So, you want to succeed in business ...
The economy stinks, which is probably
why record numbers of optimistic entrepreneurs, many of them fresh
from the world of salaried employment, are contemplating a new
If you're one of the millions of people eyeing a business
startup, be careful. It's tough out there.
Bill Madway, director of research for the Network
of City Business Journals and a former small-business owner,
has been researching what he calls the "Super Stars" of
small business: 700 owners, presidents, CEOs and other top-level
executives of companies with one to 99 full-time employees, including
Here, extrapolated from his findings, are 10 soul-searching
questions anyone considering a business launch should first answer.
1. Whose goals are these anyway?
Are you opening a business because your spouse, parents or
good buddy from school is pressuring you? Are you making decisions
based on somebody else's expectations? If you are, you're in trouble.
2. How important is it for you to be in control
of your time?
If losing control over your life is going to make you miserable,
don't start a 24-hour answering service or any other business where
you can't tell customers "we're closed." The more successful
you are, the more quickly you'll be sick of the whole deal.
3. Are you sure you have enough money?
Here's the dilemma. You're successful; you sell a lot of widgets.
Yippee! But it takes you 30 days or 60 days or, worse yet, 90 days
to collect payment. In the meantime, you run out of widgets, and
you can't afford to make more. You're not doing any business, but
you still have overhead. Moreover, you're disappointing your enthusiastic,
new customers who will shop elsewhere. Next stop, bankruptcy. So
scare up lots of working
capital, and get that home-equity line of credit in advance
-- just in case.
4. Are you certain you're charging enough to make
If you offer cut-rate
prices, you can be really, really busy digging yourself into
a hole out of which you simply can't climb. Without proper
pricing, the more customers you get, the more money you lose.
5. Are you relying too heavily on word of mouth?
All your friends are telling their friends about your new business.
That's great. But just talking up the business isn't good enough.
If you don't spend money and energy marketing
steadily and intelligently, you won't have customers over the
6. Have you lined up customers who are willing
to pay in advance?
Otherwise, you're going to find yourself financing your customers.
And trust us, you can't afford that.
7. Are you making smart hiring decisions?
Just because your best friend's husband is out of work, doesn't
mean he'll make a great sales manager. Here are two rules of thumb:
Hire people who are good at what you're not, and hire people who
are just as smart as you are.
8. Can you bite your tongue?
Don't dis your ex- (or soon to be ex-) employer. In times like
this, you need all the friends you can get, so don't make them the
enemy. If you haven't left yet, don't make your departure an unpleasant
surprise. If you're already unemployed, give your former boss an
opportunity to be your first paying customer. After all, you understand
his business, and in your new role, you might be able to offer him
a deal he can't resist.
9. Have you considered a partner?
Look for someone who shares your ideas and whose talents complement
yours. A partner
can give your company more resources and abilities and reduce
your personal financial risk.
10. Can you let your head, not your heart, rule?
When it comes to business, don't fall in love with your new
company. Keep some perspective on your operation's strengths and
shortcomings. Be realistic enough to recognize
the signs of real trouble in time to bail.
Jennie L. Phipps is a contributing
editor based in Michigan.
-- Posted: Jan. 11, 2002