However, it’s going to take more than just passion to launch a successful business. It’ll take time, dedication, planning, and a bit of risk on your part. 

Should you start a business?

As you toy around with the idea of turning your hobby or side hustle into a business, there’s one question you should ask yourself first. Should you start a business?

Typically it’s a question of feasibility, and we’ll cover that in a bit, but when you’re adapting a hobby there is one additional complication to consider. You may no longer enjoy it. The pressure of working to a schedule and meeting financial goals and customer expectations can simply take away the fun, relaxation, and personal satisfaction.

There’s a chance that you end up disliking the activity so much as a business that you never want to do it again. That fundamental change is something you need to be ready for. Think long and hard before taking that step and ask yourself “If this doesn’t work out as a business, could I live with not ever doing it again because I won’t ever feel the same about it?”

If the answer’s no, save yourself some heartache and choose some other way to make a living. If the answer is yes or if you’re unsure, then it’s at least worth exploring what your hobby as a business could look like. To get a full picture of your new entrepreneurial endeavor, you’ll want to follow these ten steps.

10 steps to turn your hobby into a business

1. Set a goal

Simply deciding to turn your hobby into a business isn’t a goal. Of course, you want to be working on something you’re passionate about, but what else do you want from your business? 

Do you intend to quit your day job and run it full-time? Are you just looking for a side hustle? Do you simply want a challenge or even just the freedom to make something on your own?

Ask yourself these questions and determine, outside of passion, what you expect to get out of opening your own business. Having your reasons clearly outlined can help you stay the course and remember why you decided to become an entrepreneur in the first place.

2. Do your research

Many entrepreneurs fall into the trap of being enamored with a product or business idea. Starting with something that you’re passionate about can be even more dangerous. That’s why you need to conduct market research to make sure your business idea isn’t just appealing to you.

This process is simply you learning more about your potential customer. You’re asking questions, looking at the available market, analyzing competitors, and identifying your target market. 

Now don’t get too caught up in this stage, as it can quickly turn into a barrier to ever getting your business out of the idea stage. Just do enough to verify that your idea is well-thought-out and has potential in the market. You’ll likely come back to this step fairly often throughout the life of your business and you shouldn’t worry about perfectly researching every single possibility. 

3. Identify a business model

The second half of doing your research is identifying a business model. It can be really easy to find a problem, have an idea, and jump right into product or brand development. But if you don’t fully understand how you will actually make money, you won’t ever get your business off the ground.

To put it simply you need to know:

• How much it will cost to make your product or service.
• How much it will cost to sell it.
• How much your customer is willing to pay.

You also need to consider how you’ll actually sell the product. Will it be a subscription model? A one-time purchase? Ad-revenue? Franchising, leasing, or maybe even crowdsourcing? 

Find a platform that fits your customer-base, business offering, and pricing strategy. Just be sure whichever model you choose brings in more money than your spending. And to be clear, you can always adjust and adapt as you go, but it’s better to start out on the right foot.

4. Test your idea

You’ve done your research and established a business model, but here’s the issue, all of that is hypothetical. You think there’s an opportunity. You think you know your ideal customer and how to sell to them. But you aren’t sure.

So, before you go full steam ahead you’ll want to validate your idea. You’ve done a bit of this already when asking potential customers questions, but this is where you test if they’ll actually buy it. 

Some ways to do this include: releasing a coming soon landing page, taking preorders, selling a limited run, running a crowdfunding campaign, and even running digital ads. There are plenty of ways to test and your method really depends on your business model.

Now, the key to successfully validate your idea is to set out with metrics of success in mind. Whether it’s a number of newsletter signups, preorder amounts, or conversions on ads, you need to know how much represents success. 

5. Develop a business plan

If you find that your idea does have traction, it’s time to make things official. Writing a business plan helps you put everything you’ve done so far in order and ensures you’re covering all your bases. This is where you put together all of your market research, business goals, operational costs and think about long-term goals and milestones.

