How to Build a Successful Online Business 101

If asked whether they had the "right stuff" to run a small business, most people who are interested in starting a new business would answer with a resounding "yes." But the purpose of this page is not to arrive at a yes or a no answer; it's really just to help you evaluate your strengths and weaknesses so that you'll be in a better position to make certain decisions that you'll have to make before you start a new small business.

There are two distinctly different roles you'll play while preparing to open and run your own small business. Each requires specific skills. On the one hand, you're the person who will be responsible for providing products or services to your customers. This is true whether you have employees or not. On the other hand, you also have to deal with all the activities that relate to running your business. You need to be able to handle both in order to succeed.

Since every business is unique (or should be), the specific skill set needed to provide products or services will vary. Do your best to gauge the scope of activities that make up the business. Be particularly careful not to overlook the less-enjoyable aspects of the business. And every business has a few. Regardless of your desire to go into business for yourself, if you lack needed skills, it's unlikely you'll succeed unless you find a way to compensate.

Successful small business owners know their own strengths and weaknesses. They build their businesses around their strengths and they compensate for their weaknesses. If you're to succeed, you'll have to be able to identify what you do well and what you don't do well.

As you evaluate yourself, be honest. You'll only hurt yourself if you're not. Also, don't panic if you discover that you have weaknesses. Every small business owner has them. The key to success is not so much in having every skill (although that would help) as it is in finding ways to compensate for the weaknesses.

You're in effect making a list of what you like to do and what you don't like to do. Generally, we like doing things we're good at and we don't like doing things we're not good at. It's a simple approach, but it should help you start to focus.

Examine each of the skills areas listed in the chart. Ask yourself whether you possess some or all of the skills listed in the parentheses. Then rate your skills in each area by choosing the appropriate number, using a scale of 1-5, with 1 as low, 2 as between low and medium, 3 as medium, 4 as between medium and high, and 5 as high and write them down to total later.

Skills	Rating
Sales pricing buying sales planning negotiating direct selling to buyers customer service follow-up managing other sales reps tracking competitors	1 2 3 4 5
Marketing advertising/promotion/public relations annual marketing plans media planning and buying advertising copy writing marketing strategies distribution channel planning pricing packaging	1 2 3 4 5
Financial planning cash flow planning monthly financial bank relationships management of credit lines	1 2 3 4 5
Accounting bookkeeping billing, payables, receivables monthly profit and loss statements/balance sheets quarterly/annual tax preparation	1 2 3 4 5
Administrative scheduling payroll handling benefits administration	1 2 3 4 5
Personnel management hiring employees firing employees motivating employees general management skills	1 2 3 4 5
Personal business skills oral presentation skills written communication skills computer skills word processing skills fax, e-mail experience organizational skills	1 2 3 4 5
Intangibles ability to work hard ability to manage risk and stress family support ability to deal with failure ability to work alone ability to work with and manage others	1 2 3 4 5

After you've rated yourself in each area, total up the numbers.

Then apply the following rating scale:

If your total is less than 20 points, you should reconsider whether owning a business is the right step for you to do on your own without outside help.

If your total is between 20 and 25, you're on the verge of being ready, but you may be wise to spend some time strengthening some of your weaker areas or conceder some outside help.

If your total is above 25, you're ready to start a new business now.

Knowing your strengths and weaknesses is important because (1) it can tell you whether you're ready to start a small business, (2) in choosing a new business, it can help you match your skills to the right business, and (3) it can tell you whether you need to consider adding a partner who can bring skills to the business that you lack.

You can still be successful even if you don't possess every skill needed to run a small business. There are, however, certain qualities that you should possess if you're to be successful. Let's take a look at them:

