methods to start a new business

7/30/2019 Methods to Start a New Business

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Methods to start a new business:

]Do what you love to do

Businesses don't just happen. They are made. Whether you plan to profit by twisting balloons

into smile-generating shapes or orchestrating the growth of multimillion dollar, multinationalcompanies, your success relies on what you bring to the business. If you love what you do, your

passion for the business will drive you to be knowledgeable, creative and persistent. On the other

hand, if your feeling for what you do is lukewarm, your success will be, too.

Turn old standbys into new products

Truly new concepts are few and far between. Most new products or new business ideas are

simply spin-offs of old ones. Inline skates is one good example. Essentially, they are ice skates

on wheels. Or, depending on your point of view, streamlined roller-skates. Other business ideas

are nothing more than new ways of marketing mundane products. Florists were around as

relatively small, local stores for years --but then Jim McCann, who started with a single retail

shop in 1976, acquired the phone number 1-800-Flowers and developed a network of

florists. The company saw an opportunity to grow online, and started selling through the early

commercial online services, and then the Internet.

You may not have the money, management ability, contacts or desire to launch a major new

product like inline skates or the energy or desire to turn your single store location into a

multimillion-dollar sales organization. But you don't have to launch anything that large to start a

business or introduce a new product. You need to think about what people want to buy and how

they would like to buy it.

Look for mundane money-makers

You don't need to create exciting new products or services to go into business, either. Millions of

business owners profit by selling routine and sometimes unglamorous services such as window

washing, car repair, sandwich making, building maintenance, house cleaning and plumbing. The

key to making money with the mundane is to sell something your customers can't do, don't want

to do, don't have the time to do, or can't get done well elsewhere.

Tip: one way to making really big money with mundane services is to develop a unique and

reproducible method for marketing and delivering the service and then open up multiple offices,

or franchise the concept. If you plan to franchise your idea or sell it as a business opportunity,

retain an attorney early on who is familiar with franchise law and can help you steer clear of the

pitfalls.


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Turn that hobby into cash

Do people ooh and ah at your handiwork? Whether you are a whiz at creating floral

arrangements or at writing software, look for ways to turn your hobby into a business. You might

want to manufacture your items in quantity, license them to other manufacturers, sell them by

mail order, at flea markets or on consignment, or open your own retail outlet selling supplies toothers with similar interests.

Ask the reference librarian at your public library to help you find trade magazines pertaining to

your hobby, and read those to generate new business ideas.

Reach out and teach someone

Do you have a skill others want to acquire? Do you have a knack for explaining things so others

can understand them? If so, don't give your expertise away. Start charging for it!

For instance, if you are a karate expert, you might teach at a karate school or open your ownkarate school. If you're a talented artist, you could teach art at home or in a school.

Tip:: Make extra money selling books, supplies, or other items your students will need to buy to

complete the course.

Sell training seminars to corporate America

Don't limit yourself to training individuals or private groups of people. Look for ways to polish

up your act and cash in on the $50 billion corporate training market.

What kind of training do corporations buy? Everything from sales, management and computertraining courses to self-defense courses.

To locate training opportunities, contact the human resources department and ask to speak to the

person in charge of training programs. Introduce yourself to that person and make an

appointment to discuss the company's needs and your ability to fill them. If you get the

assignment, be sure to have handouts for the class so they know how to reach you for more

intensive training on their own.

Mass produce your advice

Selling your product or service one-on-one limits the amount of money you can earn to thenumber of people you can personally see. To increase your profits without significantly

increasing your work, consider turning your expertise into booklets, books, computer

programs, MP3s and DVDs that you can market in quantity.


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You can use your computer to produce the printed matter and CDs, DVDs, and MP3s. You can

outsource editing and production to professionals if you don't have those skills yourself. When

sales volume grows, you may also want to outsource production and fulfillment.

Be an industry consultant

This is another great way to increase your bank account. If you can solve business problems

(such as how to bring waste water into compliance with EPA regulations) or answer important

business questions (what steps should be taken to increase market share in a target market or how

to manage inventory more efficiently) you can earn substantial hourly fees selling your advice to

corporations. Downsized corporations can be a good source of consulting business since they

may no longer have experts they need on staff.

Turn a former employer into a valuable source of new business

Just because you leave a company doesn't mean it doesn't need your services. Companies often

retain the services of former workers on a freelance or consulting basis. That way they get the

benefit of trained personnel without having to pay payroll taxes and benefits. If you leave a

company on good terms, ask about contract or freelance opportunities. Don't stop with contacts

who work with the former employer, either. Call your former employer's suppliers and customers

and tell them about your capabilities. Call their competitors, too. Stress your industry knowledge,

contacts and skills. You may soon find that the income you earn exceeds what you made as an

employee.

Modify one of your existing products

Sometimes all it takes to create a "new" product is a slight change in an existing product.Harrison-Hoge Industries is a mail order company in Port Jefferson, NY, that sells fishing lures,

inflatable boats and other outdoor gear. To expand their line, the company added a wide-

brimmed, canvas hat called the Campesino to its catalog. The hat was a big success, but the

owners of the company thought there might be more they could do with it. And there was.

