Starting Small Business: I want to Start a Business but I have Fear of unknown!

We all have it, fear of unknown, most of us have great business ideas but what stops us from working on those ideas is fear of unknown, like I used to think "I am new, this is something I haven't done..." "I don't know what to consider while starting a business?" "That guy doing business is so successful because he is so smart! and I think I am not!" "What if I lose all of my money, what if it doesn't pay off" "But I think I don't have the resources or I may not be able to find the right resources to run my business successfully" "I don't know how to manage or plan it, that business plan thing?! "I am afraid I won't be able to hire the right guys.." blah blah.

So today I am going to give you guys some really easy tips and I "Guarantee" you if you work on these tips, the way I am going to explain it, you will never fail, Yes! you can sue me for this one if you fail!!! (winks) because I went through the same things and I learned how to do it effectively, how to run your business efficiently and effectively!.



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So lets get over with the fear of unknown and let's start a business now (right after you read this article)!

Fact: According to a research, around 75% of small business owners in USA are millionaires (1)

Starting a Small Business & Getting Over with Fear of unknown

To be honest, you don't have to fear it, I am going to point out few things which can eliminate all kinds of fears so bear with me .. (winks!)

Basically there are three kinds of fears that one have when one thinks about starting a business

1. Accounts Management Side of Business & Your Fears
2. HR Management side of Business & Your Fears
3. Marketing, Sales Side of Business & Your Fears

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Accounts Management side of business & Your Fears

We all have fear, that we might not be able to have a full grip on accounting side of our business thus fear to lose all of our money, financial resources one way or another...

And for this very reason, first and foremost important thing I consider in any business is having a strong effective accounts management system in place, so that you know where your money is, to whom you owe money and where your business is standing financially.

Accounts management is the backbone of any business, if you don't have grip on that then you won't be able to run your business successfully, yes, that is 100% true.

Fact: It takes just six days to launch a small business in U.S ⁽²⁾

And yeah don't worry, I am not talking about that complex accounting thing that you have pictured in your mind, rather very elementary basic accounting!

Those elementary things are

1. Cash Book
2. Daily Sales Report
3. Daily Stock Report
4. Sales Voucher & Invoice
5. Journal
6. Ledger
7. Profit & Loss

If you don't know about these things then forget about starting a small business for yourself because anyone can steal your money and you won't know it! (a fear coming true).

So first you need to have a good understanding of these things and if you are serious about it, you can learn about these things in maximum two months and minimum in fifteen days!

And in next article I am going to discuss these things with brief examples in business order (how you should use these things when running your business) to give you an idea how things should be done!

Fact: Small business and big guns (Large organizations) spends around $245bn on advertising annually (3).

Once you have grip on these things then I guarantee that, fears from financial side will be absolutely eliminated.

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HR Management side of Business & Your Fears

We as new business owners usually have fears related to the following things when it comes to HR Management side of the business.

1. Hiring & Firing
2. Compensations/Rewards & Punishment (Includes Firing)

Yes you fear how to fire or hire guys for your business, you fear them of stealing your money or wasting your resources by not working in effective manner, you don't know how to make them never even think of stealing your money or any other resources you may have.. okay lets touch all these fears one by one, let's start with hiring and firing.

Hiring & Firing

Well its easy, nothing to fear, all you have to do is the following things to secure your business from the guys you hire.

1. Effective Interview
2. Demanding security if He/She want to do the job
3. Signature on terms & condition  of the job
4. Daily Performance Analysis

Effective Interview

First you need to hire a right guy for the right job, that means conducting an effective interview, I know being a new guy in the business you won't have that much of idea about hiring the right person for the right job.

Fact: Usually it takes from 100 to 200 hours to develop a comprehensive business plan (4)

So in that case you need to take help of another trusted experienced entrepreneur, so that he/she helps you in conducting the interview consequently having a right person for the right job.

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Now you might be thinking how am I supposed to know who to hire ?! Exactly well in any new small business one must hire the following guys!

1. Salesperson (3-6 individuals)
2. Accountant (1 individual)
3. CSR's (1 individual), CSR: Customer Service Representative
4. Sales & Distribution Officer (1 individual)
5. Office boy (1 individual)

These are the minimum guys you need to hire, now the numbers of these guys I decided on your daily expected sales in the beginning (after 2 to 4 months) $2500-$3000/day (from my personal experience).

