Interest in starting a business is growing, fueled in part by a global pandemic that has changed the way many people view their career preferences.
However, entrepreneurship requires more than a good idea and a desire for self-management. That’s why would-be business owners of all ages flock to college business consultants and programs in hopes of learning how to successfully launch their own startup.
“At the start of the pandemic, everything about business was about survival. Employers and employees were in panic mode. But then, around July or August, things changed,” said Dan Drexler, regional director of the Central Indiana Small Business Development Center. “Many people who were sitting at home, in quarantine, have decided to take charge of their professional lives.
“We have seen more and more calls come into our offices from people wanting to start their own business. Interest has skyrocketed, and it hasn’t waned.
Rob Mathews, executive director and chief operating officer of the Entrepreneurial Leadership Institute at Ball State University, said COVID has dramatically accelerated trends in business ownership that were already underway.
“Overall, interest in this type of programming has been on a growth trajectory for about 30 years,” he said. “But now when we talk to other schools across the country, they’re all overflowing with interest and enrollment.”
Entrepreneurship begins with identifying a viable business concept.
“You really should tackle something that you’re passionate about or can relate to,” Mathews said. “We urge students to look for issues 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 think have a certain problem or need. We also want them to ask about barriers,” she said. “When they bring this data back to us, everyone works together in a classroom to brainstorm possible solutions. At this point, we refine things 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 accessories. 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 a lot of things are worn by dogs, including dresses, headgear and slippers,” Doug said. “Sue is a seamstress, so she started making things around the house 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, the demand just kept growing, so we started thinking about a home business.”
However, self-interest and perceived public demand will not automatically equate to success. In fact, industry experts say entrepreneurs need to be aware of the pitfalls and prepare for them.
“Passion is an important ingredient for sure, but too much can make it hard for an entrepreneur to see the gaps in logic,” said Regan Stevenson, assistant professor of entrepreneurship and management at the Kelley School of Business. Indiana University. “Passion can help propel business owners through the ups and downs, but you also need to bring a scientific mindset.”
Create a business plan
Industry experts say a comprehensive yet flexible business plan can help a hopeful entrepreneur establish initial financial readiness, a key to long-term sustainability.
“The business plan is your individual roadmap. These are the marching orders that you have set 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 in your proposition.”
According to Mathews, the plan presented to potential lenders should be short and simple.
“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 as far as lenders and potential business investors go, I don’t think people have the ability attention 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 at the outset is people thinking the 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 applying for a loan. A number close to 700 is desirable, but 650 is acceptable.
“Fortunately, some specialist lenders are now coming to the fore and have more flexibility with young people and start-ups.”
Taylor said entrepreneurs should do extensive research on 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 is running out of money,” he said. “Sometimes it’s because they’re very successful, but don’t have enough money to keep up with ongoing web development or inventory needs. Other times it’s because they put money in the wrong place or didn’t get the return they expected.
And contractors can’t overlook legal and insurance requirements.
“Do you have a plan in place to follow payroll standards? Do you have adequate insurance to cover potential injuries? Do you have legal protection? Are you incorporated? These are all important considerations,” Mathews said.
Consultants, including those affiliated with the SBDC, can provide all kinds of tools and recommendations to entrepreneurs.
The SBDC “helped us figure out how to start our LLC,” Doug McCrae said. “They assigned me an advisor who helped us find the forms we needed, recommended accounting 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 the services of SBDC.
“They have a Business 101 course, and we also took advantage of a QuickBooks workshop they offered,” Kumfer said. “They answered many 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.
This is where Patrina Williams, owner of Business as Usual, can help.
“We help people open their own health care agency where they can come into homes, do light housework, wash dishes and run errands for people,” she said. “We support them throughout the process.
“Once a month I do a training course where we break it all down, including insurance, billing and how to find and hire staff. We walk people through and make sure they get a additional training, if necessary.
“The whole process to be operational can take four to five months.”
Stevenson said the characteristics and personality traits of a given individual also go a long way in determining the potential for success.
“A person should have an insatiable thirst or curiosity to understand and solve problems,” he said.
“A lot of people will describe entrepreneurs as brave or resilient, but for me that’s a bit too passive. What I see in the most successful people is that they are interactive. They