Starting Up an Unfamiliar Industry
You have an idea … a really good business idea … it could change your life if you're willing to take a leap and turn it into a new business venture.
Are you willing to take a calculated risk to get the kind of life you've been dreaming of. Every new business is a risk. Don't be afraid. Do your due diligence, create a business plan, and you can be a successful entrepreneur. This article provides some initial direction to get you thinking about what it will take to succeed in an unfamiliar industry.
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Know Your Why
Starting your own business is hard work. It will take good business skills, emotional resilience, and a strong work ethic to start a new business, especially if you're unfamiliar with the industry.
- Can you run a successful business, produce a new product, meet with colleagues and interact with your customers?
- Are you knowledgeable and experienced in marketing, advertising, and product design?
- Is income-earning possible during the first quarter?
- Do you want the independence of a sole proprietor or LLC member with your own small business?
Keep this vision before you. It will provide the positive energy you need to stay inspired when things get tough.
Is It a Good Fit?
It's human nature to start something completely new with a lot of enthusiastic ignorance. How can you learn the reality of entrepreneurship? What would it really be like to do that dream job or work in a new industry?
There is always a way to "try before you buy" in any industry. Volunteering, internships, taking a class, or engaging in part-time work are great ways to see if the industry suits you.
- Do you like the kind of people you would be working with?
- Do you want to work with the people who would form your customer base?
- Do you like the kind of challenges you would face?
Connect With Others in the Industry
Business owners love to talk about their business. After all, for most of them, it's their passion. It's easy to start online using social media to access industry chats and LinkedIn groups. Subscribe to a trade publication. This will get you up to speed on the newest issues in the industry.
It's critical to connect in real life, not just online. Is there an active professional organization or group in your area? Are there industry conferences or conventions it would be useful to attend? This is one way to meet industry leaders and market your business.
Would you benefit from connecting with other entrepreneurial business owners at Rotary Club or a women's business group? You may meet a small business owner who is willing to sell their business or customer list. You will very likely make business contacts who can provide advice on financing, finding rental space, locating suppliers, or building a customer base.
If you are new to entrepreneurship, consider getting a business mentor. SCORE, the Senior Core of Retired Executives, offers a business mentorship program, usually through a local office of the Small Business Administration (SBA). It's a great way to meet experienced businesspeople.
Analyze the Business Potential
You've met people and gotten the lay of the land. Now it's time to research the nuts and bolts of YOUR new business. It may be useful to look at the format of a business plan to flesh out your business model. This is the information you are going to need to know before you start your business.
Define your product or service: You are familiar with the industry by now, so you should be able to identify how your product or service will stand out in the market.
- Are there any proprietary features?
- How much money is needed to bring it to market and how long might that take?
- Who are your potential suppliers?
Conduct a market analysis: Who are the players in your new industry ecosystem? What are the market segments and how will your business fit in? How much competition is there?
Do some market research: Who are your prospective customers? What are they looking for — low cost or more features?
Startup costs and break-even analysis: What is your current financial position? How much do you expect start-up costs will be? Do you expect to self-finance or will you need an angel investor or venture capitalist to help get off the ground? What are your financial projections? What kind of cash flow do you need? When do you think your business will break even?
How do you want your business to operate? Are you looking for maximum independence as a sole proprietor or would you prefer to share the load with a business partner or a leadership team? Do you want your company to go public someday or do you want to keep it a closely-held family business?
Analyze the Business Risk
While any business entrepreneur needs to be optimistic, and never ignore the business risks when entering a new industry. What will you do if:
- You have problems with service providers, raw material suppliers, or shipping in your first year?
- Sales projections are not met?
- A co-founder wants to leave prematurely?
- The technology of your industry changes?
- Your business is under-capitalized?
- Competition is heavier than you anticipated?
Lay out what you see as the biggest potential impediments to success and always have an escape plan.
Plan To Do What You Do Best … and Let Others Do What They Do Best
It's especially important when starting a business in an unfamiliar industry to surround yourself with knowledgeable people. That can be hard for some take-charge leaders, but it makes sense to lean on the experts until you become the expert.
What skill set do you bring to this venture? What are your strengths and weaknesses? When you are moving into a completely new field, rely on your strengths and leverage the know-how of your team members to make up for your weaknesses.
What skills do you need others to have to create a successful team? Will that change over time? Start-up businesses operate one way; established businesses operate in another. You may want to consider hiring people on a per-project basis at the beginning.
Understand your preferred working style. Do you want to be hands-on with customers and products, or do you want to manage and lead? Understanding your style will help you hire the right kind of employee, and let go enough to allow them to do their best work.
Set Manageable Goals
The less you know the industry, the more important it will be to set incremental goals so you know you are making progress and you know when it's time to reassess.
Evaluate Your Commitment
Now that you've explored a new industry, analyzed the business potential and risk, and identified how you could lead a successful team, it's time to assess your commitment to starting a new business.
Be honest with yourself. Looking at the big picture and the nitty gritty details, do you think you would enjoy this challenge? Are you willing to devote the next several years of your life to this?
If the answer is YES! See FindLaw's Starting a Business section for more articles and resources to help you achieve your goals.
Get Legal Help When Starting Up in an Unfamiliar Industry
If you're starting a business in a new industry, chances are you will have a fairly steep learning curve. There will undoubtedly be laws and regulations you haven't had to deal with before. Hiring a business and commercial law attorney will get your business off on the right footing.
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