You don’t need to worry about putting together a 30+ page business plan and can instead start off with a lean plan. Lean planning is a simpler, more efficient method of business planning that allows your plan to grow and adapt with your business. You’ll still have all of the necessary documents in order if you ever plan on seeking out a loan or pitching to investors, but it takes much less time upfront to get everything together.

If you’re unsure where to start with your business plan, you can download our free lean planning template. Or if you want a streamlined process that takes the guesswork out of building a plan, you may want to consider investing in business planning software such as LivePlan. 

With LivePlan, you get step-by-step instructions as you develop your plan and a long-term solution for maintaining and updating your financials and planning documents. It ensures that you spend more time running your business and less time digging through spreadsheets and word documents.  

6. Get your finances in order

You’ll naturally identify your startup and operational costs throughout the business planning process. But you’ll also need to get the rest of your financial plan in order. The documents included represent a snapshot of your current monetary situation, the health of your business, and any future expectations you’ve forecasted. You’ll need a:

• Profit and loss statement
• Cash flow statement
• Balance sheet
• Sales forecast
• Personnel plan
• Business ratios and break-even analysis

At the start, a full financial plan is valuable for you to keep track of how your business is doing and identify any areas for improvement. Eventually, if you apply for a loan or pitch your business this will be a vital piece to successfully receive funding.

Lastly, you’ll also need to get your personal finances in order. This means understanding your current financial situation, what you can afford for your business, and if your personal credit will affect your business. You’ll likely want to separate your business from your personal finances if you become a full-time business owner, but if it’s initially more of a side-hustle and you’re in good financial standing this may not be necessary. 

7. Learn marketing basics

The potential of your business can quickly die if you’re not reaching your customers. That’s why it’s vital that you do some research and know some marketing basics from the get-go. There are plenty of low-cost offline marketing methods you can consider, as well as digital marketing practices to keep in mind.

At the least, be sure to set up a website and social channels for your business. This gives potential customers an easy focal point that you can feature in both digital and physical marketing material. You also may want to consider running digital ads on Google Search and Facebook, which can be a low-cost method for building a customer base.

The key to successfully marketing your business is iteration and connecting with your customers where they’re at. Don’t just stick with one message, test multiple iterations, and see what converts more. And don’t spend money on tv ads if your customer base is mostly in their early 20s and that money could be better spent marketing to them online. Be willing to try, fail and try again as you narrow down your messaging.

8. Get customers

This may seem like an obvious step, but it’s vital for long-term success. You’ve tested and validated your idea, which may have led to sales, but now it’s time to get your first official customers. These buyers are acquired through the sales and marketing channels you’ve established, and represent everything you’ve planned in action. 

You may find that these customers are a bit more difficult to acquire than your early adopters, but they can also be your best chance at gaining traction. Offer promotional discounts, incentives, and even free services in exchange for reviews and feedback. This initial group serves as your springboard for building an audience and a positive reputation.

Take what you learn as you acquire these customers to grow and refine your business model and marketing efforts. With the right incentives, you can make a name for yourself and work out any initial problems that would deter less interested customers.

9. Set milestones

Milestones are something you’ll need to cover in your business plan, but they aren’t goals that you set in stone. Instead, they should evolve as you operate your business, see results, and adjust your trajectory accordingly. While you likely set milestones to get your business up and running, these later goals should be what you intend to achieve long-term.

And while specific sales, operational, and even funding milestones should be included, you’ll also need to consider professional milestones for yourself. You did turn your hobby into a business after all and you may not be working on your startup full-time. So you should set goals around how long you need to stay at your current job, or how much personal debt you need to pay off in order to invest in your business full-time.

Use these long-term goals as a guiding force to become a successful entrepreneur. They can help inform any short-term actions and ensures that you stay on track without taking any unnecessary risks.

10.  Find a mentor

Now that you’ve gotten your business off the ground it may be time to grow your network and find a business mentor. This is someone who’s gone through the process before and can help guide you through the startup and growth stages. They could be someone in your current network, an old business colleague, part of a local startup community, or even a well-known entrepreneur.

