GMR 150: 6 Steps to Starting a Business
To build significant wealth, you’ll need to move beyond being an employee. This is because there are only so many hours in the day, and when you’re employed, you can only trade a limited number of hours in a day for income. In this episode, we share six steps to starting a business that will move you from employee to self-employed and gradually to business owners and investors.
Show Notes
Robert Kiyosaki - The Cashflow Quadrant
ESBI
Employee - You have a job (time is money)
Self-Employed - You own a job (time is money)
Business Owner - You own a system (other people’s time increases your money)
Investor - You own investments - Your investments grow on their own producing you more money (your income doesn’t depend on your work)
6 Steps to Starting A Business
Step 1: Make the Commitment
Determine the exact date that you’re starting the business. Write it down saying, “today on this day, November 6th, 2020, I inaugurated the business Thompson Services” … you can change the name later… but writing out a similar statement.
Just writing down the name of your business and dating it, is the beginning of self-employment. This isn’t even meant to be a legal document (although it can be), it’s just a line in the sand where you made the decision to start your business.
Step 2: Choose Your Focus/Niche
Determine your area of service. You can even have more than one. But it helps to start with something very specific at the beginning. If you don’t have laser focus, it’s easy to get sidetracked.
Consider these questions: What will your area of focus be? What will your product or service solve? What kind of knowledge and experience do you already have that you could parlay into a business?
Market analysis
Is this a need?
Is anyone else doing it?
Is there enough need / demand?
What are the barriers to entry -
Step 3: Choose whom you will serve
Determine who you’re going to serve, and where you’re going to serve them.
This is where a lot of self-employed people go wrong: they’ll say something like, “Well, I will serve anyone who would benefit from a product/service like mine!” That’s not a helpful answer, because it doesn’t give you any actionable insight into your target market.
Market analysis
If a competitive environment, how will your service be different/better?
How will you sell your product?
What is your price?
Research others who offer similar services
Can you do it for less? For how long?
Will you offer a premium or discount type service?
Step 4: Business Administration
Start the administrative, behind the scenes work for the business.
Determine how will you structure your business—as a sole proprietorship or as an LLC? How will you register it in your state? Do you need any particular licenses or permits?
Open a bank account for the business. Or a separate checking account in your personal accounts that only has business transactions in it.
Separate your personal from your business expenses from the start.
Don’t pay yourself just yet! Invest all or as much as you can back into growing margin and building your business.
Step 5: Financial Plan
Keep a budget for the business
You can use YNAB, an Excel sheet you create, or something you download off the internet.
Separate income and expenses to get a true picture of cost and determine net profit.
Track every single dollar you spend on the business (marketing, supplies, salary, contract labor, etc).
Create margin and reinvest in the business.
Step 6: Marketing
Website
Networking (friends)
Social media