Despite the undertow of the Great Recession, more entrepreneurs launched new businesses in 2009 than at any other time in the past 14 years, according to The Kauffman Index of Entrepreneurial Activity. And small-business advocate and entrepreneur Dal LaMagna says that with the help of President Obama's SBA lending package, there's never been a better time for people with good ideas to get entrepreneurial.
The key, LaMagna says, is to start really small.
LaMagna founded Tweezerman, his global beauty-tools company, with $500 in cash. "It's a myth that entrepreneurs need large loans or angel investors to get a business going," he says. In fact, he recommends against them.
LaMagna blogs at HuffingtonPost.com and is the author of Raising Eyebrows: A Failed Entrepreneur Finally Gets It Right. In that book, he offers these seven principles for starting a microbusiness:
- Tailor it to passions and interests. He encourages owners to identify their passions. Then think about what pursuing them might mean for a lifestyle. People should think about how they want to spend their day; where they want to live; whether they want to work with people or alone; in the morning or at night; on the phone or in the field; and so on. Going through this exercise helps people eliminate any aspect of their business that doesn't create their preferred lifestyle and that might work against them.
- Be frugal. Don't spend money that isn't already there. Don't invest in anything not absolutely needed. If this means baking cupcakes in the local church basement and delivering signature pastries by bicycle to local stores - two dozen at a time - do it. Take the money made and put it right back into the business.
- Stay in balance. Think of the business as an equilateral triangle comprising three important functions: sales, production and control of the business. Spend equal amounts of time, energy, and resources on each of these three functions.
- Keep a monthly profit-loss statement. Do so for the first two years of the business. That will help owners stay on top of where their business is going, where it could do better and why it fluctuates.
- Find free stuff. Many items needed to start and run a small business are available free or for next to nothing. Be creative. Use freecycle.com; ask friends if they have an old computer or printer; or visit a thrift shop for office furniture or office supplies. "A hair-accessories crafter I know gets all her leather for free from a backpack manufacturer that throws their leather scraps away," LaMagna says.
- Write down agreements and keep them. With a very small business, clients sometimes assume that they don't have to sign an agreement. Wrong. Get in the habit of thinking like a company founder and get promises in writing. And keep the company's side of agreements.
- Keep focus. "When I first started Tweezerman," LaMagna says, "I did nothing but focus on tweezers and selling them to cosmetic counters, one store at a time. Along the way, I got an offer to branch out and sell industrial tweezers to electronics manufacturers. Instead, I kept the focus on what I was already doing - and doing very well. If you can do one thing well, don't dilute your efforts until you have been turning a large profit over a consistent stretch of time."
Don't forget to record every expense. From the dollar given to the homeless guy on the way to meet a prospective client to the new tie bought to look professional, write down every single penny. The key to launching a microbusiness is to keep expenses under control and fully accounted for.
For more information, visit htt://www.raisingeyebrows.com.