I get a magazine from Compass Bank called BusinessAsset. There are always good articles about small businesses and some nice tips. Overall, it’s a great little publication.

But, there is an article in there this month that got under my skin a little… maybe I’m over reacting, so I’ll let you be the judge.

First, the title:

Go From Hobby to (Lucrative!) Small Business in 10 Steps

Not a bad title, in fact it’s a very good title…

Then the “10 tips that all entrepreneurs, experienced or novice, can follow to make their small business dream reality”:

1. Develop a business plan
2. Consider incorporating your business or forming an LLC
3. Talk to an Accountant and an Attorney
4. Get necessary tax identification numbers, business licenses, and permits
5. Insure your business and investigate other requirements
6. Take advantage of small business bank accounts
7. Arrange your business accounting and arrange for loans
8. Maintain good business credit
9. Ready another workspace
10. Create a brand identity and market your business

STOP! HOLD THE PRESSES! FREEZE! DON’T MOVE!…

I don’t know about you, but to me this plan seems like discouragement waiting to happen. I mean licenses, attorneys, accountants, permits, loans, overhead, branding, etc…

That’s a lot of time and money spent to get started. And you don’t even know if you’ve got a viable business yet.

I know a guy who was opening a restaurant and he was so worried about having just the right business cards and stationary… for a restaurant! He spent nearly $1,000 for cards and stationary months before the restaurant was even opened.

What happened?

He got bought out by the partners. The restaurant is doing well by focusing on good food, good service and by marketing to their core customers on a consistent basis.

Shouldn’t the first priority of a restaurant be to make sure there are some hungry people around?

That’s where any business should start – with finding out whether or not there is a market for what you want to offer. And if there is not already a market, is there an obvious need that you can fill? And that goes beyond what a business plan can tell you.

Forget all the other stuff until you know this thing can make money…

Go pound on some doors and make a few sales calls to see if “they” really want what you have to offer. If you get an order or sale, then worry about the other stuff.

Michael Masterson in his Book Ready, Fire, Aim says this:

“Before your business makes its first sale, it is nothing more than set of unproven ideas that you are spending money on. Some of those ideas may be good and feasible. Others may be bad and/or impractical. You can’t know which are which until you test them by selling the product.”

He goes on to say:

“… with entrepreneurs who are still in the planning stages, I try to get them to streamline their start-up process by eliminating most of the other things they are inclined to do – such as leasing office space and buying furniture – and focusing on effecting that first, real sales transaction.“

Good advice, Michael.

I know I’ve personally watched my dad make this mistake time and time again. And therefore, I’ve made it myself in the past.

But now, I know I can take most business ideas and with $100 test it out to see if it has any market appeal. If so I move ahead. If not I adjust and try a new angle.

Not Just Talk But Real Life Experience

About 5 years ago I had just resigned from a struggling family business and needed work. I had less than $50 in my checking account, no job and a wife, two kids and a mortgage to support.

So how did I start my own business?

1. I sat down at my computer and created a flier for a painting service.
2. Then I took that flier and $19 down to Office Max and had them make me 1,000 fliers.
3. I got in my car and found old but nice neighborhoods that looked like they might need some painting and would have money to hire a painter.
4. I passed out the fliers in those neighborhoods
5. Once I got a call and set the appointment, I went back to Office Max and bought a generic carbon, two copy quote pad
6. Went on the appointment and closed the sale for $1,097, got 30% down.
7. Bought supplies. (Notice I bought tools and equipment after the first sale)
8. I then repeated the process for the next 3 years, earning approximately $45k per year working 20-30 hours per week.
9. I used my free time to teach myself a new, higher paying skill that I now use to make over six figures working the same 20-30 hours per week.

My point is, I didn’t do all that expense stuff until I had revenue. And when moving from hobby to small business especially in “tough economic times” I believe that’s a more sound basis for future success.

Now, If you feel like you just have to have business cards, fine get them free at www.vistaprint.com or somewhere similar online.

Also you can put up a website using WordPress for free. Or if you want your own website name, those will run you about $10 and hosting another $10 a month through someone like www.bluehost.com where this site is hosted.

There’s also www.hostgator.com which many of my friends use. What’s more, you can host as many sites as you want under one account. I think I have 20 or so websites on this one account right now. (Here’s a sample of one of them: www.PressExplosion.com)

SO, until you make a sale, nothing else really matters.

Truth is, you’d be surprised how little most of your future customers care about the details of your business. They just want the product or service you offer…

Actually they want the benefits of the product or service you offer – but that is a lesson for another day.

I’d love to hear your thoughts and experiences, if any, on starting a business.

Leave me a comment below…

Later,

McCool