The only thing that you need to keep in mind is that you shouldn’t try and force the mentorship. Instead, it should occur as a natural part of you growing your professional network. Be on the lookout, showcase a willingness to learn, and have your business plan or pitch deck at the ready to showcase how you’re handling a startup.

Be prepared for startup post-partum

If you’ve followed these ten steps there’s a good chance you’ve successfully turned your hobby into a business. Or you may have found through the exploration that your hobby should just stay a hobby. 

Just remember if you did end up creating a business, that the process may sour something that you used to enjoy. And this can be compounded by the natural let down as you fall into the regular cadence of maintaining operations. Just remember this is perfectly natural and there will always be opportunities to grow and experiment that will inject that excitement back in.

Believe it or not, creating a business plan for a nonprofit organization is not that different from planning for a traditional business. 

Nonprofits sometimes shy away from using the words “business planning,” preferring to use terms like “strategic plan” or “operating plan.” But, the fact is that preparing a plan for a for-profit business and a nonprofit organization are actually pretty similar processes. Both types of organizations need to create forecasts for revenue and plan how they’re going to spend the money they bring in. They also need to manage their cash and ensure that they can stay solvent to accomplish their goals.

In this guide, I’ll explain how to create a plan for your organization that will impress your board of directors, facilitate fundraising, and ensures that you deliver on your mission.

Why does a nonprofit need a business plan?

Good business planning is about setting goals, getting everyone on the same page, tracking performance metrics, and improving over time. Even when your goal isn’t to increase profits, you still need to be able to run a fiscally healthy organization.

Business planning creates an opportunity to examine the heart of your mission, the financing you’ll need to bring that mission to fruition, and your plan to sustain your operations into the future.

Nonprofits are also responsible for meeting regularly with a board of directors and reporting on your organization’s finances is a critical part of that meeting. As part of your regular financial review with the board, you can compare your actual results to your financial forecast in your business plan. Are you meeting fundraising goals and keeping spending on track? Is the financial position of the organization where you wanted it to be?

In addition to internal use, a solid business plan can help you court major donors who will be interested in having a deeper understanding of how your organization works and your fiscal health and accountability. And you’ll definitely need a formal business plan if you intend to seek outside funding for capital expenses—it’s required by lenders.

Creating a business plan for your organization is a great way to get your management team or board to connect over your vision, goals, and trajectory. Even just going through the planning process with your colleagues will help you take a step back and get some high-level perspective.

A nonprofit business plan outline

Keep in mind that developing a business plan is an ongoing process. It isn’t about just writing a physical document that is static, but a continually evolving strategy and action plan as your organization progresses over time. It’s essential that you run regular plan review meetings to track your progress against your plan. For most nonprofits, this will coincide with regular reports and meetings with the board of directors.

A nonprofit business plan will include many of the same sections of a standard business plan outline. If you’d like to start simple, you can download our free business plan template as a Word document, and adjust it according to the nonprofit plan outline below.

Executive summary

The executive summary of a nonprofit business plan is typically the first section of the plan to be read, but the last to be written. That’s because this section is a general overview of everything else in the business plan – the overall snapshot of what your vision is for the organization.

Write it as though you might share with a prospective donor, or someone unfamiliar with your organization: avoid internal jargon or acronyms, and write it so that someone who has never heard of you would understand what you’re doing.

Your executive summary should provide a very brief overview of your organization’s mission. It should describe who you serve, how you provide the services that you offer, and how you fundraise. 

If you are putting together a plan to share with potential donors, you should include an overview of what you are asking for and how you intend to use the funds raised.

Opportunity

Start this section of your nonprofit plan by describing the problem that you are solving for your clients or your community at large. Then say how your organization solves the problem.

A great way to present your opportunity is with a positioning statement. Here’s a formula you can use to define your positioning:

For [target market description] who [target market need], [this product] [how it meets the need]. Unlike [key competition], it [most important distinguishing feature].

