Before You Take the Leap, Open Your Eyes

Starting and running your own business can be tough, but choosing what kind of business to start can be even tougher.

“The question I get asked most frequently is, ‘I want to start my own business, but how do I decide what it should be?’ ” says Karen E. Klein, The Times’ “Small Talk” columnist.

Other entrepreneurs have a solid business idea but don’t know where to find business start-up classes, how to draw up a business plan or tap financing. So they jump into business and soon find themselves adrift.

Today, The Times begins a tutorial on how to start your small business by staff writer Vicki Torres and Debra Esparza, director of USC’s Business Expansion Network.

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For many people, the thought of running a small business is a pleasant fantasy of short hours, lots of money and a product or idea that catches like wildfire. We envision ourselves as another Paul Orfalea, easily expanding a fledgling copy business from the inside of a hamburger stand into an international chain of 850 Kinko’s.

But the reality of running a small business is more modest and more immediate.

Small businesses are the mainstay of most communities, notes Debra Esparza, a former banking executive whose work as director of USC’s Business Expansion Network takes her to neighborhood businesses. So the first step in choosing a business is to look around you.

Open your eyes to your neighborhood and notice the variety of small businesses. Find out what small businesses exist along your daily commute, near your workplace and where you want to start a business.

Next, take action.

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“Assess your role in small business,” Esparza says. “Are you a consumer, an employee or an owner? Become more active in all of those roles.”

The idea is to begin thinking entrepreneurially, Esparza explains.

As a small-business consumer, compliment business owners if they provide extra service for you. If a problem arises, don’t just grouse to yourself or chew out the owner; come up with a suggestion.

If you work in a cafe and 15 people ask for bacon with their burger, tell the owner. Suggest that a package of bacon might bring more sales at a higher price, for minimal cost and effort.

“An employee who recognizes consumer needs can add value to the business,” Esparza said.

If you are an owner, listen to what consumers and employees tell you. If customers at your dry-cleaning business can’t make the 6 p.m. closing time, consider staying open till 7 or 8, or doing business on Sunday.

An entrepreneur recognizes opportunity and acts on it. But the first step is seeing, Esparza said.

“In market terms, it’s perceiving a need or finding a need and thinking of a way to meet that need,” Esparza says.

For example, across the street from a major Southern California university sits a shopping mall. Susan, a hypothetical would-be entrepreneur, walks through the mall and asks, “What is not here?” and comes up with the idea for a stationery store. Bingo! After all, college students need pens, notebooks, reams of white paper and computer disks.

But further investigation would reveal that two stationery stores catering to students have gone out of business at the mall.

Why?

By asking students, Susan might discover that they don’t shop at the mall, opting instead for the more convenient campus bookstore, discount stores outside the area or supplies purchased for them by their parents.

“In business, there are usually two reasons why something is not there: No one has thought of it yet or someone has thought of it and has already gone out of business,” Esparza says.

Knowing that two stationery stores failed, Susan could stock crayons, gum erasers, pencils and white glue for elementary school-age children in the neighborhood, or greeting cards, wrapping paper and small gifts for adults. If the neighborhood has many Latino or Chinese immigrants, cards in Spanish or Mandarin might be appropriate.

Now try your hand at business seeing and acting by doing the exercises in the chart above.

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Your Dream Business

1. Visit a local small business and observe who the customers or clients are and where they come from.

2. Imagine yourself the owner. What new or revamped products, services or changes in operation might bring in more customers or increase sales to the same customers? What market needs are not being met?

3. Engage the owner in a friendly conversation and casually suggest your ideas. Is the owner hostile, defensive or receptive to your suggestions?

4. Now, name a few dream businesses you’ve been thinking about starting.

5. For each, list the general market and consumer needs each business meets.

6. Entrepreneurship is a creative solution to an ordinary problem. How would your business be different from others? What unmet need would you meet?

Next: How to explore opportunity.

Class Starts Today

Today The Times begins “Entrepreneurship 101,” a tutorial on how to choose, start, finance, plan and grow a business.

The program was developed with Debra Esparza, director of the USC’s Business Expansion Network, a community and economic development project. BEN has counseled more than 5,000 small-business owners in the Los Angeles area in the last six years, helping them with financing, business planning, accounting and marketing.

The tutorial also can be found on The Times’ small-business Web site at https://www.latimes.com/smallbiz

Entrepreneurship 101

Chapter 1--HOW TO CHOOSE A BUSINESS

- Open Your Eyes

- Explore Opportunity

- Examine Your Attitudes

- Add It All Up