest that when acquired would merge with an existing interest to become a majority interest.

Owners will have as a goal the increased value of the business, but when it comes to measuring the value of the business and then incorporating the value concepts into an owner's agreement which contains buy-sell provisions, the concepts often become convoluted. It can get worse because there are more complications, those involving terms of sale and circumstances motivating the sale.

There is an old saying among negotiators: "If you give me my terms, I will give you your price." Simply put, if all the proceeds of the sale are not paid immediately then the time involved before payment will decrease the present value of the sale. If the purchaser is not going to pay the entire purchase price immediately, the time factor involved in the payment discounts the value of the price. If purchasing owners do not have the funds to buy out another owner, it is still preferable to have a sale with payment of part of the purchase price deferred. (Usually this means that the future success of the business will determine whether the selling owner is paid.)

If the owner selling the business interest is dead, there are circumstances that create the nature of the market which will cause potential buyers to offer less. If the owner selling the business interest is disabled, there are circumstances that create the nature of the market that may cause a discounting of the price a buyer will offer. If the owner is selling because of a dispute with other owners, especially if the departing owner is going to compete with the business, there are circumstances that create the nature of the market which will cause the discounting of the value of the business interest. Note that none of these circumstances potentially affect the essential worth of the business interest over time - they are market causes for a decrease in purchase price for a certain transaction.

Owners want to enter into buy-sell agreements to avoid the potential result of circumstances that create the nature of the market - that death, disability, separation from the business, or a number of other events could cause a diminution in the value received for their business interest. Where there is an effective agreement, the owners of a business form the market place and agree to buy one another's interests in the event of certain triggers initiating a purchase and sale of interest. However, owners generally do not enter into effective agreements because they underestimate the complexity of the determination of a price in a given circumstance.

One of the most frequent mistakes in buy-sell agreements is confusing fair market value with fair value. By definition, a buy-sell agreement deals with fair value (between co-owners) not fair market value (applicable to a purchase of the business by one not an owner). If the basis for value discussion is some concept of fair market value (derived from an appraisal or a comparison transaction price) during the course of a transaction when enlightenment occurs, there will be an attempt to break the agreement. As an example, where two owners each own equal shares and agree to purchase the others interest at the first death of an owner, there will be a purchase for fair value of a one-half interest that will result in the surviving owner having all of the business valued at fair market value. This situation is often described as a windfall and has been the subject of much litigation, but a careful analysis results in an understanding that there is no windfall and that the purchase and sale was for an appropriate price. If this understanding is not properly documented for the benefit of the parties, related parties, and affected parties (as well as their lawyers), litigation is likely to undermine the efficacy of the buy-sell transaction.

Similarly, where the triggers for the transaction vary, some will try to apply the same value, ignoring the concept that the market reacts to circumstance. When buy-sell agreements offer different prices and terms given different triggers and the rationale for this treatment is not appropriately documented, the consulted lawyers, parties, related parties, and affected parties often advise and initiate litigation.

Generally attempts to simplify this complexity with a formula are also problematic, because conditions will change more quickly than will the formula.

When owners consider a buy-sell agreement and desire an effective agreement, the understanding of value must be approached with appreciation of its complexity. The owners should agree on fair market value and then understand that fair value will be the basis of their agreement. For each trigger of anticipated, potential circumstance, there must be a consideration of the price and terms of each transaction reflecting the marketplace issues. The agreement should specify the rationale and procedure for each transaction. Stakeholders (spouses, potential owners, and key personnel) should be advised to the agreement and understand the relative concepts of fair market value and fair value.

The Easiest Way Grow Your Online Business Opportunity

Whether your website is selling a product or a service you need constant exposure to get new visitors to your site. The only way you'll move up the search engine ladder is to learn how to grow your online business opportunity with article marketing. It's really an easy way to find new customers and make more money on the internet!

Search engine optimization, also known as SEO, is essential for moving your site into the top ranked postings on every popular search engine. After all, what's the point of listing keywords and key-phrases associated with your business if you're not going to optimize them?

Your friends are right! Article banks are filled to the brim with back-linked articles that not only get more visitors to the originator's website or blog, but also serve to increase and optimize their site's all important search engine rankings. Aside from providing a greater chance for your business to turn into a viral online success story, marketing through social networks and article data banks just makes good sense.

Article marketing began to gain strength as more business owners began using self produced prose to help promote their business. News editors began frequenting article databases for story leads and the number of hits to the sites grew to enormous proportions.

Article marketing services will write and post informative prose for you all over the web! You won't have to become an internet or SEO-guru to figure everything out. Article marketing services can have the articles written for you and post them to all of the popular article banks.

