Have you been thinking of how to start a business? If you’re a new entrepreneur or are struggling more than you’d like to with your current business, this page is specifically designed for you.
To preface, we find that a majority of business enthusiasts believe that the reason most companies go out of business is a result of being under-capitalized. In our experience, this simply is not true. Our instructors have helped thousands of successful companies, even multi-million dollar companies, start with simply sweat equity and very little money. In fact, many of our instructors have personally built numerous companies with just hard work, the right education, and a very small budget ($5,000 or less). Sometimes, much less…
Additionally, BLU University faculty have been fortunate enough to not only build successful businesses, but also they have had the privilege of coaching, speaking, and training people and students what they know all over the world. That said, we don’t claim to be great motivators like the great Anthony Robbins. Not that motivation isn’t necessary, but BLU University maintains that motivation is slightly overrated, and too heavily relied upon for success. Many entrepreneurs and business leaders around the globe read self-help books, buy CD’s or audio downloads, even attend seminars, yet the majority are still farther from success than they would like.
Motivation serves as “sugar water.”
Which gives us an immediate boost of energy or resolve, but cannot provide the average business person with enough sustenance to grow their business. We meet with new students on a regular basis who were previously reading and self-educating, hoping that the knowledge will somehow lead them to success. When it doesn’t, they became frustrated and discouraged.
Alternatively, the BLU belief on financial success is that it takes a very specific recipe applied in a clearly identified order to accomplish create and sustain audacious business goals. If a new business owner doesn’t know exactly what variables he or she is supposed to apply and in which order, then the chances of success are slim no matter how many books one reads or time allocated to their start-up.
On this page, we outline the exact recipe that have been used to start or fix numerous businesses on a next-to-nothing budget. If you apply this strategy and education that is outlined below, you will see results.
The steps listed are the first actions that the business leaders at BLU University would take when they start a new company.
1.Define your “Why”
Having a clear purpose for starting a business is the most fundamental principle of business development. The “why” is the reason for taking the leap in to entrepreneurialism. It is the reason for waking up early, going to sleep late, and making sacrifices while your friends and are out seeing the latest movie or binging on Netflix.
We certainly can’t decide what your “why” is, but we surely can attest what it shouldn’t be…money. Although money is good, and your business should ultimately make money, it is a terrible motivator. BLU recommends setting a why that is strong enough to get you out of bed each morning. Maybe it is to prove to your family that you can do it, a newborn, or even to pay for your sibling’s college.
See, the issue with money being at the forefront of our business, it alters our decision-making. If we set our sights on making millions of dollars, then the economy tanks, then basically we have nothing left to work for. But let’s take it a step further. Let’s say, we have a family to provide for and a mortgage, and the economy crashes. The chances of us jumping out of bed at the crack of dawn and making a provides a much higher likelihood that the company is going to prevail even during tough times, all because we cannot let our family down.
When times get tough and money isn’t coming in, we tend to become unmotivated, and eventually give up. Whatever the case, set your sights on something greater than yourself, and you will be much happier in the long term.
2. Have extreme clarity of vision
Most people fail at starting a business because they lack the ability to set goals for their business and clarify the life they want to live. Having a clearly identified vision will alleviate this problem. A new business owner should consider the following in regard to their business’ vision:
- What are my goals at a high level and long term basis?
- Who do I serve?
- How big will I build it? In three years? In five years?
- If my business could be everything I dreamed, how would it be?
Once you have answered these questions and are confident in the responses you came up with, you cannot let external distractions cause your vision to deteriorate. Instead, you must refine, tweak and move, and solve problems in order to protect the vision. When in doubt, remember to FOCUS on the big picture: Follow One Course Until Success.
3. Separate your vision from your strategies
Now that you have your vision nailed down and tight, it is appropriate to list the strategies necessary to fulfill the vision. When thinking of strategies, keep this thought in the forefront of your strategizing:
- What approach will make your business successful?
- What must occur to make your goals come true?
- Will my management team have a clear understanding of what actions need to be taken in order to make the vision come in to fruition?
Remember, the strategies may change, but the vision stays the same! Even if the goal is to generate, say $5 million in year one, and you are six months in without seeing revenue, it does not mean to pull back the vision. All it means is that the current strategies used are not the producing the correct results. Refine, tweak and move the strategies, and carry on.
4. Find your rate of probability and where your attrition rate begins
This phase of starting a business is the not only the most difficult component to find, but also the most underrated principle in all of the start-up phase. In fact, it is said that only one percent of business owners actually know what their rate of probability is and where their attrition rate begins.
The reason why the rate of probability and attrition is so important is because it allows the business owner to truly predict exactly their success rate within a narrow margin of error. Solve these answers, and you are sure to succeed.
To find your rate of probability, you must answer three questions. First, “How much money do you want to make?” Many people ask if they just guess a number out of thin air. Well the answer is, yes! Just pick a number (we’ll get to why later). Second, ask yourself, “How long will it take me to earn X amount of dollars?” Is is 12 months? 18 months? 24 months? Try to be specific. After that, pose the question, “In what industry is my start-up in?.”
In the example used in the BLU University curriculum, we discuss a case study that was brought to light by one of our instructors while consulting a start-up. These founders wanted to make $1 million dollars, in 12 months, in the Mortgage industry. Great! They now have an equation.
Now that you have written your variables, it is time for the dirty work. Do your due diligence and research how much the top players are earning in your prospective industry. Find out the top 1-20% of companies. The reason why you only find the top 20% of companies is that BLU believes that anyone can make “over the herd” (or in to the top 20 percentile) with hard work and tenacity. But to get inside the 20 percentile takes very specific strategies. Find this number out and you have your attrition rate.