Yes, for the first 2 to 4 months you won't be able to achieve the above mentioned daily sales but still you would need these guys to develop market for your business, to make relationships, to get the word out and therefore you need to have enough financial resources to cover yourself in first few months.

Fact: 96% of unhappy customers don’t make their complaints known to the business (5).

Coming back to interview part, you need to hire the right guys, once you select an individual next step is to ask him/her about the job.

Demanding Security if He/She want to do the job

Off-course you don't want your employee to steal or run away with your money or any other resources (bunch of few fears you have) therefore you need to ask for certain securities from him/her in return for the job.

The Securities you can demand are

1. Open check, blank check from his/her bank account
2. Educational documents like masters degree, certificates
3. Guarantor
4. Affidavit or Stamped Paper

I would say collect all of these things so that you are fully secure from your employee side, this will surely eliminate all the fears from employee side.

REMEMBER: Verify each and every security (document/open check,blank check etc) with respective institutions (banks, University etc).

Signature on terms & conditions of the job

Well now you might have fear of him/her not performing the right way, not delivering upon the demands of your business, thus slowly but steadily leading your business to a complete failure!

Fact: According to research, 82% customers globally indicated that they are more likely to buy from businesses who offer a loyalty program (6).

To avoid all that you have to clearly point out the terms and conditions, job description, duties & rights to your would be employee, so that he/she knows what is required of him/her, what will make his/her job less secure or more secure, what would he/she needs to clear before quitting the job etc etc.

Putting all these terms and conditions, job description on paper and then having a signature (on your business letterhead) will give you a legal moral position to fire anyone in a right manner when you don't find them effective for your business, for the job. Though remember it's not always easy to fire someone, there are hurdles, I will discuss that in next post.

Having done that will make you secure from the fear of employees poor performance, poor attitude/behavior.

Daily Performance Analysis

Well you need to carry out daily analysis of the each individual by asking from Sales and Distribution officer and looking into things yourself, you can do that by constantly keeping check on them via telephone/cellphone if they are in market. This helps you in responding to performance issues in timely manner thus eliminating employee performance related fears!

Fact: Each year over one million business starts in the United States that exclude online/internet businesses and partial startups ^{(7) (8)}

Now before keeping daily check you need to set daily and monthly sales targets and assigning each sales person a target that is reasonable for him/her and healthy for your business.

And to do that, since you are a new guy in this whole business thing, you need to either have an experienced entrepreneur on your side all the time (for first 3 to 6 months) or you need to spend at least 3 to 6 months with an entrepreneur to learn these things.

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Without having the help of an experienced entrepreneur on your side or not having learned these things, it will be difficult if not really difficult for you to effectively manage your business on daily basis! And that could make your fears a reality!

Compensation/Rewards & Punishment (Including Firing)

Now after daily analysis you will need to compensate (as per terms & conditions) reward or punish your employees at the same time, when it comes to rewards, you can wait for that till end of the month but when it comes to punishment like fines for breach of various SOP's (mentioned in terms & conditions, job description) you need to do it right away in-case of serious breach and can wait till end of the month if it is one of those minor breaches!

Fact: A recent study shows that just the word “Sale” can drive up demand by 50% without any actual price change (9).

Though it is not necessary that you should fine for minor offenses straight away rather it would be good if you start with warning!

So having full understanding, grip on these things will eliminate the HR Management related fears!

I will be discussing this part in upcoming posts in more detail with examples from my own experience to guide you guys on how to do this part effectively!
  

Marketing, Sales Side of Business & Your Fears

Here you would need to focus on the following things to eliminate all marketing and sales fears

1. Sales Targets & Fears
2. Marketing Targets (Products/Services) & Fears

Sales Targets & Fears

You might have fears like I don't know nothing about sales, how am I supposed to set sales targets, what would be an optimum sales target ?!!, what to look for when setting a sales target ?!, how to achieve the sales target, whom to push , when and how to achieve sales targets... what other targets beside sales targets I need to work on.. etc.

Well once you hire salespersons/CSR and Sales & Distribution Officer (S&DO) you need to set sales targets for each of these guys that they need to achieve each day till the end of every month.

