Break the Gravitational Pull of a Traditional Job and Blast Off into the Amazing World of Running Your Own Business
Have you ever researched how stars form? I don’t mean movie stars, but actual, bright light in a dark sky stars. You might think there has to be some sort of explosion, but actually it is, in the absolute simplest form of the explanation, extreme pressure that kicks the process off. That’s right. It is a super complicated drawn out process, but it all starts with extreme pressure. This is how many businesses are born as well. An idea forms out of the pressure of needing more time, more flexibility, more money, more creativity, or any number of desires. The pressure builds to the point that an amazing business idea explodes forth, and nothing can reign it in. You cannot do anything but start a hot shot business all your own.
It starts with an idea, but bringing that idea to life can be a daunting task if you are not sure where to start. Once you have the idea in place, the hard work of breaking the gravitational pull of all the things that threaten to hold you back and blasting off into business success begins.
We countdown our top, lesser known business tips to help you do just that.
10: Educate Yourself about Your Target Market
Before an astronaut can board a rocket and prepare for blast off, they have to do a million things. The first of these things begins potentially before they even consider going into space. To gain acceptance into the space program, they have to have education in at least one of a handful of specific subjects.
Grades need to be impeccable, even in undergrad. There can be no questionable marks on their record. They have to have their eyes on the goal and research requirements starting years before to know what they need to do to prepare for their application. One cannot simply wake up one day after college and a career and decide to go to space.
You can just wake up, at any time, and decide to start a hot shot business. Anyone can do it. You can’t just jump in though. Similar to the space program, you will still need to do market research about your idea before you really get started.
What is Market Research?
There is a ton of information out there on how to start a hot shot business. Everything you read will tell you that, after your initial business idea, you need to do market research. For the average person wanting to start a hot shot business however, this can sound like a foreign language. What exactly is market research and how do you do it? Do you need to hire someone or can you do it yourself?
The truth is, market research can be as simple or complicated as you want to make it. It does need to be thorough, however. What it boils down to is you need the answers to the following questions:
- · Is there a need for my business?
- · Who needs it?
- · How much can they pay for what I am selling?
- · Are they willing to pay for it? If so, how much?
- · How much will it cost me to fill the need?
- · Are there enough people that need it to make a profit?
Of course, you could ask a million more questions and each answer would help you. These are a great start to help you get a feel for what type of market exists for your business though. You need to know if anyone is looking for the product or service you are selling.
Finding Your Target Market When You Start a Hot Shot Business
If they are, those people are your target market. Who are they? Are they middle class adults? Is it primarily teenagers? Do retirees seem the most interested? Is it a larger age range? Do you cater more toward men, women, kids, families, or singles?
Once you know if there is a need and who it is that has that need, you can look into viability. If you want to open a gourmet specialty bakery, you may find a huge number of people that say they love baked goods and would enjoy the bakery.
Upon closer examination however, it may seem that the disposable income in the area is quite low, and your goods are going to cost more to make than the majority of your market has to spend on those types of products.
You may also find the opposite. Maybe your target market is in an area where there are plenty of people that can afford and are willing to buy gourmet baked goods. There may or may not be enough target market population to support the business. That is what your market research will help you find out.
Whatever the answers may be, you need to know on the front end before you open your business. If the market cannot support your business idea, you need to go back to the drawing board.
How Do You Do Market Research?
You can hire someone to do it. If you can afford it, that is a great idea. It may even be the best option. A professional will know how to gather and analyze the raw data into something useable quickly and efficiently.
If this is not an option however, you can check with your local small business development center or area colleges and universities. They offer resources that can help you throughout the process.
9: Write a Business Plan
One of the first things an applicant to the astronaut program has to go through is a health evaluation. Being in space is hard on both the body and mind, and if they are not in excellent shape on both fronts, they may not be able to handle it. This physical and mental examination is all part of the plan to ensure an astronaut is physically and mentally able and ready for the harsh realities of space.