BLU administators recommend aiming for the 12-15% range for your company’s attrition rate. Once this number out accurate, you may need to tweak your original numbers. Maybe you need to pull out the term a half a year to 18 or 24 months. It could also prove that the amount you wish to make is a little too farfetched, and needs to be pulled back some to say say $500,000 or $750,000.
The rate of probability and attrition rates is what the top players do, and if you follow suite, you are to find success.
5. Create your unique selling proposition
No longer are we in the days of “if we build it, they will come.” Simply building a company without evolving will inevitably lead to failure. For example, look at Blockbuster. They were a dominant company in the video space. Their unique selling proposition was they had a wide variety of movies, all a person had to do was go to the store and pick out the one they wanted to rent. Later, Redbox came along and their unique selling proposition was to offer convenience by setting up their vending-style kiosk at every day locations. Then Netflix and Hulu hit the scene and can you guess what their unique selling proposition is?
The point is when starting a new company, it is imperative to show how your product or service is different than everyone else. In fact, it is the focal point used to grab the prospective consumer’s attention.
6. Create the appropriate documents
At this stage in business development, a new business owner should have enough variables to get their paperwork in order. This includes forming the following:
- LLC– An LLC is a legal entity that allows a business owner to obtain a tax identification number, open a bank account and to conduct business, all under it’s own name. More importantly, an LLC hosts the lion share of the liability instead of the founder(s) should the company go bankrupt.
- Operating Agreement- An agreement amongst the members of the LLC that governs the members’ financial and managerial duties. In laymen terms, the operating agreement spells out each members’ roles as well their percentage of ownership.
- Articles of Organization– A legal document used at the state level in order to establish an LLC. The articles of organization include the names and addresses of the members of the LLC, the names of managers/directors, the name of the business’s registered agent (spokesperson), and a statement of the business’s purpose. Each state usually provides the new business owner with a fill-in-the-blank style form to simplify the process.
- Tax Identification Number/EIN Number- The tax ID number is a number used by the IRS to identify the company for tax purposes. This is crucial to have when establishing a business checking account.
- Business License– A business license allows a business owner the right to operate your business in your respective city. It also helps the local government (in some cities) assure that there are not businesses too close to each other (such as a bar located next to a church).
Completing these documents will legitimize your company on a local, state, and national level, as well as for setting up a business checking account.
7. Build and optimize your website
Do you have strengths in web development or is it something that your team should outsource? When starting a company, it is essential to find the balance of time vs. money, so that you have enough of both to get off the ground. If anything, remember that more than half of internet users searches come from a mobile device rather than a desktop, so responsiveness is something to keep in the forefront of your web development.
Additionally, search engine optimization, this is an area that cannot be missed in today’s world of business. According to moz.com, “An important aspect of SEO is making your website easy for both users and search engine robots to understand. Although search engines have become increasingly sophisticated, they still can’t see and understand a web page the same way a human can. SEO helps the engines figure out what each page is about, and how it may be useful for users.” We couldn’t have said it any better ourselves. Without it, your website (and even your company) may be lost in to the abyss.
8. Have a grind and build your business in your free time
Tom Clancy once said that “an overnight success is ten years in the making.” Likewise, aspiring entrepreneurs sometimes see the glamour and fame of successful entrepreneurs such as Mark Zuckerberg or Russell Branson, and think that they were handing a thriving company or that in six months they made their first million.
Every successful business owner acknowledges that building a start-up is a real grind. Often times we are bootstrapping our company, so there is no way to draw a salary. This means either maintain your day job, or find a job that you can do in the off hours.
If you are not currently working, we recommend going one of two paths to supplement your income while building your business. The first path BLU recommends is finding a job that relates to the industry your start-up is in. For instance, if you are starting a book publishing company, it would be of best interest to work as a freelance editor or at a printing facility. That way, you are learning transferable skills that will lend you experience in your start-up.
The other route we recommend is finding a job in the service industry, such as a waiter or bartender. This is highly recommended, because most hospitality jobs take place at night, allowing you to work on your start-up during normal business hours. Another perk to working in the service industry is the advantage of being able to meet so many new faces. You never know who you will serve next that will help connect the dots for your business.
9. Become a master salesman
BLU University believes that sales is the life blood of any company. Sales equals revenue, and revenue provides options. Our BLU University instructors take pride in being sales professionals first, business owners second. It is important to learn how to sell, and be good at it. Because in business, and life, you are either selling someone or they are selling you. There is no grey area! When getting a business off the ground, you will constantly be working deals along the distribution channel, whether it’s dealing with retailers or distributors or the end customer. It is no excuse to tell yourself that you are no good in sales. Take it from us, sales doesn’t get easier, you just get better!
10. Have an up-to-date business plan
In most start-ups, business owners do not write a business plan unless they are going for funding. Although this is a valid reason for a writing a business plan, it is not the most prevalent. Writing a business plan is fundamentally important because it holds you and your team responsible for executing the ideas and strategies your team originally projected for the business. Think of it as an accountability buddy to keep you on track.
Additionally, writing a business plan assures that you know every single detail about your business, down to the wire. Most people think that they know their business model until they sit down to write their business plan. Similarly, the average business owner hasn’t thought about particular aspects such as proprietary positioning, industry advantages, or the profile of the customer or target market. These are all pivotal components to running a business, but typically are not sought after until sitting down and writing a plan.
This start-up business resource provides many key principles and real world secrets that BLU Instructors have used to start companies over the course of their career. These principles are not biased when it comes to age, race, gender, current education level, or even experience. Every new business should make sure they have these items crossed off their list before open the doors for business.
Need help crossing one of the start-up items off your checklist? Let us know!