In fact, simply by providing a keyword or key-phrase, these fee-based services can have a professional writer prepare your articles in as little as twenty-four hours for proofing. Then the article marketing service does the rest of the work.

In fact, there are many services available now that will write your articles and post them for you. All you need to do is supply a small fee and a keyword or key-phrase and Voila! In a day or two your articles are appearing all over the web and your search engine rankings increase accordingly.

You'll get all of the important backlinks needed to get your site noticed for just a few dollars. It's like getting big business level assistance for the price of a few Venti Lattes! What could be better than that?

Article writing and submission services range from $15 per unposted article to as much as $3,500 or more per posted article or prepared press release. There is a service to fit every budget and meet every unique marketing objective.

Whether your enterprise is large or small, you can grow your online business opportunity with article marketing. If you know how to write using keywords and key-phrases properly, the process can cost you nothing more than a little time. But if you would prefer to concentrate on your core business, there are many cost-effective article marketing service approaches that are available.

Business Opportunity Leads

Before I started doing affiliate marketing online I was actually involved in a home based network marketing business. I learned a lot about this business and how valuable a solid lead can be in growing a business.

My problem was I always wanted to go on the internet to find my leads but the business itself exploded in a "warm market" environment.

Against my mentor's recommendations I decided to try the online lead gathering approach anyway... and tried to build trust online so that I could eventually show people the real business plan and hopefully become partners with them.

After a few months of work online I was getting pretty decent at capturing online leads. I thought I really was on to something big. In fact, what I really learned was that my follow-up plan for converting my leads into my business was failing and most of my leads were not interested in joining me in an offline business endeavour.

What I began to realize was I was good at getting leads online but was having trouble converting them in a warm market business. I was able to convert them on other things which made me focus more on the affiliate side of things and I started to lose focus on my original business. This is because I was actually starting to see money come in from my online leads.

I no longer do network marketing, but I do believe it is an excellent business model, and in fact sometimes I think back and wonder if I made a mistake in leaving that offline business to start working online.

My mentor really taught me a lot about business and personal relationships, and I have starting using some of his philosophies when structuring my own online marketing campaigns in a way to stimulate long-term growth, and residual income.

So, with all that in mind, understand that I learned a whole lot from my online approach to capturing business opportunity leads.. and this post is going to explain some of the things I learned

Gathering Business Opportunity Leads Online - What I Learned

Gathering qualified leads online can be tricky, but many people find it a necessary step they must take. With your own list of leads you can continue to promote your own business opportunity, your own products, or continue to market affiliate products and offers to your list well into the future.

Business opportunities is one of the most competitive niches online. You can even narrow this niche down to "home business opportunities" which still gets millions of searches around the world every day. People searching for home business opportunities are very valuable leads for several reasons.

If you do a typical search for home business you will find hundreds or thousands of people advertising the next great opportunity, and millions or even billions of blogs around the globe pumping out daily content in this niche.

Many of these site owners have done nothing more than hire a graphic designer for a few hundred bucks to create a nice website and some of them even pay people to write their blog posts for them. These sites have one goal in mind and that is to capture you as a lead and then later convert you to a customer or business partner. Many of the sites and owners promise fancy cars, and warm days at the beach, and some of them will tell you they have the answer you need to gain financial freedom.

Does this sound familiar? It probably does...

The actual number of these types of sites has drastically expanded in the last 10 years. There are literally billions of them - which makes it extremely expensive to advertise in this niche, and very difficult to stand out above the rest.

So How Does One Generate Their Own Qualified Business Opportunity Leads Online?

There are many tactical methods for generating good business opportunity leads online, but it really depends on what type of business you want to build.

If you are looking to just collect emails and send people a bunch of affiliate based products related to making money then the above mentioned style of websites might be all you need, but of course you will be competing against millions of people doing the same thing.

If you are one of the many people who have come online to find qualified business opportunity leads to expand your own home based business then you are probably familiar with warm markets and cold markets.

For the purpose of this article warm market is people you know, which could be friends, relatives and existing customers, even referrals are said to be warm. "Cold market" refers to a sales person's future or prospective customers.

You may have a lot of experience in converting a warm market but the internet is generally a cold market environment. This does not mean you cannot turn your online leads into warm leads. It just requires a different approach to online lead generation that goes against the traditional "squeeze page" or "sales page" & affiliate approach.

Below are some of the most important things you should include in your quest to build a large list of business opportunity leads, that you can convert into a warm market business.

Be The "Real" You Online

Your first step should be building a presence online that is the "real" you. That's right. You have to come out from behind the curtain and actually post your real name and photo online.

Many people who start a home business will come online and try to keep their identity hidden because they don't want their friends, current employers, or family to see they are doing this. This will NOT work for you if you want to build a relationship with your leads.