It is simple, set a feasible sales target that is healthy for your business, feasible in a sense that your sales team/CSR/S&DO can cover them effectively and healthy in a sense that it can cover all of your business expenses from fixed costs to variable costs along with that earning good amount of profit or ROI on the investment you make.

Now in first few months you won't be able to do that, earning profit, it is normal for any new business to go through loss in first few months so that shouldn't make you nervous but you have to minimize those losses each month consequently turning it into healthy profits.

Fact: There are 28 million small businesses in the U.S. -- which outnumber corporations 1162 to 1 (10)

You should also set new sales outlets (retailers/wholesalers) targets for each of your salesperson and S&DO that they must achieve each month or in like every 10 days, like putting your product/service at 10 new retails, wholesale stores each month, doing that will help your products/services reaching new retailers/wholesalers developing your market further consequently minimizing losses and increasing profits.

S&DO must have relationship targets too, where he/she focuses on starting and maintaining relationships with key influence-rs, suppliers, distributors and lastly you have to held him/her responsible for the performance of your Sales team/CSR.

The CSR along with handling customer complaints should also have sales targets and relationship targets that focuses on attaining a beneficial long lasting relationship with key influence-rs in the market.

Achieving that will ensure positive word of mouth about your brand and having your brand being positively influenced by key influence-rs thus resulting in more word of mouth, more brand exposure so on and so forth.

The Accountant should provide you daily info on market float, money (product/service $ worth) your sales team have put in market, how much they have collected, how much is pending and why, how much stock, inventory do you have, what is over all financial picture till this day. Having such info would help you in understanding if things are going as per SOP's.

And doing things in this manner will eliminate all fears related to sales!

Marketing Targets (Products/Services) & Fears

You might have fears like how am I supposed to market things, what mediums should I use, what if those mediums doesn't pay off, what if I fail in marketing, what is the right approach to marketing ? I am nervous about the whole marketing thing, I don't know anything about marketing...how to set marketing goals, targets ??? etc etc

Coming to marketing Targets, you will need to set a reasonable budget for your marketing related tasks, I would say don't think about like marketing on TV ads, Radio, internet in the beginning but rather focus on simple things like brochures, pamphlets, booklets, eBooks, putting up a website and then blogging about things that resonates with your target market.

Fact: According to SBA, 70% of small businesses in USA are owned and operated by a single person (10)

You can distribute your brochures/pamphlets/booklets etc via your Sales team/S&DO/CSR and on your own, while for blogging (SEO based) you either need to hire a guy or you need to learn it in your spare time that could well take at least 5 to 10 months!

Again, if you need to effectively manage all of this, you need to have an experienced entrepreneur on your side for at least first 3 to 6 months or you need to be with an experienced entrepreneur for at least that amount of time!

In a nutshell, you need to focus on all three angles of your business (Accounting, Management, Marketing), learning about them, implementing the way I pointed out to eliminate all of your fears related to starting a new business plus taking help from an experienced entrepreneur for at least three to six months.

Lastly I will be discussing this part in detail too in upcoming days so subscribe! (Winks!)

Over to you guys! Share your business fears and lets eliminate them together!

Don't forget to subscribe to this awesome website of mine!

References:

1. Thomas J. Stanley, The Millionaire Mind (Kansas City, MO: Andrews McNeel, 2001). Thomas J. Stanely and William D. Danko, The Millionaire Next Door (New York: Pocket Books, 1996).

2.  www.getbusymedia.com/small-business-stats/

3.  “Part One: Advertising Perspectives” Page 6. Contemporary Advertising 10^th edition by William A Frens.

4.  David Gumpert in Burn Your Business Plan Needham, M A: Lauson publishing, 2002.

5.  www.1stfinancialtraining.com/Newsletters/trainerstoolkit1Q2009.pdf

6.  www.nielsen.com/us/en/newswire/2013/free-and-easy-loyalty-program-benefits-that-matter-most-globally.html

7. Heidi M. Neck, Andrew L. Zacharakis, William D. Bygrave, and Paul D. Reynolds, Global Entreprenurship Monitor: National Entrepreneurship Assessment-United States of America, 2002 Executive Report.

8. Small Business by the Numbers (Washington DC: Small Business Administration, 2004)

9. OP. cit., Kiviat.
 

10. www.archive.sba.gov/advo/research/