8 First Steps to Start Your Business

Posted on: March 4, 2019

Starting your own business – whether it’s your first time or you’re a serial entrepreneur – is both exciting and frightening. You can see the potential for growth, your mind is racing with ideas, and you can’t wait to get started. What you soon realize is that it’s going to take more than last year’s birthday money to get your venture off the ground.

Let’s follow Molly, a young woman who is ready to launch her first business venture, Know Coffee.

Harness and Focus Your Excitement

Molly is a coffee connoisseur. With a single sniff she can tell you if you’re drinking Sumatra or Kona. She delights in the perfect cup of coffee. Over coffee (naturally) one night, her friend sighs and says, “Gee Molly, I wish I knew as much about coffee as you do. Some of the stuff I drink is downright awful! How do I know if a coffee is good or bad?”

Molly can’t fall asleep that night. The questions turn over in her mind. Finally, as the first ray of sunlight hits her pillow, she makes a decision. She’s going to make it her mission to bring everyone the best coffee possible.

She pays a visit to her personal coffee merchant and tells him what she’s planning. She buys three times her normal order, taking the money from her entertainment budget for the next month.

After she gets back home, she fires up her laptop and buys a domain name and website. Those purchases go on her credit card. She makes a cute logo from a design website, then orders custom printed coffee bags that will arrive in a couple of weeks. Last, she opens a spreadsheet program and records everything she has bought for the business.

Check (and Fix) Your Credit History

While researching ideas for her business, Molly comes across an article about credit history. Curious, she reads the article, then does an online request for her credit score. She’s surprised to find that a few late payments have affected her score negatively. Going through her shoe box file system she finds the statements and the canceled checks. They weren’t late, the credit card company made a mistake! She calls up her credit card company and explains that the payments weren’t late, and she faxes them her statements. After a little while, they agree to adjust her credit record which will automatically fix her credit score. Molly also asks them to increase her credit limit because she realizes that she’s going to need a few more things for her new business.

Do Your Market Research

Molly calls the friend that planted the idea in her head and asks if she was serious about good coffee. Her friend answers with an emphatic yes. Molly quickly outlines the idea and her friend says, “Congrats! You just signed up your first customer. Just tell me where and when to pick it up!” Before she hangs up, Molly tells her to tell her friends at work.

Molly walks down to her local coffee shop. They know her well, but this time she has a different look on her face. She marches straight to the manager and asks him how much he spends on beans each month. He gives her a number, and Molly writes it down. “And how many cups served is that? You don’t have to be exact.” He tells her, but reminds her that this information isn’t for public use.

For the next few days, Molly pays close attention to all the coffee comings and goings in her neighborhood. She tallies the number of coffee shops, and even counts the number of people walking around with hot coffee cups. Soon Molly knows the average cost for a cup of coffee for the entire neighborhood!

Next, she phones some local business associations and asks them questions about small businesses. She gets some information she thinks would help her with sales and marketing. Molly eagerly learns all that she can about her market and starts developing a strategy on how she can use everything she’s learned to make the best decisions for her new company.

Molly studies all the information she gathered and realizes that people would be willing to pay a little bit more for a much better cup of coffee. She realizes that her idea to sell better quality coffee could really work, and she starts selling the high quality beans she’s found.

Track Your Cash Flow, Spending, Everything

Business is crazy! It’s only been a few months, but Molly already has dozens of customers, including her local coffee shop, which has started using Molly’s beans. Molly begins tracking all her transactions, from gas to parking meters to the new business cards she picked up.

One of the most important pieces of advice Molly received from one of her customers was that the banks will only consider your bank loan application seriously if you have detailed, up to date financial information about your business. It tells the loan officers if you spend money smartly, and if your business model is going to work long term. Molly’s spending records will form the basis of her business plan.

Molly leans back on the couch and considers that this isn’t going to be a part-time gig for long. She’s ready to take her business to the next level.

Prepare A Business Plan

Among Molly’s customers are a few small businesses that seem to be doing well. On her weekly delivery route, she stops to talk to a few of the business owners. They all tell her the same thing: she needs a business plan. Molly’s friends offer her advice on how they tackled their own business plans and business challenges, and a few even show her their plans.