Willingness to sacrifice — you must be willing to accept the fact that, as a small business owner, you are the last one to be paid. Your bank, your vendors, and your employees are all in line ahead of you and must be paid before you see any of the money. You must also be willing to sacrifice much of what once was your free time to your business. If you like working nine-to-five, knowing how much you'll make, and taking three weeks of vacation every year, don't go into business for yourself.
Strong interpersonal skills — if you thought that getting along with your boss was tough, wait until you have to deal with suppliers, customers, employees, lawyers, accountants, government officials, and everybody in between. Successful owners are able to work with all personality types, and they're able to find out from their customers what they like and don't like.
Strong leadership skills — successful owners understand that others are looking to them to be led to the promised land. Others will be looking to you for answers, and if you're not ready for that responsibility, you probably shouldn't own your own business.
Strong organizational skills — successful owners are able to keep track of everything that's going on in their business and they're able to set priorities and get things done. They know that if they lose track of what's going on, they're sunk.
Intelligence — we're not talking about the ability to score well on standardized tests. We're talking more about street smarts and common sense. Successful owners are able to anticipate problems before they arise and to take preemptive steps to avoid them, and they know how to solve crises after they occur.
Management ability — small business is all about managing relationships, with your customers or clients, with your employees, with your suppliers, with your accountant and lawyer, with your banker, and with your family. If you don't think you can effectively manage those relationships, you shouldn't start a new business.
Business experience — without some solid business experience, you're probably not going to be able to borrow any money. Your banker will want to know about your experience, not just in business, but in the same field as the business you're hoping to start. If you lack the experience, go get it any way you can: volunteer at an existing business or try to get a part-time or weekend job in the field.
Optimism — how will you react when business isn't going as well as your expected? A pessimist may fold the tent, but an optimist who believes in the business will keep going. Successful owners are optimists who are able to weather the rough spots.

Although the qualities listed above are important to a small business' success, particularly to one just starting out, not every single owner of every single successful business has had every single one of the desired qualities. This suggests that there's hope for those who don't possess every quality.
Maybe one of these categories applies to you:

The unique idea — if you've built a better mousetrap, they'll beat a path to your door, even if you're a poorly organized pessimistic misanthrope.
The genius — if you possess the gift of greatness, they'll not only overlook your weaknesses, they'll revel in them.
Blind luck — the Small Business Hall of Fame contains more than a few stories of people who backed into success because of their incredibly good timing.

If you discover that you don't have all of the traits you need to succeed, don't despair. You have options, including:

hiring someone who can handle those tasks you may not be good at
partnering with someone who has the traits or skills you lack
developing those traits or skills yourself

Refer back to the list of items you didn't score well on. Ask yourself if you can pay someone else to perform them. For example, if you don't like to sell, you can hire a salesman or if you don't like to do accounting work, you can hire an accountant. Down the road, as you get further along in setting up your new business, you may determine that the convenience of paying someone else to do the work is outweighed by the costs. But for now, all you have to do is identify whether someone else could do the work for you.

Now look again at the list of items you don't like to do. If your list includes items that you can't hire someone else to do, such as working with others, the solution is not so easy. Your best bet may be to partner up with someone whose skill set complements yours. For example, a person who likes working with people but not with numbers and forms may be a good match for someone who likes working with numbers but not with people.

Finding a good partner can be difficult. Most people partner up with those they know best, such as friends and family. But be aware that partnering with those you know best doesn't always work. Some marriages and friendships have been ruined by business partnerships, while others have been enriched by them. Finding a partner through others means, such as through a business association, is even more tenuous. The best advice is to be careful. Make sure that you're a good match before you go into business together.

Learning new skills. The third possibility is to develop the traits and skills yourself. There are at least three ways to do this. The first is by trial and error. In other words, you'll develop the skills over time by learning from your mistakes. The downside to this approach is that most small businesses won't give you much time or allow you to make many mistakes. If you benefit from trial and error, it'll usually be with the third or fourth new business you start.

The second method is to take classes at a local business school. While classes may offer a wealth of valuable information, they are usually expensive, they often take a long time to complete, and they normally don't offer much in terms of real-world experience.

The third method, using a small business incubator to help you get started, is probably the most effective. Incubators are programs that provide you with hands-on advice, as well as office space and access to office equipment and supplies. They're usually sponsored by federal or local government, but there are some private ones as well. There are so many of these incubators that chances are that one is near you. For more information and the location of the incubator nearest you, call the National Business Incubation Association at 740-593-4331 or the Small Business Administration at 1-800-827-5722.

So ends How to Build a Successful Business 101

How to Build a Successful Business 102 will be available 9/26/05