And here’s an example of a positioning statement using the formula:

For children, ages five to 12 (target market) who are struggling with reading (their need), Tutors Changing Lives (your organization or program name) helps them get up to grade-level reading through a once a week class (your solution).

Unlike the school district’s general after-school homework lab (your state-funded competition), our program specifically helps children learn to read within six months (how you’re different).

Your organization is special or you wouldn’t spend so much time devoted to it. Layout some of the nuts and bolts about what makes it great in this opening section of your business plan. Your nonprofit probably changes lives, changes your community, or maybe even changes the world. Explain how it does this.

This is where you really go into detail about the programs you’re offering. You’ll want to describe how many people you serve and how you serve them.

Target audience

In a for-profit business plan, this section would be used to define your target market. For nonprofit organizations, it’s basically the same thing but framed as who you’re serving with your organization. Who benefits from your services?

Not all organizations have clients that they serve directly, so you might exclude this section if that’s the case. For example, an environmental preservation organization might have a goal of acquiring land to preserve natural habitats. The organization isn’t directly serving individual groups of people and is instead trying to benefit the environment as a whole. 

Similar organizations

Everyone has competition—nonprofits, too. You’re competing with other nonprofits for donor attention and support, and you’re competing with other organizations serving your target population. Even if your program is the only one in your area providing a specific service, you still have competition.

Think about what your prospective clients were doing about their problem (the one your organization is solving) before you came on this scene. If you’re running an after-school tutoring organization, you might be competing with after school sports programs for clients. Even though your organizations have fundamentally different missions.

For many nonprofit organizations, competing for funding is an important issue. You’ll want to use this section of your plan to explain who donors would choose your organization instead of similar organizations for their donations.

Future services and programs

If you’re running a regional nonprofit, do you want to be national in five years? If you’re currently serving children ages two to four, do you want to expand to ages five to 12? Use this section to talk about your long-term goals. 

Just like a traditional business, you’ll benefit by laying out a long-term plan. Not only does it help guide your nonprofit, but it also provides a roadmap for the board as well as potential investors. 

Promotion and outreach strategies

In a for-profit business plan, this section would be about marketing and sales strategies. For nonprofits, you’re going to talk about how you’re going to reach your target client population.

You’ll probably do some combination of:

• Advertising: print and direct mail, television, radio, and so on.
• Public relations: press releases, activities to promote brand awareness, and so on.
• Digital marketing: website, email, blog, social media, and so on.

Similar to the “target audience” section above, you may remove this section if you don’t promote your organization to clients and others who use your services.

Costs and fees

Instead of including a pricing section, a nonprofit business plan should include a costs or fees section.

Talk about how your program is funded, and whether the costs your clients pay are the same for everyone, or based on income level, or something else. If your clients pay less for your service than it costs to run the program, how will you make up the difference?

If you don’t charge for your services and programs, you can state that here or remove this section.

Fundraising sources

Fundraising is critical for most nonprofit organizations. This portion of your business plan will detail who your key fundraising sources are. 

Similar to understanding who your target audience for your services is, you’ll also want to know who your target market is for fundraising. Who are your supporters? What kind of person donates to your organization? Creating a “donor persona” could be a useful exercise to help you reflect on this subject and streamline your fundraising approach. 

You’ll also want to define different tiers of prospective donors and how you plan on connecting with them. You’re probably going to include information about your annual giving program (usually lower-tier donors) and your major gifts program (folks who give larger amounts).

If you’re a private school, for example, you might think of your main target market as alumni who graduated during a certain year, at a certain income level. If you’re building a bequest program to build your endowment, your target market might be a specific population with interest in your cause who is at retirement age.

Do some research. The key here is not to report your target donors as everyone in a 3,000-mile radius with a wallet. The more specific you can be about your prospective donors—their demographics, income level, and interests, the more targeted (and less costly) your outreach can be.

Fundraising activities

How will you reach your donors with your message? Use this section of your business plan to explain how you will market your organization to potential donors and generate revenue.