When you start a business, you have to plan as well. There is a very creative name for it even. It is a “business plan.” Original, right? You will hear a lot about this when you first start trying to figure out how to start a hot shot business. It is more than just “having a plan” however.
The business plan is an actual document that you will need to refer back to often. You will need it when you obtain funding for your business as well as when setting up and actually running your business day to day.
How to Write a Business Plan to Start a Hot Shot Business
This is another area where you may do well to hire a professional if you can. A professional business plan writer can work with you to gather all the necessary information and compile it into the traditional, acceptable format.
If you cannot hire a business plan writer however, there are a number of resources that can help you. The Small Business Administration offers a template, and your local small business development center can help as well.
As a general rule a business plan contains the following information:
The Introductory Opening
- · An Executive Summary– This is a complete summary of the business idea.
- · Description– The description goes into further detail than the summary, describing the business. What type of business is it? What product or service will it offer? This is where you work to get others excited about your business.
- · Strategies-Layout your plan for getting started. Do you have a marketing plan, area in mind for location, or idea of how many employees you will start with? What is your ramp up plan?
· Market Analysis– This actually includes two parts. All that market research you did goes here:
o Analysis of audience: What need will your business fill, and for who? Are you a child care facility filling a need for affordable child care for working moms? Are you an eatery filling a need for a lunch spot for those working downtown? How will your business fill the need? All of that information goes in this section.
o Competitive Analysis: Is there already a business working to fill this need? Is there room for more? How do you plan to compete with them?
The Flight Plan
- · Plan for Design and Development: How is all of this going to play out, from start to finish. What steps are you going to take? This is more detailed than your strategies section.
- · Plan for Operation and Management– Who will own the business and who will run it from day to day. This could be as simple as stating that you are going to be the sole owner and operator, or as complicated as laying out a complete partnership plan or board or directors’ format. It just depends on how your business will work. Will you be the owner but hire a manger? This is where that information goes.
The Money Honey: Fuel for Blast Off
You can’t blast off without fuel. When you start a hot shot business, that fuel is money.
· Financial Information– This is where a lot of new business owners get lost. How do you have financials if there is not a business yet? Here is where you lay out your funding plan. What money do you have? How much do you need? How will you use the funds? This section also has a complete set of financial projections, typically going out for at least 5 years. It is best, if possible, to have an accountant put together your projections.
8: Choose a Strong Location
You have to be strong to survive in space. The physical training that an astronaut goes through in preparation for this is extremely rigorous. You need to be just as diligent about choosing a strong location for your business.
There are a few options here. Of course, if you are going to have a traditional brick and mortar location you need to consider several things. The most important is accessibility to your target market.
You could also choose to run online only. If that is the case, then you need to focus on a business web address. This is important whether your sell online or not. If your sales are going to be through the internet however, your web address plays an even more important role. If people cannot find you, they cannot make purchases.
7: Choose Your Business Structure
You could operate as a sole proprietorship with a DBA (Doing Business As) name. This is the business structure option many new business owners choose because it is the least expensive and easiest. It isn’t the best option however.
It is actually better to incorporate in some way. Whether you choose to form as a corporation, s-corp, or LLC, your will have more personal protection from business liabilities. In addition, incorporation separates your business as its own entity apart from you. This helps you build business credit and prevents your personal and business credit from affecting each other.
If your business transactions are on your personal credit, it can cause a few different issues. First, if you have poor personal credit, it can prevent you from finding the business funding you need. Alternatively, if your max out your personal credit with business transactions, it can negatively affect your personal credit score even if you are making your payments on-time.
It is really best to incorporate in some way. The option you choose will depend on which one works best for your situation. Forming a corporation is the most time consuming and expensive, but it offers the most protection. A corporation is also taxed at both the business level and the personal level however, so one of the other possibilities may work best for you.
Special Kinds of Corporations
An S-Corp eliminates the double taxation, is less time consuming and less expensive, but has several restrictions imposed by the IRS.