You must get over your fears and create your online profile.

To do this you should develop your own blog (WordPress is easiest), which can contain anything you want and can be business related. On this blog you can post your daily thoughts, business tips, quotes, information about yourself... etc. You will want your blog to link to all of the following.

A Twitter Account

A Facebook Profile

A Facebook Fan Page or Business Page

A Facebook Like Box on Your Blog (Very important for building trust - it shows how many people like you on Facebook.)

A Private Facebook Group

A Linkedin Profile

Facebook Comments - this is a cool way to link your blog to Facebook and every time someone comments on your post it goes on their Facebook news feed.

A Professional Lead Capture Approach

You will want to have a squeeze page or a form on your blog where people can actually enter their emails or contact details, or can contact you directly. You can set up a form on your blog to collect whatever information you want from your leads and even allow people to send you a message. the form is designed to prevent spam. This can be done on WordPress blogs by using a free plugin like WordPress Contact 7.

You can also encourage them to join your email list for exclusive updates, industry news, events, or a free ebook. This can be easily done using a service like Aweber which stores email addresses for you and costs about $20 a month.

Whatever you think your readers would find valuable you can offer to them as an incentive to join your list. Aweber will store all your emails in a safe place and allow you to send emails easily and automatically if you wish.

You might want to steer clear of looking too promotional on your lead capture page and in your messaging. Avoid typical marketing images showing material possessions, and over use of exclamation points. You really need to separate yourself and look professional here in order to keep this people from clicking on the "back" button before they even subscribe.

Most people who are joining your list will be people you have met online or in person and you have already told them to visit your blog. These people will also be referred by friends and family, so you probably don't want to look like a "shady" salesperson.

Become Involved

To build a following that will trust you, you need to be interactive online. This means you need to update your blog regularly and update your twitter, your Facebook etc. You need to build a following and show them you are the real deal, and you are available to talk at any time. If your leads believe you are there and available, they will be more likely to convert.

Save Time With Syndication

You can update all of your online accounts automatically just by setting your blog up to syndicate the content to other places. If you build your blog in a way that facilitates automatic publication onto social media outlets then you can save a ton of time. For example, you can install the auto tweet plugin so that all your new blog posts are automatically tweeted to all your followers. The same goes for Facebook Page Publish plugin.

Make sure that at the bottom of all your posts you remind people to join your email list or fill in your contact form! People will follow your instructions - all you have to do is tell them. You will want to give them an incentive to do so.

You can also syndicate your content to other popular blogs and websites in your industry if they exist. All you need to do is content the site owners and ask them if they wish to post your content. Many of them will if you have a solid reputation and this will generate traffic to your site.

Generate Traffic

There are several ways you can generate traffic to your site. Paid traffic is the fastest form of traffic online. Facebook allows you to buy traffic and target specific interests and hobbies. It can be effective, but very expensive.

If you are going to pay for traffic you need to calculate your cost per acquisition or CPA and you need to know the value of 1 lead to your business. This will determine whether it is worth the investment in buying traffic.

You also have to have an end goal in mind on how you are going to get the paid clicks to convert into an email lead and how you will then convert that email lead into an actual business partner. This is the most difficult part of the process for most people.

What is the Cost Per acquisition?

In my experience online using squeeze pages, for every 100 clicks you buy you should convert at least 30 - 40% or more into email leads. So if you pay 40 cents per click it will cost you $40 for 40 leads. ($1 per lead)

I found with a few tweaks and some cheaper traffic I could acquire email leads for 0.50 cents or less.

You could also pay-per-click on places like Bing Ads or Google Adwords which may be a bit cheaper than Facebook.

Once you become more involved and post more blog content you will start seeing a trickle of free traffic. Another trick is to build a viral video or viral content that will be shared among people on social media sites. Make sure it is linked back to your site.

Every time you post new content you should also be sending it to all your other social media accounts and your subscribers. You will find that as you gather more and more leads and continue to build more solid content on your blog that your traffic will increase exponentially since many of your existing leads will share your content through Facebook and Twitter.

You can also set up new business cards with your blog address, and do some offline promotion including radio ads, flyers, classifieds etc.

Email or Contact Follow Up

How you follow-up with your leads is the most important part of all your efforts.

Business opportunity leads generally convert better if you "warm" them up first. So you should treat the people you meet online the same as you would treat people in person, or even your friends and family. Steer clear from lengthy automated email follow ups and salesy tactics. You need to build trust and give them what they are looking for.

A couple automated welcome messages may be OK, but you really should try to eventually get these leads on the phone or use a tool like Skype which allows you to have a face to face conversation with someone.

If you have a pre-formatted presentation or "plan" you need to show them, you should not do this on auto pilot - (for example with automated emails).

