Starting your own business

Ebony, Oct, 1998

DO you constantly daydream at work about the changes you'd make if you were the boss? Was your last promotion during the Carter Administration? Is your creativity left outside the office door? Are you ready to take control of your destiny?

If you answered a resounding yes, you're probably ready to take the leap and start your own business. And you'll have plenty of company. According to John F. Robinson, president and CEO of the National Minority Business Council Inc., nearly 425,000 of the nation's 1.2 million minority-owned businesses are owned by Blacks. "But before you take that plunge and quit your job," he cautions, "be well prepared."

Do a little soul-searching. Ask yourself if you honestly have what it takes to be a shot-caller. Welcome critiques from others. Write down your talents, hobbies, skills and goals, and try to find a business that combines your interests. Most importantly, "make sure [the business] is something you enjoy doing or making," says Cheryl D. Broussard, author of Sister CEO: The Black Woman's Guide to Starting Your Own Business. "If you don't have that passion, it's difficult to be successful."

Once you decide on the right business, write out a mission statement--a few lines that tell what you hope to achieve with your product or service--to give you focus and guide you in writing a business plan. Next, do your homework to find out all you can about the business. Visit the library, the bookstore, your local college's business development center. Surf the Web. Contact the Small Business Administration. Get advice from others with similar businesses. Identify your competitors. Observe what they do and improve on that formula. The more you know, the greater your chance of success.

After you do your research, come up with a business plan. Experts say that your plan should cover at least your first three years of operation and include specific goals you want to attain in that time. However, Broussard assures that you don't have to write a "30-page effort--just something to give you an idea of what you need to do to start and how you plan to sell your product or service."

A fundamental part of your plan is creating an effective marketing strategy. Having a good product or service means nothing if no one knows you exist. Determine the best way to reach the public, through classified ads or flyers posted in your neighborhood. Initially, focus on people most likely to purchase from you so that you can get your money's worth. Also, if you're selling a product, choose the most cost-effective way to get your goods to the public, perhaps by mail order, a booth at a local bazaar, or even door-to-door.

Your business plan also should include a statement of purpose that gives your reason for going into business and also tells why your product or service is needed by the public. If you're selling goods, you also need to include manufacturing information such as the cost of raw materials, where you will purchase them, and who will make the product (you alone, you and relatives, or a separate manufacturer). And don't forget to set a price that allows you to make a reasonable profit.

Remember, it's essential to have a good plan, so don't overlook this crucial step. "Without a plan," Robinson says, "you're planning to fail." No matter how good your plan is, though, your business can't run on air. Office supplies, advertising, licenses, and, of course, inventory, all cost money. Be prepared to raise the initial capital by yourself, experts say, since financial institutions rarely lend money to new entrepreneurs. Broussard planned and saved for five years before starting her California-based money management firm, putting any extra money, such as income tax refunds, into a special account. The Sister CEO says that if you squirrel away $1,000 or $2,000, you can start a part-time business. But please don't quit your day job, at least not yet. You need your primary income to survive and to support your fledgling company. "And remember, that [savings] is just for your business," Broussard says, "so don't dip into it to pay the rent or your child's tuition."

To keep your costs down, experts say you should work out of your home until your business grows. "Don't go out and rent expensive office space," Robinson says. "You're better off cleaning out the basement or taking a guest room and converting it into an office." If you have a business that requires you to meet with clients, consider renting space in a shared office suite, which costs less since you take turns using it with other people. Also, think about teaming up with a partner to help offset costs. Just make sure you pair with someone trustworthy, reliable, responsible, and one who shares your goals.

And when storms come your way (and they will), have the patience to weather them. "Most people who are successful in business did not become successful overnight," Broussard says. "The rule of thumb is five years. Once you get over that five-year threshold, then you know you're really in business."