I frequently encounter soon to be corporate exiles ready to trade in their full-time job for a rewarding entrepreneurial career. Some boast, “I’ve got plenty of funds to throw behind this project.” Or, “Money is not an issue.” Yes, … not an issue (you read correctly). There was, is and still will be money to be made. While the economy undoubtedly experienced corrections and contractions — it was a slowdown, not a melt down.
And if by some chance your grandpa told you money can’t be made in this type of economy — think again. Think FedEx – the company that couldn’t land a single contract and now manages 7.5 million shipments worldwide. Or HP, a company forged out of the Great Depression in a Palo Alto garage. Now is the best time ever to launch a lean and mean startup. But first, chuck traditional thinking out of the window. If you have funds to spend, great – but spend wisely.
Most new entrepreneurs assume that the more funding they can throw at something … the bigger it should get. This is predicated on the idea that they can cash out a 401k, sell a kidney or use their corporate paychecks to slowly bail out of a 9-5. It’s indicative of one thing – the best intentions don’t translate into the soundest business practices.
Your Goal is to Turn a Profit Quickly
By definition a business is started to provide goods and/or services and in turn, earn a profit for its owners and generate wealth. If profit equates to revenues less expenses then common business sense coupled with real-life trial and error experience would suggest that frugality and smart spending is critical. It’s important to learn the principle, “A fool and his money shall soon depart.” If not, life and business will soon teach the lesson.
Why you Should Run Lean and Mean
Another business principle, “Run lean and mean.” Move forward, trim excess business fat and perform. For me, this meant making an active decision to think differently about the way I spent money. It’s not a fad business diet – it’s a fabulous business lifestyle.
My goal was, and still is, to be efficient, effective and profitable. So invariably, that begs the question, “What good is a profitable business that is inefficient? Or an efficient business that can’t turn a profit?
With this in mind, if you are in the process of launching your new venture here are five tips and tools to help you kick-start a lean, mean profit machine.
5 Steps to Launch a Lean and Mean Startup
1. Plan the work and work the plan. It starts with a great idea. Choose your business entity. File a DBA, if it is required in your state and apply for a Federal Tax ID (EIN) – it’s free. Check with your State and apply for your licenses and permits. And don’t forget to start drafting a mini no-frills business plan.
If you want to attract lending institutions, VC’s or angel investors you will need a bullet-proof business plan. Try user-friendly business plan software to guide you through the steps. Lastly, set-up appointments with at least two local bankers and pitch your plan. The initial goal is not to secure funding, it’s to gain invaluable feedback and strengthen your position.
Tip: Consider using business plan software to develop a business plan.
2. Set-up a home office space and buy in bulk. Convert your dining room or carve out a space that you can work free from distractions. Don’t overspend on non-essential items – start with the basics. Every home office will need a desk, computer, internet connection, printer, telephone line and office supplies. If you run a products based company, set-up and organize a storage area for inventory.
3. Develop a digital presence for your business. Every small business should and must have an online presence. It’s a non-negotiable. There are numerous out-of-the-box resources entrepreneurs can utilize to create a professional website including WordPress, Shopify or Magento Go.
Customers will rightly assume that a poor quality digital presence equals a poor quality product and/or service. And remember, @gmail, @yahoo, and [email protected] so and so dot com is really not permissible. Select a web host for less than $5 per month and get your domain email address for free.
Tip: Launch a free WordPress website and sell your stuff via a free e-commerce plug-in.
4. Hire an administrative intern. Utilize an intern and adhere to legal stipulations. Ensure to offer educational and beneficial training, don’t promise employment, supervise and clearly communicate (in writing) if it is a paid or unpaid gig. If unpaid, ensure an intern can receive college credit. Then get started and delegate administrative, operational or marketing tasks so you can focus on revenue goals. A capable intern is invaluable. He or she can assist with research, sourcing or social media management. For customer-facing projects, outsource a virtual assistant for less than $10 per hour.
Tip: Post free internship descriptions with local universities and business schools.
5. Market and Sell. Are you comfortable selling? If the answer is no, you aren’t alone. Overcome your fear of selling and just do it – and do it often. Understand that often times, “No” means “Not right now.” Most importantly, don’t try to squeeze square pegs into round holes. If they aren’t your target market, don’t try to convince them otherwise.
Your goal is to identify prospects (marketing), qualify potential leads (sales) and convert to paying customers. Many entrepreneurs start selling without identifying who is actually a viable customer. This is why marketing is important. On the flip side, don’t market and forget to sell. There is a difference. In the end, there are numerous routes that lead to sales. Your goal is to identify the most effective ones with the strongest ROI.
Tip: Test Google AdWords as a cost-effective marketing tactic to increase website traffic and potential sales.
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