You should call them and arrange a meeting time and have them watch the plan or presentation. Then follow-up immediately by phone or Skype. Be prepared to sign them up or have them purchase your product at that point. This will drastically improve your conversion rates for your business opportunity leads that you collect online.

Affiliate Approach

If you are an affiliate looking to make money from your leads, then an automated follow-up sequence on Aweber may work better for you. There are several legitimate business opportunities that have affiliate programs and convert well with this type of marketing approach.

Trap for Startups to Avoid: Starting Multiple Businesses

The scope of a startup is often a trap for a budding entrepreneur. It's a common trap for an entrepreneur to try and take on too much with their startup, either because they feel the need to offer something similar to what a large corporation can offer, or because they combined existing services to come up with their idea, not realizing that in the process it became unmanageable.

A few years ago I was reading through a book called Growing a Business by Paul Hawken. This book was one of the first influences that started me thinking about going into business. It's a good read, and one concept in particular that has stayed with me has been to start only one business at a time.

Multiple businesses

Entrepreneurs have to find an idea that they can do better than the existing competition. They will often look to existing companies and try to offer something better, or perhaps combine services to offer something unique. As a result, fresh startup ideas often incorporate multiple businesses in their pitch. The entrepreneurs often don't even realize that that's what they're doing, but when it happens the result is very difficult to get off the ground.

The example that Growing a Business used was that of a farmer who wanted to slaughter his animals himself to save money and sell the meat at a stand by the road. This is actually opening three businesses at once: A farm, an abattoir and a retail butcher shop. All of these businesses require very different skills and capabilities and could easily overwhelm the farmer. I've seen my own examples too, including:

Authors who self-publish their book

Coffee shops that also sell crafts on consignment

Restaurants that also do catering

Just recently I met someone on the Internet who had programmed a database with details on old computer games. He wanted to make a business that offered access to this database, a portal that allowed people to access multiple online communities to discuss the games, and an auction function like eBay but with a different auction feedback system. Talk about biting off too much at once!

Why is starting multiple businesses a problem?

Running a business is about matching resources and capabilities that a business has to customer needs in the marketplace. When a business starts up, it has zero capabilities and very limited resources. The entrepreneur has to develop everything from scratch and that takes a lot of effort. In addition, having multiple businesses start at one time increases the amount of competition the business faces.

To put this in perspective, imagine a startup magazine that wants to open their own magazine stands to sell directly to customers. The idea is that they don't have to pay a distributor and can get a higher percentage of the profits. The capabilities required to produce a magazine include:

Stories and journalism

Photography and graphics

Layout and typesetting

Administration

Marketing

Printing

Distribution

But to open retail stands requires very different capabilities including:

Finding locations

Hiring vendors (HR)

Constructing kiosks

Supply chain management

Processing payments

And this list is not exhaustive. This is a mountain of work that would take dump trucks full of money to get going. In addition, now instead of competing with other magazines for sales, the company is also competing with other magazine sellers as well, all of whom are more established than the magazine startup. A venture like this would likely not last very long at all.

Questions to ask

it can be difficult for an entrepreneur to tell if their business idea is actually trying to start multiple businesses at once or not. One helpful took is to ask these three questions:

1. Is the business idea actually just a vertical integration of a traditional business?

Vertical integration is when a firm is its own supplier or distributor. This is what was going on in the example of the magazine company who wanted to have their own retail stands, or the farmer who wanted to butcher and sell his own meat. Vertical integration is a way of reducing costs and keeping a larger percentage of profits.

2. Is it possible to split my business idea into two ideas that need different capabilities to run?

Imagine a retail hardware store selling hammers and nails. This is still one business. If split into two, a hammer store and a nail store, both stores would require the same capabilities: purchasing supplies, having a location, selling supplies, etc. If, on the other hand, the business in question is a coffee shop that sells crafts on consignment, the story is very different. When this store is split into two ideas the differences in the two businesses become more obvious. Compared to a coffee shop, a consignment store has a very different way of obtaining supplies, tracking inventory, selling items, accounting, marketing, pricing and so on. This means that running both will require the entrepreneur to have both sets of capabilities. This is why every coffee shop/consignment store I have encountered has struggled.

3. If I split my business idea into two ideas, would they appeal to different customers?

Let's take the example of the hardware store that sells hammers and nails again, and compare it to a restaurant that does catering. Split the businesses in two. We can see that a hammer store and a nail store will attract similar customers. A restaurant and a catering company will attract very different customers. Trying to market to two types of customers at once is a strain on your marketing. It's often not appropriate to reach everyone with one business, so rather than adding to the business, start with a segment of the market, and establish the company first within the segment. Once it is established, then it can be appropriate to expand.