5 Resources You Need to Succeed to Start a Business

Part 1: Do You Have the Right Stuff to Start a Business?

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Anyone can start a business. But to start a business that succeeds and continues to flourish isn’t so easy. According to Statistics Canada, at least half the new companies in Canada go out of business before their third anniversary, and one in four new enterprises don’t survive longer than one year (Failure Rates for New Firms).

If you’re going to start a business that has staying power, there are five resources that you must have in place before you open your literal or figurative doors.

To turn a start up venture into a successful business, you must:

Fully Commit

Successful entrepreneurs are people who are fully committed to their business ventures. You have to be prepared to put your heart and soul into what you’re doing. You have to truly believe in your product or service, and be prepared to work long hours to get others to believe in your product or service, too. You have to be ready to go without treats such as holidays, and even necessities such as salary, for what may seem like an endless stretch of time. And you have to do all this without the safety net that salaried employees are used to, such as benefits and pension plans (see 6 Traits You Need to Move From Employee to Self-Employed).

Be a "Type D”

People commit themselves to all kinds of things; causes, hobbies, other people. Just being able to make a commitment doesn’t automatically lead to business success. If you’re going to get where you want to go in business, and start a business that will endure, you also have to be what I call a "Type D” person; someone who has desire coupled with drive, with strong discipline and determination.

You have to not only have the business ideas, but be able to execute them. Successful business people are tenacious; obstacles are temporary barriers to work around. They may take “No” for an answer, but only for as long as it takes them to reframe the question from another angle and ask again.

But desire and drive alone are not enough to start a business; you don’t want your business to be a temporary comet streaking across the sky.

Discipline and determination are what give successful business people the endurance to follow through on their business ideas, and weather the storms and calms of the economic climate. For more information to help you determine if starting a business is right for you see:

Entrepreneurial Self-Assessment

The Entrepreneur Test

Thinking of Starting a Small Business?

Knowledge is another resource you need to have in place before you start a business. Continue on to the next page to learn what types of knowledge and skills you must have if you want to start a business with staying power.

Get The Business Knowledge You Need

Many people have tried to start their own businesses without bothering to acquire the business knowledge they need to make their business a success - and their businesses have failed.

To start a business, you have to be knowledgeable about many different aspects of business and have many different skills… or at least have done the research to find and hire the people who have the skills you lack.

If you aren’t knowledgeable enough about accounting to keep your own books, for instance, you’re going to need to hire a bookkeeper and/or an accountant. If your business is Internet-based, you’d be wise to hire a company to design your web site and handle the back end, unless you personally are an expert in site development.

When you’re creating your business plan, one of your first steps needs to be a frank assessment of your skills and expertise. What aspects of the business are you qualified or willing to handle, and which aspects will necessitate either more learning on your part or calling in outside help?

Managing people is only one skill set you’re going to need to start a business that's going to be successful. You also need to be knowledgeable about sales and marketing. For example, suppose you’ve developed a better mousetrap. Who are your competitors? What are the mousetraps they’re offering like and how are they priced?

What makes your mousetrap better? Is there even a need for a better mousetrap out there? Where is “out there”? Do you have the skills needed to identify and contact customers? Are you good at selling mousetraps? Can you develop a feasible marketing plan and promotional material?

And what about business operations?

Do you have the business knowledge to manage inventory and fill orders? Where all you going to store all your mousetraps and how are you going to get them to your customers? Have you found the suppliers you need and developed relationships with them? Have you set up a customer support policy?

Business knowledge before you start a business is critical. All the drive and determination in the world isn’t going to help you if you don’t have the knowledge to actually run a successful business and don’t bother to research and plan for your success appropriately. A friend of mine had long dreamed of opening a bookstore. So he did. Unfortunately, he hadn’t bothered to study the competition or the demographics of the market in the area. It took less than a year for his bookstore to fail. He had the desire and the drive, but didn’t have the knowledge he needed to apply them. For further information on why many new business fail see:

Why Do Small Businesses Fail?

The Two Main Problems of Starting a Small Business

Don't Do What You Love When Starting Your Own Business

Top 10 Business Mistakes When Starting a Business

So let's assume that you are a Type D Personality with all the business knowledge necessary to start a business. Are you a shoo-in for success? Not unless you have the money you need to start a business. Continue on to the next page to learn about finding start up money.

