Looking at opening your own business? This is a month of celebration for Val Grubb & Associates, as my company marks the five-year anniversary of its founding. I was pretty nervous that day in 2008 when I gave NBC Universal my two-week notice (especially since I was leaving such a prestigious company). But my career had reached a point where I had to break from corporate America.
I’ve been mulling over this decision, and I’m certain that my preparations gave me the solid foundation I needed before I ever handed out my first business card. If you’re thinking of striking out on your own and opening your own business, first answer these 11 questions to find out if you’re truly ready to make the leap:
1. What are you good at?
Determining what’s in your wheelhouse (i.e., what you’re good at) is one of the most important considerations—after all, you’ll ultimately have to convince someone to pay you for your services. Equally important is determining what’s not in your wheelhouse, as it can be challenging to overcome a bad customer experience (and the possible hit to your professional reputation) if you agree to provide services outside your area of expertise.
2. What do you like to do?
If you hated your job in corporate America, trust me—it doesn’t get any better if you do the exact same thing when opening your own business. Figure out what you like to do and how you can turn it into a moneymaking venture that can support you.
3. How much money do you need to survive and thrive?
Take a good hard look at what it takes to run your company, conduct business, and attract customers—and what it takes to live your life, too. Remember, you’ll need to pay for your own health care and retirement, and also cover your salary when you’re on vacation. (An Entrepreneur article titled “How to Budget Your Own Salary” features a great worksheet to help you identify all your expenses and calculate what to charge your customers.) Don’t forget to consider whether you can survive if a customer pays in 90 to 120 days (common practice with larger companies). And if your company requires startup capital, make sure you know where you can secure funds with the best possible return rate and stipulations.
4. How much working capital do you need?
Before hanging up my own shingle, I made sure to have six months’ worth of expenses in reserve. Those funds allowed me to focus on growing my business—and not on panicking about how I was going to pay rent. The more you can save before taking the leap, the better off you’ll be when you’re on your own. This is especially important in the beginning when you’re trying to make your first sales.
Also understand that you’ll need to be looking for more work constantly, even when you secure a contract. I had my first gig lined up before I left my corporate position but foolishly stopped looking while working that assignment and when it ended, I found myself without my next contract. The good news? That had to happen only once for me to learn my lesson. Even now, after being at this for five years, I am always looking for my next customer—even when in my favorite bagel store!
5. Who are your competitors?
When opening your own business, identify your competition, then clearly define how you’re different from and better than them. For example, one of my offerings is training, a very crowded field. I distinguish myself by basing my training on real-world experience at leading and managing employees, not merely on what I’ve read about leadership and management in books and magazines. With 20 years of management experience under my belt, whenever I lead a training session I rarely encounter a question or situation for which I cannot offer guidance. My experience is one of the major differences between my services and those of my competitors who offer the same type of training.
6. Who are your customers?
I initially targeted smaller companies, which I saw as an underserved market that could benefit from outsourcing COO responsibilities to Val Grubb & Associates. In practice, though, I found that smaller companies could not afford my services. Therefore, I established a tiered system of rates and now charge companies according to their size and revenue. I’ve consciously decided to maintain my core interest of helping smaller companies, but I need clients of all sizes in order to meet my budget requirements.
7. Why are your services essential to a company’s success?
Being able to articulate to a potential customer how your services will directly affect the company’s bottom line will ensure continued business, even as the economy ebbs and flows.
8. How are potential customers going to find you?
Once I made up my mind to go out on my own, I spent the next four months generating all my marketing materials (including my website). Creating catchy slogans and ad campaigns is not my strong suit, so once I defined my area of expertise (see #1 above), I hired marketing consultants to make it sound interesting. Letting experts handle those tasks allowed me to focus on my offerings: back-office operations consulting services and high-level leadership and management training.
9. How can you reach your potential customers?
Defining your company’s brand will go a long way toward helping you sell your services. Hone your networking skills so you can identify potential customers and succinctly describe your services to them. Daphne Kwon, the CEO of ExpoTV (and my mentor and good friend), once complimented me by saying I was “great at getting in the traffic”—that is, I’m able to find out where my customers are and then be there to introduce myself and my services to them.
Don’t wait for your customers to find you when opening your own business! Do an activity every day that’s designed to get you in front of potential clients. Keep in mind that customers typically won’t buy from you at your first meeting. In fact, my average time to turn a prospect into a customer is six months. Thus it’s critical that I meet new prospects every week to ensure I’ve got business in the pipeline half a year down the road.
10. Who can offer mentoring advice?
Before you strike out on your own, identify mentors who can answer questions and offer advice if you run into a problem (a likely possibility when setting up a new business!). Your mentors may change as your company grows, but it’s good to have an initial round of people with experience in your field. Think of this as similar to establishing a board of directors (but without going public).
11. Are you self-motivated?
If you’re not a self-starter, setting up and opening your own business will be tough. The only status report you’ll do is for yourself, and it’s quite easy to push deadlines in favor of having fun—especially when those deadlines are for tasks you don’t relish. I once spent a full day cleaning my apartment (a job I hate!) instead of crafting a pitch letter for a cold-calling campaign I had decided to undertake. Realizing how much I dislike doing this (and how likely I am to delay working on it in favor of other non-business tasks), I’ve since limited my cold-calling activities.
If the business you’re starting will be housed in your home (in the beginning, at least), don’t forget to factor in any difficulties you might encounter while working from home with little or no interaction with others. Be honest with yourself here, and give careful thought to how you’ll deal with the motivational and social challenges of this arrangement.
Over the next several weeks, I’ll be sharing plenty of other suggestions on how to become your own boss. So be sure to follow along on the Val Grubb & Associates Facebook page, on my Twitter feed, and on this blog. Send me your comments and questions, and I’ll answer them as we go along!
P.S. On another note, I’m thrilled to be in the running for the position of Chief World Explorer at Jauntaroo, a website that offers travel suggestions and vacation planning. Please watch—and “like”—my video explaining why I’d be great for the position. Thanks!