Too often, many would-be entrepreneurs spend all of their time planning their corporate structure, getting all of the necessary permits, licenses, bank accounts, and doing all of the other minutiae of business before they actually figure out whether or not they actually have a product or service that someone will pay for.
I advise everyone that asks me, and some that don’t, not to quit their day job until they have actually gone out, talked to potential buyers and had someone they didn’t already know pay for their product or service. Nine times out of ten, what you originally thought was going to be a big hit in the marketplace is a dud, and you have to go back and rework your product. If you spend all of your savings establishing your corporate presence, you won’t have any money left to pay yourself when you have to go back to the drawing board. In addition to not quitting your day job, here’s my list of twenty things not to do before starting a business:
- Don’t quit your day job.
- Don’t incorporate. Seventy five percent of all businesses are sole proprietorships, and they already make money.
- Don’t get a bank account. Your personal banking account will work just fine if someone wants to write you a check, or if you need to pay for something.
- Don’t rent an office. Work from home. It won’t require a first, last and security deposit. Plus, it’s tax deductible .
- Don’t hire an attorney. What’s an attorney going to tell that you didn’t already know, or couldn’t figure out on Nolo or in a good bookstore? There are only two times to call an attorney: if you’re in jail, or if someone else’s attorney contacts you.
- Don’t hire an accountant. Quickbooks Simple Start will get you going.
- Don’t get a loan. To get a loan from anyone, even your family, will require that you do too many items on this list. And besides, if you get a loan, you know work for the bank — not for yourself.
- Don’t hire anyone. Don’t hire someone if you can do it yourself. For everything else, use contractors and give them 1099 .
- Don’t get a business license. I’m not advocating that anyone cheat the government. Once you can sell your product/service, go out immediately and get all of the necessary business licenses and permits in your jurisdiction .
- Don’t try to patent
anything.It takes 1.5 to 2.5 years to get a patent. Who knows what the market will look like then.
- Don’t design a logo. You are your own brand, you don’t need a logo.
- Don’t waste time picking a business name. As a sole proprietor, you already have a business name: your own!
- Don’t advertise. Advertising costs money, and takes time to perfect. Selling takes only you.
- Don’t buy office supplies. If you need a pencil, get one out of the kitchen or your son’s backpack. You are working from home, aren’t you?
- Don’t buy any equipment. Outsource everything. Fedex Office can handle all of your printing, and instead of splurging on a postal meter head down the post office. Need something big? Rent it! If it’s not something you can rent by the day, maybe there’s another local business with one. Can you rent it during their off hours in the middle of the night?
- Don’t try to find a partner. What do you need a parter for? Capital? Don’t take loans. Need someone with some sales experience? If you the inventor of your product/service can’t sell it — no one will be able to.
- Don’t join the Chamber of Commerce. Chambers of Commerce have great mixers where you can meet and network with other local business people. Right now, you don’t need to network, you need to sell! Plus, you can always go as a visitor.
- Don’t tell all of your friends about the business that you’re going to start someday soon. Every minute that you spend telling someone you love about your future business is one less minute you have to either try to find someone to buy your product/service or to refine it. Plus, everyone knows an “entrepreneur” that is all talk and no action: don’t be one yourself.
- Don’t write a business plan. Sure you need to know what you’re going to do and how you’re going to make money, but don’t waste time formatting it into a structured plan.
- Don’t get a business telephone number or mailing address. You have a cellphone, use it. If someone needs to mail you something, have them send it to your house. You’re working there, remember.
Update. Lots of people are commenting that these rules are utter suicide. You’re wrong. They’re just counterintuitive and go against everything you’ve ever heard about starting a business. Think these rules through.
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Category: Personal Finance