You might use a combination of direct mail, advertising, and fundraising events. Detail the key activities and programs that you’ll use to reach your donors and raise money.

Strategic alliances and partnerships

Use this section to talk about how you’ll work with other organizations. Maybe you need to use a room in the local public library to run your program for the first year. Maybe your organization provides mental health counselors in local schools, so you partner with your school district.

In some instances, you might also be relying on public health programs like Medicaid to fund your program costs. Mention all those strategic partnerships here, especially if your program would have trouble existing without the partnership.

Milestones and metrics

Without milestones and metrics for your nonprofit, it will be more difficult to execute on your mission. Milestones and metrics are guideposts along the way that are indicators that your program is working and that your organization is healthy.

They might include elements of your fundraising goals—like monthly or quarterly donation goals, or it might be more about your participation metrics. Since most nonprofits working with foundations for grants do complex reporting on some of these, don’t feel like you have to re-write every single goal and metric for your organization here. Think about your bigger goals, and if you need to, include more information in your business plan’s appendix.

If you’re revisiting your plan on a monthly basis, and we recommend that you do, the items here might speak directly to the questions you know your board will ask in your monthly trustee meeting. The point is to avoid surprises by having eyes on your organization’s performance. Having these goals, and being able to change course if you’re not meeting them, will help your organization avoid falling into a budget deficit.

Key assumptions and risks

Your nonprofit exists to serve a particular population or cause. Before you designed your key programs or services, you probably did some research to validate that there’s a need for what you’re offering.

But you probably are also taking some calculated risks. In this section, talk about the unknowns for your organization. If you name them, you can address them.

For example, if you think there’s a need for a children’s literacy program, maybe you surveyed teachers or parents in your area to verify the need. But because you haven’t launched the program yet, one of your unknowns might be whether the kids will actually show up.

Management team and company

Who is going to be involved and what are their duties? What do these individuals bring to the table?

Include both the management team of the day-to-day aspects of your nonprofit as well as board members and mention those who may overlap between the two roles. Highlight their qualifications: titles, degrees, relevant past accomplishments, and designated responsibilities should be included in this section. It adds a personal touch to mention team members who are especially qualified because they’re close to the cause or have special first-hand experience with or knowledge of the population you’re serving.

There are probably some amazing, dedicated people with stellar qualifications on your team—this is the place to feature them (and don’t forget to include yourself!).

Financial plan

The financial plan is essential to any organization that’s seeking funding, but also incredibly useful internally to keep track of what you’ve done so far financially and where you’d like to see the organization go in the future.

The financial section of your business plan should include a long-term budget and cash flow statement with a three to five-year forecast. This will allow you to see that the organization has its basic financial needs covered. Any nonprofit has its standard level of funding required to stay operational, so it’s essential to make sure your organization will consistently maintain at least that much in the coffers.

From that point, it’s all about future planning: If you exceed your fundraising goals, what will be done with the surplus? What will you do if you don’t meet your fundraising goals? Are you accounting for appropriate amounts going to payroll and administrative costs over time? Thinking through a forecast of your financial plan over the next several years will help ensure that your organization is sustainable.

Money management skills are just as important in a nonprofit as they are in a for-profit business. Knowing the financial details of your organization is incredibly important in a world where the public is ranking the credibility of charities based on what percentage of donations makes it to the programs and services. As a nonprofit, people are interested in the details of how money is being dispersed within organizations, with this information often being posted online on sites like Charity Navigator, so the public can make informed decisions about donating.

Potential contributors will do their research—so make sure you do too. No matter who your donors are, they will want to know they can trust your organization with their money. A robust financial plan is a solid foundation for reference that your nonprofit is on the right track.

Business planning is ongoing

It’s important to remember that a business plan doesn’t have to be set in stone. It acts as a roadmap, something that you can come back to as a guide, then revise and edit to suit your purpose at a given time.

I recommend that you review your financial plan once a month to see if your organization is on track, and then revise your plan as necessary.

