If you’ve ever had aspirations of starting a business, the process can seem overwhelming. There are many questions and hurdles to address even before setting up shop. From complying with local, state, and federal regulations, to developing a marketing strategy or distribution network. The list goes on and on and the actual technical aspects of starting a business can vary greatly depending on the industry. While this article won’t address those specific factors, what we will cover are the basic building blocks we believe all entrepreneurs should engage in. These are 4 tips for starting a business we learned through the process of launching Millennial Wealth.
Chad and I initially met as competitors while working at different wirehouse broker/dealer firms here in Seattle. We were both young and driven with the same desire to change the perception and accessibility of the industry we had devoted the beginning of our careers to. While that may sound naive, it did ultimately become the biggest driving force in choosing to launch our own firm. Regardless of whether your dreams or confidence are mistaken for being naive, just remind yourself – if it motivates you, who cares what other people think?
Our initial discussions began at a pizzeria in the Belltown district of downtown Seattle over a couple of cold ones. I had started writing a personal finance and investing blog for Millennials soon after leaving my old firm with a goal to monetize it until I had landed a new job. The plan was to look for a job at a local tech company, as that’s what I had originally intended to do when moving to Seattle soon after graduating college. Those first few months of looking for a job were painstakingly slow, for which I am grateful now. Who knows if I would have met with Chad had I already started a new job in the tech industry.
Chad asked to meet with me and discuss my blog and an idea he had begun to ponder. During the course of a few weeks after our initial meeting, the idea of providing financial planning to Millennials really started to take shape. We were both disillusioned with the way the current system was structured to cater solely to the wealthy while younger generations were being left behind. We had the belief that young professionals were the ones who could truly benefit from financial planning services because we could get them on the road to a better financial future with healthier habits established early in life, rather than later. Before it was too late to invest, too late to improve their credit, or too late to build lasting wealth.
From that moment on, that idea and vision empowered us. We both feel good about the services we’re providing and the way that we can provide them (fee-only). From our perspective, truly buying into a belief, a vision, or a passion of yours is the first fundamental step to starting a business.
4 Tips for Starting a Business
Are you Passionate?
While some business owners or organizational leaders may argue that your passion for the product or the service you provide isn’t necessarily a prerequisite to being successful, no one can argue that it doesn’t help. The truth is if you’re passionate about something you’re going to be excited to work on it. Michael Jordan didn’t become the greatest basketball player of all time by practicing a sport he didn’t love for multiple hours every day.
If you have the passion for an idea it will go a long way towards making it into a reality. It doesn’t necessarily feel like work when you’re so caught up in the idea that it actually makes it fun! You know you’re passionate about it if you can’t stop thinking about it or you constantly ask your friends or family for their opinion. If you can find that passion, that’s a great starting point towards starting a business.
Know the Rules of the Game
Laws and regulations overseeing particular industries differ based on municipality, state, and even country. Knowing the rules of the game BEFORE you launch or begin a business plan is a great way to avoid, for lack of a better phrase, “shit hitting the fan” down the road. Starting a business in which you have no idea how laws or regulations affect your industry immediately puts you at a disadvantage to competitors. It’s the equivalent of attempting to play chess not knowing that your queen can move in all directions, not just diagonally.
Think of business as a game. Knowing the rules and strategies of the game undoubtedly helps you compete.
Build a Business Plan
Once a solid amount of research around your idea has been conducted, it’s time to build a business plan. The goal of your business plan should be to foresee as much of the startup costs, operational challenges, and potential problems that could arise during your first 3-5 years. A favorite quote of mine from none other than the Seattle Seahawks Super Bowl winning quarterback, Russell Wilson, is “the separation is in the preparation.” If you’ve reviewed as many scenarios as you can early on in the process, you’ll be more prepared to face them when they arise. It’s just like going into to a job interview or presentation – the more prepared you are, the more likely you are to be relaxed, confident, and engaged, and therefore successful as a result. It’s no different in building and eventually executing a business plan.
Lastly, we believe the business plan is part of the process of defining, and refining the value your product or service provides your potential customers. A lot of people are dissuaded from starting a business because they believe a novel idea is required, yet, that’s far from the truth. Many businesses are formed using ideas that aren’t novel at all. It’s not the uniqueness of the idea itself that dictates that success or failure, it’s the execution of that idea. In other terms, can they provide their product or service BETTER than their competitors? Apple didn’t develop the first smartphone (IBM released Simon in 1992), but it built a smartphone better than anyone else! Your business plan is the perfect place to outline HOW you will provide a product or service better than your competition.
Get Professional Help
Talking to a CPA falls along the lines of knowing the rules of the game. They’ll specifically give you advice on which type of business entity to form (sole-proprietorship, partnership, corporation, etc). They’ll consider a wide variety of factors such as the number of owners, what types of liability protections need to be in place, how the business and owners will be taxed, and much more. They’ll also help you set up your bookkeeping correctly. Not having your books in order from the get-go can be a headache by having to go back and make corrections. It’s simply far easier and less stressful to just do it right the first time. You also might consider involving a lawyer for any legal documents, such as partnership agreements or contracts. Lastly, a financial planner can help you understand the impact starting a business could have on your overall financial situation. It’s important to have a clear understanding of the risks and costs of starting a business as part of your preparation and planning. It’s not meant to dissuade you, but to help you determine what funding sources will be needed, not only for the business but for yourself as well. Starting a business is risky and can be very expensive. Ensuring your personal living expenses are met and your business is funded through the startup phase, is just as important as the detail and time you invest in your overall business plan. A planner will also be able to discuss retirement plans for the business when the time comes.
Certainly, you may feel comfortable handling some of these tasks on your own, but just because you can, doesn’t necessarily mean you should. Professionals help take tedious tasks off your plate that aren’t directly benefiting your bottom line. Leveraging professionals allows you to focus on the strategic growth and forward progress of the business.
We are by no means serial entrepreneurs, however, having successfully launched our own investment advisory firm we wanted to share our tips for starting a business. Please feel free to reach out to us should you have any questions about our journey, or would like to see how starting a business could fit into your financial plan.