Be Your Own Boss -- If You Feel Your Talent is Not Put to Good Use

Often when we are stressed at work, we say out loud: "How wonderful it would be if I were my own boss." At other times, when the entrepreneur bug bites, we think of quitting our job to start our own business.

Before you rush out that resignation letter, consider the pros and cons of starting your own company. In your mind, you see a rosy picture of your new business eight years down the road. You have 300 employees and business is booming. You direct international operations from your executive office that has a view of Marina Bay.

Consider the many obstacles you have to surmount before you get to the executive office by the Bay. Have you enough cash flow to sustain the business? Many dreamers fail because they run out of funds just as business is picking up.

As your own boss, you lose the medical benefits you enjoyed as an employee. You have no annual leave benefit too. You are going to spend long hours with no overtime pay in nurturing your business. You don't look forward to pay day as it means ensuring that you have enough funds in the bank to pay your staff.

Many think that their network of clients and supporters over the years will eagerly help them in their new business. You will soon realize that these people supported you as long as they can benefit from the services of the reputable company you work for. Many will withdraw their support and loyalty when you approach them as the owner of a small business startup.

The gestation period of a new business is the riskiest part. Once the foundations have been laid, the success of a business is easier to predict. To play safe, some people let the partner start the business first. When it is stable, they will then resign their jobs and join the business full time. This may not be fair to the partner but it is a prudent step to take for self-survival.

Before you embark on a new venture, look at your strengths. In the history of Apple computers, Steve Wozniak enjoyed inventing electronic gadgets but he needed Steve Jobs who could see the business angle. Ask yourself if you have the business acumen of Jobs.

You need passion for what you are doing. Your hobbies can be turned into a profitable business. I know of a writer and photographer who loved to hitchhike to exotic destinations. He resigned his well-paying job to start a specialized travel magazine for hitchhikers.

Next, look at your skills. If you are good at baking, consider starting a cake shop. If you have passion for what you are doing, you can tolerate the long hours necessary when running your own business.

Type of Business
Consult your friends about your business idea. Unless you have rich parents or are flushed with savings, look to starting a business that has a low barrier to entry, for example, import and export, or consultancy.

Since the rentals in Singapore are high and getting higher by the month, ask yourself if you really need a brick and mortar outlet. If you can conduct your business via the Internet or through direct mail, you don't have to worry about rentals and a prime location.

Starting a food business sounds attractive. Everyone needs to eat-even in a recession. But if you're thinking of starting a restaurant, the initial setup cost is very high and the risks of failure are high as well because new restaurants need time to gather regular customers. It may be less expensive to start a stall at a coffee shop or hawker centre to test the market to see if your dishes are delicious.

Here again, you have to think about the kind of food to sell. If I start a stall at a food court, I'll sell rojak (mixture of various fruits) with extra ingredients such as soursop, raspberries, and beetroot added into the standard salad. I will enjoy slicing the ingredients and mixing them with the Penang prawn paste.

Another business with small start-up cost is vanity publishing. There are large vanity publishers in England and the United States. They offer editorial, production, and distribution services from fledgling authors or rich businesspeople who want to be respected as published authors. For a fee of about S$2,400 someone can be a published author. One can run vanity publishing from home with a good editor and layout artist. The customers' stocks of books can be stored at a rented warehouse. This is the case of businesses that have been tested as viable overseas and adapted for the Asean region.

Researching the Market
Once you have decided what kind of business you want to embark on, you have to spend time researching the market. Surf the Worldwide Web to learn about the markets both locally and regionally. Go to the library to study trade publications and collect statistics on the potential size of the market.

From your research, you should get to know the competition. Study the industry trends. Be sure that you are not entering a sunset industry. Look at the prices of your competitors' products and services. These will help you to price your products and services later.

Naming your Business
You have to register your business with the proper authority before you can conduct any transactions. Think carefully about the name of your business as this is your branding and you will have to live with it for better or worse.

Brainstorm for useful names with your team and with close friends. The name should be easy to remember, have a positive meaning, original, and creative.
Take care to check the meaning of a particular name.
If you want an original name that is difficult for others to copy, check if the word is in a standard dictionary. Say you think the word "techniques" is a positive brand word you want to use for your product, you may want to spell it as "technix" which is a coined word. The letter "x" is not commonly found in English and occurs more often in Maltese.