Being the go-getter that she is, Molly goes online to start working on her business plan. Pretty soon she learns that there’s some information she needs to include, but she isn’t sure how to find it. Molly flips through her little notebook and finds the card for the business consultant that her customer handed her. The next morning, she sets up an appointment.

“This is pretty impressive for a first-time business plan, Molly,” says the business consultant. Molly brought a printout of her business plan, as well as her notebook, a pile of papers she figures might be important, and a USB key with more digital documents. They outline a plan for how to polish up the business plan. They discuss his fees, and Molly is shocked when he says he wants part of it in coffee! She never figured on bartering, but was thrilled with the idea, and the other applications she could use it for. She happily agrees and leaves to catch up on her deliveries.

Molly flips through the business plan. She loved the idea of getting a delivery van with her logo, and smiles as she remembers how shocked she was when she realized she was going to have to hire her first employees.

A few weeks later, Molly stops in with a freshly roasted bag of coffee at her business consultant (who is now a customer). He hands her a printed copy of her finished business plan and her USB key. “Now you’re ready to hit the banks. Remember, the most important things is that you are their customer, Molly, not the other way around. Come back when you have enough offers, and we’ll figure out which one is best for you.”

Shop the Banks and Explore Other Financing Options

Because of her daily deliveries, Molly knows where every bank in town is located. She makes a plan to visit a different bank each day. It takes a while, but eventually she collects the details for loans from eight different banks. Molly also applies for loans at several different online lender websites.

Molly stops in to make her regular delivery to her first business customer, her favorite coffee shop. As she heads towards the back of the store, a copy of her business plan slips out from under her arm. A woman waiting on line bends down to retrieve it. “This is your coffee?” she asks Molly. Molly smiles and nods her head. “Can I bring this back to my office?” “Of course,” Molly replies.

An hour later Molly gets a call inviting her to a meeting that afternoon. When she gets there, Molly is brought into a conference room where she recognizes the woman from the coffee shop and two other people. “We adore your coffee. We want to invest in your business. Here is a term sheet. Look it over and let us know what you think.” Molly looks at it. “Can I bring this to my business advisor?” she asks. “Of course,” they reply. “Give us a call as soon as possible.”

Her business consultant smiles at the term sheet. “Molly,” he says, “This is a great offer. It will really help get your business going. Together with the offer you received from the online lender, you’ll have more than enough to get everything you need for the first phase of your business plan.”

She decides to accept the term sheet from the investors and chooses the online lender with not only the best rates, but where her service representative was the nicest. As a face to face service business, she appreciates good customer support. By splitting up her lending sources, Molly feels that she isn’t tied down, and she was able to get a better overall interest rate.

Get the Money to Grow Your Business

The smell of her signature blend roast coffee greets her as she walks into the conference room at the bank. Her business consultant, investor, and a bank officer are all there. Molly is nervous but excited. There’s a small mountain of paperwork to go through, which everyone at the table takes turns looking at and nodding with approval. “Pretty soon, everyone’s going to Know Coffee!” jokes the bank officer. They clink their coffee mugs together and laugh. Molly smiles behind her mug as she thinks about her business plan and all the things she is planning for the next phase of her business.

When she gets back from the meeting at the bank, she discovers that the online lender has already transferred the funds into her account as well. Between what Molly had in her bank account, her new investors, and the loan from the online lender, she is over the amount she outlined in her business plan to start the next stage.

Molly can’t believe how much she’s gone through in the last year. She smiles and says to no one in particular that starting on the next phase can wait until tomorrow. Molly picks up the phone and calls her friend, the one who first gave her the inspiration. It’s been a while since they shared a good cup of coffee.

While Molly’s story may not reflect the experience you’ve had with starting your own business, the lessons she learned along the way may help you in your pursuit of starting and growing your own business venture.

Lessons Learned

Staying organized and creating a business plan were the keys to Molly’s early success in her business. Once she got going, she was able to build up her business without going into a tremendous amount of debt, until she was finally able to apply for accessible, manageable business loans and take her company to the next level. Even without any business experience, Molly used whatever assets she had available to her to make sound business decisions. Don’t discount a bit of good luck, either.

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