Have you ever considered the option of being your own employer? Done right, self employment can free you from the ups and downs of the employment market, and the impact of personal likes and dislikes of your boss. It can also allow greater flexibility in using your time, like rescheduling work to meet essential personal commitments.
The above and other advantages of self-employment will materialize only if you do it right. Let us explore what doing it right means.
Select the Right Business
Starting self-employment can be seen as starting a business of your own. And selecting the right business is at the top of the right things to do. There are several issues to consider when you select the business on which you will be focusing (probably for the rest of your life):
- Would you like what you will be doing day after day in that business? If the answer is yes, that’s a great plus point. Succeeding in a business typically involves working long and hard, and this becomes far easier if you like what you will be doing.
- Will you be able to sell what your business plans to sell? Answering this question requires you to identify the group of people who will be your customers. Do you know what they want? Another issue is competition. How exactly will you get these customers to buy from you instead of from a competitor?
Answering the “marketing” question should not be done in haste. Instead, you should take the time and trouble to get to know your customers and competition. Work with different ideas and continue thinking about the issues until you have come up with an offer that has a real chance of appealing to prospective customers more than competing offers.
The process just mentioned, of identifying relevant issues, and working with and continuing to think about them, lies at the core of “business modeling.”
Develop a Business Model
Business modeling covers not only the marketing issue, but every issue involved in creating, marketing and delivering what you sell to your customers. You will not only have to come up with effective solutions for the issues but also check to see whether each solution can be feasibly implemented with the resources you can organize.
Building a full business model as above is needed for every business idea you come up with. Some of the ideas might be dropped quickly because you become aware that they are not feasible, as when you identify that there is no worthwhile market or that they require resources far beyond what you can organize. The remaining ideas must be subjected to the modeling exercise.
The aim of business modeling is to gain insights into how you are going to tackle issues like:
- Technology related issues of making the product or rendering the service,
- Know-how and processing related issues of locating and hiring people with required skills, or of organizing the know-how or processes through outsourcing,
- Marketing related issues of reaching and winning over customers in sufficient volumes, and of delivering the product or service to them in a way that is convenient to you and them,
- Viability related issue of generating revenues that will comfortably exceed the costs of generating them, and
- Funding related issues of organizing money for setting up and running the business till the amount of cash flowing in is comfortably in excess of the cash flowing out.
Business Plan should come after Business Model
The exercise of writing a “business plan” should be postponed till you have worked out a business model. Business plans are typically fund-raising documents that you present to outside investors and lenders. Fund-raising is much easier if this audience feels that you have really gone into all the issues that affect the success of the business, which is precisely what business modeling does.
It might appear that if you have to do all this work to start a business, that option is not worth it. It depends on you. Do you want the freedom (and the money) that a business of your own can bring? If you do, business modeling can give you the confidence to go ahead.
Ideally, you should develop your business model by working with someone who has both business experience and business modeling expertise.
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