So you think you have cleverly coined the word "technix", now go to the Web and do a search and you will be surprised to find that many other companies are using the word: One is Silicon Technix which is a registered trade mark. Future Technix is a home technical products retailer in Australia. You try to spell the word as "taknix' and do a new search, you will find that there are several French Web sites that use that spelling but none for registered trade marks. So it is safe to name your new firm Taknix & Company.

Structuring your Business
The three common ways to structure your business are as a partnership, sole proprietorship, or as a private limited company.

A useful partner can bring along resources, experience, contacts, and skills into the company. A partner can provide guidance for business decisions. He could caution you against taking unnecessary risks, for example.

However, with a partner, you may lose the freedom to run the business as you think fit. Partnership is like a marriage, sometimes it doesn't work out as envisaged. When the profits come rolling in, there will be arguments whether to pay out dividends or to plough them back for expansion. When there is a loss, partners will quarrel over small decisions and small expenses.

Sole proprietorship is the way to go if you want total control over the destiny of your startup. Under this structure, you are the emperor but you are also solely liable for the losses that your firm incurs. If you think that the company's debts will not be very great, this is the way to go as it is easier to submit your annual taxes under this structure-the personal income tax and the sole proprietor's taxes are treated as one and the same.

If the company's exposure to debts is high, then it is best to structure it as a private limited company. Here the shareholders have limited liabilities for the losses of the company.

To cut down on the risks of a long gestation period, it is good to consider getting a franchise for an established brand name. The risks are reduced but you have to pay for the use of the franchise, the expertise that comes along with it, and perhaps to buy stocks from the franchiser. One example of this is to start a Subway food outlet.

If you are cash rich, you can afford to buy over a successful business to reduce your risks but you have to pay for the goodwill and hard work of the previous owner.

Drawing up a Business Plan
When you want to get from point A to B, you need to have a road map. Likewise, to start a business, you must write out a business plan which sets the foundation upon which your business will grow.

The plan acts as a guide for you to stay focused and not lose your balance on the business tight rope. A business plan is especially important if you want to attract investors to your company.

It is essential to prepare a projected cash flow to determine how much money you require to get started. Many small businesses fail because they run out of money to pay salaries, rentals, and the suppliers. The revenue collected each month cannot sustain the business especially in the initial period when the company is building up its client base.

Draw up an organization chart to identify which functions are critical to the efficient running of the business. Many tasks such as delivery can be outsourced. If you hire a delivery person, you may need to purchase a vehicle and that incurs maintenance cost as well.

In your plan, you should consider which marketing methods you will use to sell your products and services.

Next, ask yourself what do you offer? Unless you are running a departmental store, you should not try to sell too many products otherwise the firm will lose its focus. Decide whether you intend to sell in quantities at low prices or sell expensive goods in limited numbers.

Who are your customers? Decide on the age group you want to target. Nowadays, parents are prepared to pay for branded goods for their children so you may want to import products for this special group. Alternatively, you may want to target women from 36 to 55 years of age. This group has better spending power than teenagers.

Next, identify the relevant external changes that will add to your company's success. For example, with increasing numbers of cash card thefts from parked cars, you should think about selling covers for the In-car units that hold the cash cards. By keeping in touch with current news and society trends, you can discover business opportunities. Look deeply at what makes it likely that your company will succeed today compared to three years ago?

Finding a Location
If you are targeting customers who want to examine and try out the products before they part with their dollars then you need to have a shop front. This should not be at any location but in a busy shopping complex near a mass rapid transit station.

Look at the rental of the space; can you afford it? How much space is enough? If you don't think through this aspect, you may end up working for the property owner. The same goes for office rental. If you want a prestigious address you will have to pay premium rents. One way around this is to rent a room at a prestigious address along central business district and meet your clients at their offices. The expensive upmarket address helps to create a good impression for the business. For example, some suppliers will demand cash on delivery to orders from offices located at some run-down blocks as there have been many cases of fly-by-night operations having their offices there.

Even if you managed to get an excellent location with pedestrian traffic day and night, before long, the lease runs out and the shop owner is sure to increase the rent in the new lease agreement. You are forced to move to a new location but will your customers follow you? Note that whatever you have invested in the interior decoration of the premises will have to be written off when you move.

You may want to avoid locations where customers have to pay Electronic Road Pricing more than once to visit your shop. Customers who drive have the spending power but they are also the most calculative when it comes to dollars and cents.