Additional Help

Our free business plan template can help you work through each section of your plan. Also, be sure to check out a complete nonprofit business plan example for reference. 

If you’re looking for a tool to help you write your business plan, you may want to check out LivePlan. It can easily be configured to create a nonprofit business plan with step-by-step guidance throughout the process. You’ll be able to easily develop forecasts and compare to your actuals through a single dashboard to actively plan, adjust, and present to investors and board members. It’s a great option to keep business planning simple so you can focus on serving those that you’re hoping to help.

Editor’s note: This article was originally published in 2014. It was updated in 2021.

Picking the right attorney in your startup is as important as picking the right business partner. You can’t underestimate the importance of selecting an attorney who “gets” your business model, your market opportunity, and most importantly, your fundraising and exit strategy.

My business partner and I made many mistakes in our first tech startup, and so many of them were the result of choosing a lawyer who was a terrible fit. 

Let me paint the picture for you: We were about two months into our startup idea. We had stars in our eyes and excitement in our bellies. Both my business partner and I were “green”—meaning, this was our first startup venture, and we had no idea what we were about to get ourselves into on that warm fall day when we walked into the office of our soon-to-be attorney…

The attorney was, in fact, a business attorney, but what we later discovered was she had never before worked with a tech startup with high growth ambitions, the need to raise multiple rounds of financing over the next two years, and the goal to exit/sell the company in a five- to seven-year timeframe.

We were targeting raising around $3 million from investors. We had personally invested $70,000 of our own money at this point, and we were hoping to raise at least another $250,000 to help us hire a team, launch our company, and begin to build our product.

We shared all of this with our attorney before she helped us write our Operating Agreement (OA), so we assumed we were in good hands. The agreement seemed to have all the things business partners would need in order to professionally launch and run a company together (i.e., team roles and responsibilities, ownership percentages, “what if” scenarios, etc.).

We set off to raise our money. We developed a kick-ass investor pitch and we started pitching it to family, friends, angel investors, and even venture capitalists for feedback. We knew we were too early for VC money, but it was nice to get the chance to pitch to VCs early in our startup and learn what milestones we needed to accomplish to become “venture-ready.”

We soon got interest from an angel investor, and he wanted to invest $300,000 in our startup. My business partner and I were elated. After a couple of due diligence meetings with the investor and our attorneys, he gave us the check.

The deal we made with him was he’d get 30% of our company in exchange for the $300K, and my business partner and I each diluted from 50% ownership down to 35% each. So far it sounded like a fair deal, considering we didn’t yet have a product developed—only a pitch deck, a business plan, a fleshed-out idea, and some user interface (UI) designs of what we thought our online product would look like.

However, the deal we made with this investor was not in the best favor of the company’s growth—we just didn’t know it at the time.

The non-dilution clause that killed my startup.

What we’d signed was an agreement that the investor could keep his 30% ownership and never dilute.

Now, if you’re a savvy investor or entrepreneur, I’m sure your jaw just dropped as you read that. Maybe you even shouted some profanities out loud. For those of you who don’t understand the implications of an investor this early in a deal never diluting his shares: That kind of a deal is unheard of and extremely detrimental to any future fundraising.

When fundraising for a startup, all investors dilute as additional investors join in on the deal. This should be clearly spelled out in your Capitalization Table, or “Cap Table” as it’s commonly called. A Cap Table shows who owns the company, what the ownership shares are, and what the owners have invested in exchange for that share.

Our attorney updated our operating agreement to include a “non-dilution clause” for this investor, and my business partner and I later found out how much this would cost our company—both financially and otherwise.

Now, let’s fast-forward about nine or ten months into the growth of the company. We had a beta product launched, 20 beta testers, and lots of interest from different investor groups. One group of angels was interested in investing up to $500,000 in our company, and another was willing to match those funds if the first group invested. We even won $65,000 from an angel investor pitch competition in the form of a convertible note.

We were on a roll.

