Interest in starting a business is swelling, fueled in part by a global pandemic that changed the way many people think about their work-related preferences.
However, entrepreneurship requires more than a good idea and a desire for self-management. That’s why potential business owners of all ages are flocking to consultants and college-based business programs in hopes of learning how to successfully launch their own startup.
“At the beginning of the pandemic, everything regarding business was about survival. Employers and employees were in panic mode. But then, around July or August, things changed,” said Dan Drexler, regional director for the Central Indiana Small Business Development Center. “Many people who were sitting at home, quarantining, decided to take charge of their work lives.
“We saw more and more calls come into our office from people wanting to start their own business. Interest skyrocketed, and it hasn’t tapered off.”
Rob Mathews, executive director and operations manager of the Entrepreneurial Leadership Institute at Ball State University, said COVID dramatically accelerated business ownership trends that were already set in motion.
“As a whole, interest in this type of programming has been on a growth trajectory for approximately 30 years,” he said. “But now, when we talk to other schools across the country, they’re all bursting at the seams when it comes to interest and enrollment.”
Entrepreneurship begins with identifying a viable business concept.
“You really should attack something you’re passionate about or can relate to,” Mathews said. “We urge students to look for problems around them.”
Ronda Taylor, dean of the Garatoni School of Entrepreneurship and Innovation at Ivy Tech Community College, agreed.
“We send students out into the real world to talk with people who they perceive to have a certain problem or need. We also want them to ask about barriers,” she said. “When they bring that data back to us, everybody works together in a classroom setting to brainstorm possible solutions. At that point, we narrow things down and start testing ideas.”
Business concepts can also be developed through personal experiences. That’s how Doug and Sue McCrae got into the business of providing dog accessory items. Their newly formed LLC is called “Oh Sew K9.”
“My wife and I show field spaniels, and when we started going to dog shows about 15 years ago, we noticed that lots of things are worn by dogs, including robes, head coverings and booties,” Doug said. “Sue is a seamstress, so she started making things at home and bringing them to shows for fun.
“It was a hobby at first, but after she started making things like tote bags and embroidered towels, too, demand kept growing, so we started thinking about a home business.”
However, personal interest and perceived public demand won’t automatically equate to success. In fact, industry experts say entrepreneurs should be aware of and prepared for pitfalls.
“Passion is an important ingredient for sure, but too much can make it difficult for an entrepreneur to see gaps in logic,” said Regan Stevenson, assistant professor of entrepreneurship and management at Indiana University’s Kelley School of Business. “Passion can help propel business owners through the ups and downs, but you also have to bring a scientific mindset.”
Create a business plan
Industry experts say a thorough but flexible business plan can help a hopeful entrepreneur establish front-end financial readiness—a key to long-term sustainability.
“The business plan is your individual road map. It’s the marching orders you have self-defined for your business. It’s what keeps you focused,” Drexler said. “But it can also help potential lenders understand your approach to marketing and ultimately see the value of your proposition.”
According to Mathews, the plan presented to potential lenders should be short and sweet.
“Of course, you still want to do your projections, provide operational details and define who your customers will be and how you will reach them, but when it comes to lenders and potential business investors, I don’t think people have the attention span for a 100-page business plan,” he said. “People prefer summaries. If they want more information, they’ll let you know.”
Investors are also interested in the creditworthiness of the person behind the plan.
“One of the biggest mistakes we see being made on the front end is people believing business is completely separate from the person,” Drexler said. “Lenders will want to know your personal credit history and score, so it’s important to build that up before seeking a loan. A number near 700 is desirable but 650 is acceptable.
“Luckily, there are some specialty lenders coming to the forefront now that have more flexibility with younger people and startup businesses.”
Taylor said entrepreneurs should thoroughly research how much money they’ll need upfront.
“Make sure you have enough capital to get started, but also consider operational costs,” she said. “You have to set realistic goals, make a budget and stick to it.”
“By far, the most common pitfall is that a new business owner will run out of cash,” he said. “Sometimes, that’s because they’re very successful but they don’t have enough money to keep up with continued web development or inventory needs. Other times, it’s because they’ve put cash in the wrong places or didn’t get the return they expected.”
And entrepreneurs can’t neglect legal- and insurance-related requirements.
“Do you have a plan in place for following payroll standards? Do you have adequate insurance to cover potential injury? Do you have legal protection? Are you incorporated? These are all important considerations,” Mathews said.
Take advantage of help
Consultants, including those affiliated with the SBDC, can provide all sorts of tools and recommendations for entrepreneurs.
The SBDC “helped us figure out how to start our LLC,” Doug McCrae said. “They assigned me an adviser who helped us find the forms we needed, recommended bookkeeping software, helped us understand how taxes work, and even provided social media tips.”
Brent Kumfer and Frances Russell, who are in the process of starting a winery in the Traders Point area called Fruitful Vines Winery, have also used SBDC services.
“They have a Business 101 course, and we also took advantage of a QuickBooks workshop they offered,” Kumfer said. “They’ve answered a lot of our questions about financing and accounting.”
For some entrepreneurs, following a scripted, existing plan for a new business opportunity might be the preferred approach.
That’s where Patrina Williams, owner of Business as Usual, can provide assistance.
“We help people open their own health care agency where they can go into homes, do light housekeeping, wash dishes and run errands for people,” she said. “We mentor them through the whole process.
“Once a month, I do a training class where we break everything down, including insurance, billing, and how to find and hire staff. We walk people all the way to the end and make sure they have additional training, if needed.
“The whole process to be up and running can take four to five months.”
Stevenson said a given individual’s characteristics and personality traits also go a long way in determining potential for success.
“A person should have an unquenched thirst or curiosity about understanding and solving problems,” he said.
“A lot of people will describe entrepreneurs as being gritty or resilient, but to me, that’s a little too passive. What I see in those who are most successful is that they’re interactive. They