Now that you have a name (Step 1), a rough idea of your startup expenses (Step 2) and a rough idea of whether you have any chance to make money (Step 3), we are about to shift gears from thinking to doing… Not quite yet though we have one more step that will help to ensure your success before we jump into the pool…

To start a business requires RESOURCES—sometimes a lot, sometimes a little.  Here’s what I mean by resources:

1)     Time-  you need to evaluate how much time you have available to invest in the business.  In the beginning, a startup can be all-consuming.  In my case 18-20 hour days were common in the first year.  If you are planning to startup part-time, this can be done, but you need to carve out enough time and your family and friends are going to have to get used to you not having as much time for a while. 

I think that you should plan to spend at least four hours a day in addition to your “regular job”—preferably the last two and the first two of each day.  For example 8-10pm and 5-7am can be your Startup Time when you work solely on your new business.  Whatever works for you.  Just be aware that you need to have the resource of time available… (sign up for www.simpleology.com and you’ll get twice as much done in the same time, and it will be the right stuff- trust me and do it).

2)    Money- you need enough money to fund the business.  Money can also be used to purchase the time of others, such as coaching, marketing assistance or copywriting.  Money can also be used to purchase How-To information and business instruction.  But if you remember back to step 2, we discussed startup costs.  You need to have this money in hand before starting. In Step 3, we looked at Income and Expenses.  All businesses are different and you need to have a good idea of any lag between spending money and getting paid for your efforts.  At the very least, you should count on having three-six months (or more) of your Fixed expenses available in case orders are slow to come in the beginning as you work through any kinks.  You should also plan to have at least one-two months of your variable expenses on hand if there is any lag between fulfilling the order and getting paid.

In our example before, the Fixed Monthly costs were $150 and the Variable Monthly Expenses were $2450, so using the formula of six months fixed and two months of variable would mean you need $900 + $4900 = $5800.  At the very least three months fixed and one months variable would be $450 +$2450 = $2900.   I would try to make sure that I had at least this much available before starting.  

This isn’t to say that if things aren’t working out with your idea, you will have to sink all this money in a losing venture.  What I am saying that if your idea succeeds, this is what you will need to run the business and reap the rewards.

This is in addition to your startup costs for a computer and/or software and anything else you need to get rolling.  One of the advantages of an Internet based business, especially if you are selling information is that the startup cash required is very small in most cases, and you can grow the business rapidly using your profits from the business.  In addition, you can change ideas rapidly and most of the tools that you have invested in will still be useful in the next venture…

3)    Knowledge- you need to have at least some idea of what to expect and how the legal and financial rules are going to affect you.  You also need to be aware of what risks you are liable to face so that you can take steps to insure against them and to structure things so that you minimize your risk.  Often this information can be found in the library (the big brick things that are the physical embodiment of Google) or on-line.  If at all possible, take someone in a business like you are thinking of starting to lunch or dinner at your expense and ask them questions.  There are no stupid questions, only those that aren’t asked.  If at all possible, work for someone else in this type of business for six months and see what sorts of things happen that you hadn’t thought of.

4)    Professional Team- in the long term, you are going to have a Banker, an Insurance Agent/Consultant, and an Attorney.  Depending on the business you might need all of these at Startup.   Unless you are knowledgeable about accounting and tax laws, then you should find a small business accountant and talk with him before officially starting the business.  This is one area that you cannot afford to mess up and this advice is available for $100 an hour or less.  Get a reference from someone you know if possible…

The last resource I recommend to anyone starting a business is some sort of Accountability Partner.  This can be a business coach, it can be a local Mastermind group of success-oriented businesspeople, or it can be someone on-line or in the real world that you agree to share progress reports with.  But there is something about telling someone else that you are going to do something by a certain date that seems to increase the chances of it getting done…