Last week I talked about how to plan out a small business idea. As I mentioned before, in uncertain economic times, there is no such thing as a secure day job. If you make your living by working for someone else, you might get laid off tomorrow due to no fault of your own! So it is absolutely imperative for people to build their own economic networks. And starting a small business is one of the best ways to do this.
And before you say it’s too hard, I just want to point out that anyone can start a small business. Heck, even a little boy in the video below can start his own little business venture. And if he can do it, you can too!
So this week I want to go into some detail on how to execute on a small business plan. These tips are from my experiences only and may not be applicable to everyone. But these techniques are working for me and they might be of use to other people, so here goes:
1. Baby Steps over Giant Leaps
We’ve all heard of young entrepreneurs who bets everything on the next great idea, creates a “start-up”, and suddenly gets showered with millions upon millions of dollars from Venture Capitalists. In my humble opinion, this approach, while very hip and fashionable at the moment, has a low probability of success for most would be entrepreneurs.
Realistically, start-ups has a failure rate of over 90%, so risking everything you have on that 1 golden idea can bankrupt you. However, knowing this grim statistic, we can do many things to ensure that SOME of our small business ventures grow to become profitable sources of revenue without losing our shirts in the process.
The key here is to take many small calculated risks instead of a few huge ones. If you create a business that will not require more than a few hundred to a few thousand dollars in starting capital, you will have more money and time left over.
This approach allows you to simultaneously pursue 2-3 business plans. Invariably, the majority of these business ideas will fail, but every so often you will stumble upon a business plan that actually makes you a profit.
2. Have enough resources to sustain your business initially
For any small business to get going, you need 2 fundamental resources: money and time. Some businesses need more money upfront, others need more time. As a general rule, I prefer to start businesses which requires more time rather than money simply because I never want to risk too much capital in the process. Capital(money) is a precious commodity that must be used cautiously.
Whatever the case, you have to make sure that there are ample amounts of either commodity to support the venture. This initial amount of capital and time will hopefully allow your small business to survive long enough to begin making profits and thus become self-sustaining.
Many small businesses do not break even for months(if ever). Many small businesses experience dramatic changes in their core business model early on in life to go from being unprofitable to profitable. Given these constraints, you have to basically set a window of time for your small biz to succeed or fail. Only you can be the judge of how long this time window should be. Usually, I set my window to be within 3 months.
Over this arbitrary span of time, if you did everything right, your business will do 1 of 2 things. It might grow, or it might do nothing. If the business grows and shows signs of potential, then the next step is to scale it up.
3. Scaling up or automating your business
If one of your business ventures begin to make money, the next logical thing to do is to scale it up to make as much money as you can for that particular niche. Depending on the business, there can be a variety of ways to scale up. You could spend more time working, you could hire more people, or you could automate certain portions of your business workflow. If your small business grows to a certain size, the options for scaling it up further gets reduced to just automation or hiring more people.
With a niche business, sometimes there is only so much growing that you can do, at some point, a profit ceiling is going to be reached. You’ll know that you’ve reached this ceiling when additional investment on your part is yielding very marginal returns. When this point is reached, I usually try to automate every single portion of the business’s workflow that I possibly can. Some steps of a business process can be done using computer software. Other steps can be done by hiring virtual assistants or physical employees. The idea is to take YOU out of this loop. This process of automation reduces the cost of running that particular business to an absolute minimum and it frees up your time to work on other small business ideas.
4. Knowing when to stop a business
Most of the time, my business ideas don’t work out. The key thing is to know when to quit. In few cases, I shuttered a failing business too late and ended up losing large amounts of time and money. The trouble is that a person has already invested so much effort in a failing business that he can’t just drop it all and walk away. I had a part of myself invested in a failed green design business, and shuttering it back in 2009 felt like I was losing a good friend.
But some lessons have to be paid for in sweat and tears. And this is one of them. Nowadays, I rely on hard numbers to tell me when to stop running a business. When a small business stops being profitable, I set a window of time to bring it back to profitability. If I cannot do so within that window of time, the business is either sold(assuming there is a buyer) or it is shuttered. There should be no ego or emotions involved in these kind of things.
Applying these techniques in real life
So those are my tips for executing on a small business plan. Now here on Surviving Economic Collapse, I’m all about doing stuff to prepare for changing times and to make life better for my family. So I’m going to reveal 2 small business ideas that I’m working on right now. I think any prepper should be able to cobble together enough resources to start these 2 businesses.
- Lending Micro-loans
- Publish an E-Book
My wife has a healthcare background, so we’ve been working together on a niche Medical Ebook. I’m going to try to market and sell it on several Ebook Stores across the United States.
I’m going to be posting updates over the next 3 months on how these 2 small businesses are doing. It would be so awesome if I could make a little bit of money from either of these ventures. Now as always, comments and feedback are welcomed and appreciated!