That is until one very savvy investor from the interested angel group asked for a copy of our operating agreement. We gladly handed it over to him as part of the due diligence process. A few days later, he asked to schedule a call with us. This is when we found out just how devastating it was to have that “non-dilution clause” as part of our OA.

The investor said, “We can’t invest in you unless this clause is removed from your operating agreement.”

It didn’t seem like too big of a deal to ask our first angel investor to agree to us removing the clause. But when we asked him he was livid that we had “gone back on our deal.” We explained to him and his attorney that this clause was harmful to our growth, and that interested investors were stipulating that we remove it. We even explained that it’s not common to have this clause in an OA for startup companies—especially tech startups.

Neither he nor his attorney grasped this concept. His attorney was convinced he was protecting his client’s investment, when in fact he was harming his investment because the non-dilution clause was not allowing other investors to fund our growth.

That $300,000 investment, which had initially made us so happy, was what we later learned is endearingly called “dumb money.”

Our attorney should have known.

At this point in our startup’s saga, a mentor suggested we hire another attorney—someone with experience in technology startups that raise multiple rounds of financing and desire founder exits within five to seven years. It felt awkward going to another attorney without telling our first attorney (we were advised not to do so), but we decided it was important for the health of the company. So we hired another firm to help us facilitate the removal of this clause.

We eventually got the clause removed, but it took several months and tens of thousands of dollars. It also cost me, as the CEO of the company, time away from additional fundraising and selling, since both my business partner and I spent too much time on expensive legal meetings trying to convince our only investor that he was harming the future of our company, and ruining his own investment by blocking others from coming in.

By the time the clause was removed from our OA, the Great Recession was in full swing. The housing debacle was ramping up, and the angel investor group that had been interested in investing in us had moved on, and invested their funds in another startup. We lost the opportunity and had to raise funds from our friends and family to help sustain us for a few more months. Ultimately, we ran out of money and had to dissolve the company.

Success is a terrible teacher

This was a terrible—but also great—lesson to learn at that stage in my startup career. Mind you, my business partner and I didn’t blame the failure of our company on that one investor because we did make a series of other mistakes, but I can tell you that the experience hurt us at a critical time during our company’s launch.

I now say that “success is a terrible teacher,” and I strongly believe in that statement. Life’s best lessons come from failure. What’s important, though, is to learn from those failures and share those experiences with others, in the hopes of helping them avoid making the same mistakes.

I hope I can help you avoid making the same mistakes we made.

It’s important to conduct due diligence on anyone that comes into contact with your company—especially your attorney.

Below is a quick checklist of ten questions that will help you select the right attorney for your startup. Please add to it in the comments if you have other tips for entrepreneurs!

10 questions to consider when interviewing an attorney for your startup:

1. Has the attorney ever worked in your industry before? Do they understand the startup lingo in your industry, and do they understand your business model?
2. How much time do they have for you?
3. Who else in their firm can help you if they are unavailable for some reason?
4. Have they worked with companies who have raised multiple rounds of financing to start or grow?
5. Can they create and advise on a Capitalization Table?
6. Do they (or does the firm they work for) have experience creating compensation packages for key employees, including stock options for all employees?
7. Do they (or does their firm) have experience with intellectual property and patents?
8. Have they worked with companies that have a global footprint?
9. Do they have experience with mergers and acquisitions, including how to set up the company for successful exit scenarios?
10. Are they willing to share a few references from other startup companies they’ve helped?

After our company failed, I took several weeks and interviewed angel investors, venture capitalists, and other founders who had experienced failed startup ventures and investments. As a result of my research, I compiled a presentation titled “The Top 10 Reasons Startups Fail.”

I’d love to hear your startup failure stories. Tweet me @iamcarolina.

Best of luck to you in your startup venture!

Editor’s note: This article originally published in 2014. It was updated in 2019.