An LLP is the least expensive to form, has fewer restrictions than a S-corp, but also offers less protection. It does offer some protection however, and it serves the purpose of separating your business from your personal credit. If you need the most cost-effective option possible while still having some protection, this is the option for you.
6: Choose a Name and Establish Your Business
This is the fun part for many. You need to choose a name and establish your business as its own entity. It needs an address and toll-free phone number all its own. Once you have that, get it listed in the directories with this contact information. Do not use your own address and phone number. That is important when you are ready to start building business credit.
Also, when you start a hot shot business, you are going to need to set up a professional looking website. Even if you do not plan to operate your business online, and online presence is essential in this day and age. Customers and creditors head straight to the internet when they want to know more about a business.
You need a dedicated business email address as well. It should be directly related to your business and not a free email address through yahoo, Gmail, or some other free email exchange.
5: Get an EIN
The EIN is the business equivalent of a social security number. You use it for credit applications, tax returns, and other business documents. This keeps your business away from your personal SSN, which helps to separate it from your personal credit.
Obtain an EIN for free from the IRS website.
4: Licenses and Permits
Be sure you have all the licenses and permits you need at the federal, state, and local level to operate legally. It sounds simple, and usually it is. If you skip this step, however, life will be anything but simple.
3: Open a Business Bank Account
It’s another quick and easy step that sounds simple but can cause a ton of problems if skipped. This is essential to separating your business and your business finances from you and your finances. It helps keep business expenses and income separate from your own. Pay yourself and all business expenses out of this account.
There are even free business checking accounts. Find out more about these here.
Virtually any search on how to start a hot shot business will tell you to find funding for your business. You will find information on business loans and lines of credit, working capital loans, equipment loans and more.
These are all great and they are a first stop for most when looking to fund a business. However, if you do not have a great personal credit score, you’ll run into trouble. You may need to, in the early stages of your business, work toward building business credit to be able to fund your business properly.
I know. You’re wondering how you can build business credit without having to use your personal credit to get started. We actually know a little secret to that.
Shhh… Don’t’ Tell: The Secret to Building Business Credit without Great Personal Credit
It really is possible. You may have to start your business on a smaller scale at first, unless you can find investors or a grant. However, after you have your business established as a separate entity by following the steps laid out above, you can totally rock this.
The secret, in a nutshell, is the vendor credit tier. These are starter vendors that, after a few initial purchases, will extend net 30 terms. That means they give you 30 days to pay the invoice, and then they will report your on-time payments to the business credit agencies.
Once that happens, your business credit profile will start to grow. You will need a D-U-N-S number before the payments they report to Dun & Bradstreet to matter, but it is free to get one on the D&B website. Be sure to do that, because they are the oldest and most widely used of the 3 business credit reporting agencies. The others are Experian and Equifax.
Dun & Bradstreet will try to sell you other stuff while you are on their site, but just ignore it. You don’t need anything else, and the number is free.
As more and more starter vendors report, your score will grow and you can apply for credit from the retail credit tier, fleet credit tier, and the cash credit tier. Eventually you will have a strong business credit score and will be able to access all the funding you would ever need to continue growing your business.
1: Work on Branding for that Final Blast Off to Start a Hot Shot Business!
There are a lot of things you think about in the beginning when you start a hot shot business. Logo and branding usually do not make the list on the front end. That tends to come much later. If you start working on it from the beginning however, it will be easier to attach the branding to your business. It definitely worth at least some consideration at the start. You will be thankful in the long run, and it may just give your business that extra boost to make it out of this world.
You Can Start a Hot Shot Business
With all the information out there on how to start a hot shot business, plus our additional tips, you have all the information you need to get your engine running and blast your business into something huge. Do you research, write your plan, get your EIN and licenses, and establish your business as an entity separate from yourself. Once you do these things, you will be in the perfect position to board the ship, get funding, and blast off into the world of business success.