how to start a business

A new friend from Myspace.com asked me the following question, so I offered my answer.
question: Hello! I want to ask your advice: how to start my own business? If you have been already done it,can you describe your firs steps?

answer:

1. get yourself ready.
   1. Change your mentality about money. Most of us grew up with the mentality that money is scarce. With this kind of mentality it is very difficult for us to start any business because we are scared of loosing money.  It takes trial and error for a new entrepreneur to learn about building a business. Our first business almost always fails because we are doing it for the first time and loosing money is almost always inevitable. if you are stuck you can get over the fear of loosing money by allowing yourself to loose money. the same goes for overcoming the fear of failing just mentally let go and allow yourself to fail in your business. Most of us are paralyzed by our perceived needs to do everything perfect.  that is why venture capital always prefer to invest in people that have had business start up experience before whether they failed or succeeded.  VCs are looking for people that have been there done that before and that is why for your first business you almost always have to come up with your own money or your family’s money. the only way to get around this is if you already have a product with new technology that has already demonstrated tremendous demand.
   2. your business evaluating skills (absolutely need it now. if you don’t you will fail a couple of times and learn, which is how most people learn. the best way to learn how to evaluate business is to write a thorough business plan. it take at least 3 months for you to hammer out the research and the plan.
   3. your business management skills (may learn as you go. read a lot and try a lot.)
2. find a partner if you need one. generally it is best to find someone that compliments your skill sets. for example a technical person partnering with a business person. that way the technical person develops the product and the business person can sell the products to the clients.
   1. if you have a lot of money you can hire that partner offer little or no equity.
   2. if you don’t have a lot of money your only choice is to offer equity to start the partnership.
   3. Or if you already secured funding then you can hire the partner too, but without a prototype the chance of getting funding is almost zero.
3. find money.
   1. have a solid business plan
   2. build the prototype or beta site
   3. prepare a impeccable investment pitch
   4. practice that investment pitch
   5. go out there talk to VCs and angel investors to get funding
   6. make sure that your equity in the company is not diluted to next to nothing.
4. manage and grow your business
   1. the business process:
      1. ask what the customers want.
      2. find or build that product.
      3. and give it to the customers.
      4. follow up for feedback and assistance.
   2. the selling process:
      1. built your product or service that is better than competitor and cannot be replacement products cannot be found easily.
      2. market your product to the right consumer group with the right message
      3. capture leads efficiently. meaning every calls or store and web visits generated from the marketing should be generated into a sell. this goal is not realistic but it is what you want.
      4. conducting the sell.
         1. if it is done by sales persons they should be adequately trained.
            1. sales person should learn by watching first. it could be in person training or video training or both.
            2. sales person should then internalize those material and put on paper.
            3. sales person should then practice either in person or on the phone
            4. at last sales person should be tested before going out to meet real customers.
         2. if it is done by the web the interface should be user friendly and process should be safe for consumers.
      5. after the sell call to ask clients whether they are satisfied with the products or services
      6. do every thing possible to keep repeat customers.
      7. ask for referrals from current customers.
   3. employees make everything happen so they should be treated well
      1. hire wisely
         1. when company is small hire the ones that fits your situation. you may not have the ability to hire the best yet.
         2. hire the best when your company has the ability to do so.
      2. compensate accordingly
         1. compensate according to individual contribution.
         2. also compensate according to group efforts.
      3. treat employees like family
   4. money should only be spent on three things
      1. getting new clients
      2. keeping existing clients
      3. keep employees happy
5. exist: ultimately what do you want to do with your company?
   1. grow your own company by introducing great products and generate great profit and stay private.
   2. sell your company.
   3. Initial public offering.