Before you get that entrepreneurial itch amid the recession, take a step back and focus on your plan.
According to Leah Grant, author of the special report,”15 Absolutely Important Things You Must Do Before Starting Your Business,” people often shy away from the planning phase of launching a company, which on average takes three months to two years.
“A recession is a perfect time for people to start that planning process,” Grant says. “This is not the time to open a business without planning” During an economic downturn, opening a business will be a far cry from solving your woes, as it requires money, time and hard work.
“If you think a business will solve your problems, it won’t,” Grant says. “It only amplifies them.”
Grant offers some wise advice for those serious self-starters willing to put in the hours and effort:
Clean up your personal life
Evaluate stressful events in your life that could be amplified if you started a business in the midst of them. These events can include getting divorced, moving, having a baby, having surgery and more.
“Those aren’t things you want to be doing in the middle of starting a business,” Grant says.
Secure lines of credit
Particularly during this dismal economy, banks are tightening up credit. And in most businesses, you need credit. If you’re still employed and thinking of starting a business, consider staying at the job while you secure lines of credit, as it’s much easier to be approved that way. Grant says she sees many people make the mistake of quitting their jobs beforehand and then being declined.
Grant notes three types of credit: Home equity, credit cards and personal loans from family or friends. Personal loans, she says, are often better than credit cards because you can set a fixed rate.
Write a business plan
People have nine months to prepare for childbirth, so why not prepare for a business in the same manner?
Writing a business plan is No. 15 on her list. And although writing a plan with a three-to-five-year forecast is key, people often want to skip this step.
“Some people have the attitude to skip the planning phase about their business… but a business is actually as demanding as a child,” Grant says, adding, “People don’t like the research component.”
Most new businesses also require more than 40 hours of work per week, so you must plan for how much time you will contribute. And not only do new businesses require your time, but they also require your money. Remember to plan for taxes, health insurance and other self-employed expenses.
Even if you’ve already started your business, Grant says it’s not too late to complete the 15 key tasks, which are available at www.beforestartingyourbusiness.com
“Scrap the mentality of, if I build it, they will come. It’s more like, if I build it wrong, I will fail,” she says.