When Randy Melzer, chapter chair of Fox Cities SCORE and certified mentor, teaches entrepreneurs, his first goal is to help people face reality. As one of the instructors in the five-session Simple Steps program, he tries to dispel romantic notions of business ownership.
"So many people have stars in their eyes," Melzer said. "We want to make sure they've considered what this means before they get caught up in their enthusiasm and go forward before they're ready."
Before spending money, Melzer advises clients to spend their time and follow a step-by-step process. The first step is doing a diligent study of everything related to the business.
He had a client recently who came to SCORE after signing a three-year lease on a building.
"The only problem is that she doesn't have any clients yet," he said. "The meter is running on that lease and she could be dead in the water by the time the business is established."
Following a timetable of very specific actions would have helped her avoid this situation. She violated the important step of knowing your personal and family finances and how much everything will cost.
Melzer said there is a tendency to calculate income, and overestimate it, before doing a realistic projection of costs. The best way to do financial projections is to underestimate income and overestimate expenses. And, when a family is part of the equation, it is important to have their support.
He said: "Before I get into this business, I need to know what I have and what I need to have. If I need additional cash, can I take money out of the family budget without crashing the family? Have I thought about the overall impact on the family and made sure that they're on board with it?"
If these steps are positive, the next step is to complete the timeline, including dates for items such as completing a business plan, meeting with an attorney and accountant, applying for financing, completing a marketing plan and looking for a location, if needed. Along the way, he recommends celebrating when a goal is reached.
The process will be time-consuming, and he is quick to throw out the common notion that owning a business will give you more time.
"More time? No, no. That's one of the biggest falsehoods," Melzer said. "It's 24/7, and it's always you. It's better to understand how much is going to be involved and be willing to put that time in as a labor of love. You won't be able to vacation whenever you want, but set goals to do it next year. It needs to be positive."
In addition, there are personality traits that usually define entrepreneurs. According to Melzer, the top four are the ability to take a risk, being decisive, showing responsibility in doing what needs to be done and organizational skills. However, he recognizes that not everyone will have all of the technical skills needed.
He advised, "Be honest with yourself and whether you have the qualities of an entrepreneur and the skill set to do what needs to be done. If you don't have the skill set, you have two options: learn it or pay for it. Identify what you can do, what others need to do, and how that will work in your favor."
Once the business is up and running, he suggests staying anchored to the business plan so you know where you're going and stay on target. It's also important to find a way to recharge and be healthy so you can enjoy the process.
By Tina Dettman-Bielefeldt, co-owner of DB Commercial Real Estate in Green Bay and district director for SCORE, Wisconsin.