Find Adequate Business Start Up Money

Unless you personally have deep pockets, such as inherited wealth, figuring out where you’re going to get the money to start your own business and getting the financing in place beforehand is going to be one of the most important components of planning your business.

Finding adequate business start up money is especially critical because there’s no guarantee that your business is going to make money right away, and certainly no guarantee that your new business will bring in enough money for you and your family to live on.

You can’t start a business without start-up capital, the total amount of money you need to open your doors for business, and to keep them open until sufficient revenue can be depended on.

You’re also going to need operating capital to start a business, the amount of money it takes to keep the business going. Operating capital includes expenses such as salaries, wages, rent, expenses, supplies, utilities, advertising, depreciation, and interest payments. Small business advisors recommend that start-up expenses include at least six months operating capital.

If you don’t have deep pockets of your own, where do you get the business start-up money you need? According to a 1998 study of small- and medium-sized enterprises by Thompson Lightstone and Company, fifty percent of small- and medium-sized business owners report that they currently borrow from a financial institution, such as a bank. Twelve percent of SMEs finance their companies through private loans from friends or relatives and three percent by loans from non-related individuals.

Forty-one percent use personal credit cards to finance their businesses.

Personal assets, such as savings, (including RRSPs, pension funds, severance allowances), remortgaging property, credit cards, and personal property, are the most common initial source of business start up money for small businesses.

This may be because people starting new businesses have no alternative; if you don’t have much collateral or an established credit history, getting a small business loan can be difficult. (See my article, How to Get a Small Business Loan, to learn how to increase your chances of making a successful small business loan application.)

In Right From Home: How To Start a Successful Home-Based Business, Barbara Mowat and Ted James state that money borrowed from family, relatives and friends makes up more than fifty percent of the loans to home-based businesses. They advise avoiding misunderstandings and bad feelings by always getting agreements about loans in writing and making sure that all loans are set up with proper security, any terms or conditions, and a payment schedule. This is sound advice to follow whenever you borrow money.

For additional information on business start up funding see:

How do I find small business start up money?

8 Sources of Business Start Up Money

What else do you need to start a business with staying power?

Support. Click to continue reading...

The last of the five resources you must have to start a business that will be successful is a good support system. When you're thinking of business support, look first to the home front.

It’s no coincidence that most successful small business operators are married. While we like to talk about “going it alone” and “running our own show”, you can’t start and run a successful small business without the support of other people.

And who better than a supportive spouse to listen to your ideas or problems, and provide the encouragement or advice that keeps you going?

In Entrepreneurship: A Profile For Canadians, William E. Jennings points out that the successful entrepreneur usually has an exceptionally supportive spouse.

He adds that these exceptional spouses don’t just provide love and stability, but also specific support for the business, such as helping to provide the capital needed to start a business, or working in the company without pay to keep costs down. Spouses who contribute financially by working outside the business are also a common small business scenario.

Having a supportive spouse is especially critical if you want to start a home-based business. As Barbara Mowat and Ted James say, “in reality, you don't start a home business, your whole household does” (Right From Home; Starting A Successful Home-Based Business).

 You can’t start a home-based business without considering what your family members think about the idea, what role(s) your family members might play in your business, and how your business is going to affect your home life. Without the active support of your family, your home-based business will fail.

Talk out these issues beforehand and explore how supportive your family is before you start a business.

Other business people are another valuable source of business support. No matter what kind of business you’re thinking of starting, someone has been there and done that. Talking to other business people who have already established a successful business can go a long way towards avoiding pitfalls and provide insight into what works and what doesn’t.

I’ve always found that other business people are willing to share their knowledge with others; if you can’t find someone locally to talk to, there’s a ever-growing network of business communities online (like this one!) where you can get the information you need, and sometimes good advice, too. My Business Support library has links to Canadian organizations where you can get advice, find a mentor, or just talk to someone.

Are You Ready?

All five of these resources are necessities for starting a successful small or home business. And all five of these resources need to be in place before you start a business.

Are you a “Type D” person willing to fully commit to starting and running a successful business? Have you figured out where to get the business start up money you need and secured your financing? Do you have the business knowledge and the support system to help you do what you need to do to be successful? Then go for it! You’re already well on your way to small business success!

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