They discovered they could adapt the hat to sell in specialized markets just by changing the hat

band. As a result, they began to supply the Museum of Natural History and the Guggenheim

Museum (both in New York City) with hats. Each museum's hat has its own distinctive hat band.

Skip the start-up headaches: purchase an existing business

When you start a business from scratch you have to jump through hoops to find and train

employees, build up a customer base and find suppliers. But when you buy an existing business

much of this infrastructure will already be in place.

Don Pelham bough of MasterCare Cleaning Services, in Seattle, WA, from another businessman.

He explains the advantage of purchasing a business this way: "In a start-up you have to pound


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the pavement while you wait for your ads to appear in the phone books and your website to show

up in Google. But when you purchase a business, the phone rings from day one. Ads are in place

and working. Schedules are already made. When I took over the cleaning service, there were

about 12 jobs already scheduled, 3 or 4 a week, and the phone was ringing a new job every 2 or 3

days. ".

Buy a franchise

If you want to start a business but don't want to develop your own products, or methods of doing

business, franchising could be your ticket to business ownership. That's because when you buy a

franchise, what you get is essentially a build-your-own-business kit.

Depending on the amount of money you invest and the franchise opportunity you choose, you

get rights to use the franchise name, distribute a branded product or service, and perhaps use the

franchise's methods of operations. Customer leads, help locating your business and other services

may be part of your package, too. The benefit of this approach is that it simplifies start-up andmay also help reduce the chance of failure.

Buying a franchise won't actually put you in business. You have to do that yourself. But if you

choose your franchise carefully, the franchise's products and methods can give you the leg up

you need to succeed.

Life Cycle Models

Entrepreneurial ventures evolve over time through various stages from start-up, development and

growth through to decline and closure. The enterprise changes its characteristics in each of these

stages in a way that often requires different skills, structures and resources to manage them. Anumber of modelsor ways of categorising and predicting these characteristics have been put

forward in order to conceptualise the life cycle of an enterprise from start to finish. Greiner

(1972) developed an early model of evolution and revolution in the growth of an organization

(see Figure 6-1). Greiner proposed that an organisation evolved through various stages but that

movement from one stage to another was precipitated by a crisis that led to more revolutionary

change. If the firm managed its way through this period it progressed to the next stage. For

example, the first stage ofgrowth through creativity leads to a crisis of leadership; once this

is resolved the next stage of growth through direction begins. By the fifth stage, a more

collaborative management approach emphasises teamwork and matrix style organisational

structures, but Greiner was unable to predict what crisis might precipitate the move into yet

another phase. Other models follow Greiners five-stage approach but with different descriptors

for each of the stages. Churchill and Lewis (1983) identified the stages of: existence; survival,

success, take-off and maturity. Scott and Bruce (1987) described the five stages as: inception,

survival, growth, expansion andmaturity. In each of these stages, they suggest that the role of the

topmanager, the style ofmanagement and the organizational structure will change accordingly.

Thus the management role moves from direct supervision in stage 1 to decentralisation by


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stage 5. The organisational structure evolves from unstructured in stage 1 todecentralised by

stage 5. In the first stage of inception the management style is assumed to be entrepreneurial,

individualistic. By the fourth stage of expansion this has changed to professional,

administrative and by the final fifth stage of maturity the style has become that of watchdog.

A common feature of these models is that they describe the management style of the

entrepreneur and the key functional activities in each phase of development. A composite model

by Stokes and Wilson (2006) described the five stages, shown in Figure 6-2, as follows:

Stage 1: Concept/test

Before a business is launched, it undergoes some form of conception and planning. This may

involve a market test or running the business as a part-time operation, before the owner places

complete dependence on it. Creative thinking, information gathering and networking are key

activities in this stage.

Stage 2: Development/abort stage

The business is launched and either develops to a viable size, or it is aborted at an early stage.

This will depend critically on whether sufficient customers in the marketplace adopt the product

or service on offer, hence marketing linked to cash flow management are often the key functional

activities. Typically an individual entrepreneur manages the enterprise in this stage largely

through their own efforts. This is a particularly vulnerable stage for a business as statistics

indicate that it is the smallest and youngest firms that have the highest rates of closure (more on

this below in section 6.3).

Stage 3: Growth/decline stage

Some enterprises that have developed into a viable entity in the marketplace continue their

growth quickly or, in some cases, more steadily. Such growth may place strains on the internal

structure of the enterprise. The management of internal processes and people are often the

critical functions. The one-person entrepreneurial management style may prove inadequate to

fully sustain growth. A division of managerial tasks, the recruitment of non-owner-managers and

the development of a functionally organised team are often prerequisites to take a business

through this phase, without which it may struggle and close

Stage 4: Maturity

Most surviving business go through a period of stability, when growth flattens and the enterprise

matures. It may at this stage lose its simple structure of centralised decision-making, use more

sophisticated business processes and become more bureaucratic in its procedures. In other words,

it takes on some of the characteristics of a larger organisation.


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Stage 5: Re-growth/decline

Once an enterprise has established itself in the marketplace with a competitive advantage over its

rivals, profits or external investment may be available to exploit further the successful business

model. The so-called s-curve hypothesis suggests that such investment may trigger a second

period of growth. Without this further period of growth, the maturity stage can turn intostagnation and decline, as competition intensifies from existing rivals or new entrants into the

market.

methods to start a new business

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