The best location is still to sell your products online where the location does not really matter as the Worldwide Web has not geographical boundaries.

Where's the Money?
We have a great business idea but unfortunately not all of us are born with millionaire parents. Even if our parents can afford to give us a huge loan to start a business what happens if the business fails? There is no guarantee that all business ideas will succeed.

Certainly you need to have some savings to put into the new business otherwise your partners who hold the larger share will take over the successful business after you have labored to build it up.

If you don't have sufficient finance, you can turn to venture capitalists. They are often more interested in firms that already have good products and sales but require finance to expand. However, some venture capitalists are prepared to take a risk in financing a startup if they are impressed by your creative and profitable business plan.

Unlike banks, venture capitalists want to have a say in the business. When the business is successful, they may sell their share to a third party for a profit, or they may buy your share and take over the company. They are not charitable organizations out to help new businesses. Their main aim is to make profits.

Avoid getting finance from the bankers if you are a tenderfoot company in search of capital. All bankers require collateral for their loans and as a new firm you don't have much to offer the bank as collateral. When you are successful million-dollar business, bankers will queue up to offer finance at prime interest rates.

Angel investors are private individuals who make investments in new companies. They are often kinder than venture capitalists. They could be those who have taken a lump sum from their Central Provident Funds savings and are looking for a good place to place part of the money. Or they could be the lucky ones who made some profits from an en bloc sale of their property.

Many angels invest because they enjoy the excitement of playing a part in a new venture with potential. Others are simply impressed by the business plan and the passion of the person running the show. As they are taking risks with their finance, they expect good returns on capital in the future.

A good source of capital could be from individual investors. These could be close relatives, former or present colleagues, or close friends. In such business arrangements, make it clear if the finance is in the form of a loan or an investment. When taking this financing route, be careful as when the business fails or is not doing well, you lose a relative or your best friend.

Hiring Good People
The success of your new venture depends on the people you hire. You can't be doing everything yourself in a 10-hour day. The salespeople are the ones who bring in orders. They must know the product well. They must believe in the product. To motivate them, they should be paid on a basic package plus a commission on sales.

In retail, charming salespersons are essential. With their smiles, they can convert a prospect to a loyal customer. For firms that handle cash, you need to hire honest people to look after the sales counter. The temptation of not issuing receipts and pocketing the sums collected is always present.

To prevent this, some bosses hire relatives for this trustworthy job but even relatives can be tempted to pocket some of the cash.

You need to set aside some budget for staff training. To have an efficiently run company with good customer after-sales service, the staff must be skilled in the services that they provide.
Marketing your Products and Services

While word-of-mouth recommendations are valuable, if you depend on this channel, business will be slow in the first year. Can you afford to wait for sales to trickle in? You need to have an advertising and marketing budget.

A moderately inexpensive way to market your products is through direct mail. Buy a mailing list and mail out attractively designed brochures. As its name implies, direct mail talks directly to the potential customer compared to an impersonal advertisement in the newspapers.

It is not expensive to start a Web site to help with marketing and sales. You could use E-mails for direct marketing. It is one of the cheapest forms of marketing. The E-mails could direct prospects to your company's Web site.

With a limited marketing budget, you will have to depend on public relations to generate publicity about your new business. Try to interest television, radio, and print media journalists to do an article or documentary about your special products.

If you can't afford to pay a public relations specialist to help to write press releases, you will have to learn the tricks of the trade through trial and error.

Managing your Business
After embarking on the new business venture which has taken up all your waking hours, your business begins to serve its first customers. Now your skills as a manager and entrepreneur come into play.

You have to monitor the cash flow of the business. Look at the credit you are getting from your suppliers, explore if they can extend more generous credit terms to you.

Many businesses fail because they have good sales but are unable to collect from customers when payments are due. Don't be too generous with providing credit terms to your customers. Companies that collect cash have better chances of survival.

You have to manage people-both your staff and the customers. This may be the most difficult part of running a business. To get along well with people, be a good listener and communicator. Most of the problems that occur each day are due to miscommunication.

Conclusion
To start a successful business, you need passion, commitment, and you need to care about your customers and workers. Experience will come after you have made numerous mistakes. You need capital, contacts, and expertise. Building a successful business is not an easy task but when the money comes rolling in and you watch your business grow, you feel that all the perspiration and tears are worth it.