If your dream is to open a hair salon, now might be one of the best times to do it. According to Zion Market Research, the salon industry is growing steadily and is projected to continue growing. They estimate that the global spa and beauty salon market should reach approximately 190.81 billion USD in 2024. In the U.S. alone, the salon industry is estimated to be worth $47.1 billion, and the market size is expected to increase by 1.5 percent in 2019.

If you are planning to start a hair salon, this guide will give you the details you need to get started. Plus, we’ve asked two salon owners to offer some tips to get your shop up and running.

Dallas Alleman, the owner of Salon Du Beau Monde in New Orleans, and Avi Shenkar, the owner of Philadelphia-based BLO/OUT, have different backgrounds and different business models, but share similar strategies for success.

Alleman has a 40-year history in the salon business, as both a licensed cosmetologist and an instructor. He has opened three salons in New York, Santa Fe, and New Orleans, and his current endeavor is a high-end boutique salon that offers all the traditional services.

Shenkar, on the other hand, is an entrepreneur with business experience, but no salon background. However, he has opened two BLO/OUT locations in Philadelphia and is working on three other locations. 

While they may run different types of salons, many of their tips for success are the same. 

It’s important to have a plan in place before you open your salon. Here are a few things you’ll want to do before you open:

Create a business plan

No business can function properly without a business plan. A business plan acts like a roadmap, a document that will guide your business to success. 

But, business planning doesn’t have to be a long drawn out process. In fact, you’ve probably already put together a lot of the information mentally, or even scribbled a few notes on paper. The point of a solid business plan is to figure out what your business is, how it will be successful, and how you’ll troubleshoot problems.

Our article on How to Write a Business Plan is a good starting point if you need a formal business plan, and if you’re looking for a faster, lightweight planning option, check out our guide to Lean Planning. You can also download our free business plan template, and take a look at our salon industry sample business plans to see how other salons have approached the process. If you’d rather not start from scratch, you can also try LivePlan, our business planning software.

Figure out funding

Whether you’re seeking a traditional bank loan or borrowing money from friends and family, you need to figure out how much money you need to get started, and where it will be coming from. 

Most likely, you’ll be doing a combination of multiple funding methods, and you may be using your own money and bootstrapping your business. Regardless of what route you take, it’s important to have a clear idea at the outset of where the money is coming from. Our funding guide gives an overview of your options if you aren’t yet sure what funding options are right for your salon.

Find a mentor

As you’re planning your business, it’s a great time to find a business mentor. It’s best to find someone in the salon industry that can answer questions for you as you start and grow your business.

Put an accounting and inventory program in place

To keep track of your money and project growth, you’ll want to implement an accounting and inventory program. 

On the accounting side, you’ll need a program to track your revenue and expenses. You’ll also need to figure out how you’ll pay Uncle Sam, so it’s a good idea to sit down and chat with an accountant to help you get started.

You’ll also need a way to track inventory; Salon Today has some great tips on this particular topic.

Hunt for the right location

Choosing the right location is the difference between success and failure, Shenkar says. He admits that if he could go back and pick a location for his first salon, he probably wouldn’t pick the same spot. 

You want to select a spot with good traffic, high visibility, and is located where your target demographic shops or lives. Shenkar advises being fussy about your location, as it’s vital to the success of your salon.

Aside from touring around various locations with a realtor, Alleman suggests driving through the areas that you want to be located in and look for vacant properties. Just because there isn’t a “for sale” sign in the window doesn’t mean it’s not available. In his experience, people sometimes hang on to a property for sentimental reasons and are willing to rent it out if the right opportunity comes along. It never hurts to call and ask the owner if an arrangement can be made.

You don’t just want the right storefront—you want the whole package, says Shenkar. So, do your homework. Know the demographics, the local competitors, and think about how your customers will get to your salon. Is there ample parking? Is a construction project planned on your block? You want to know everything you can about the area before you select a location.

With the planning stages complete, you’ll move on to the nitty-gritty details of actually opening your salon.

Build your salon brand around the clientele you want

Before you start painting the walls and picking out furniture, make sure that your brand vision matches the kind of clientele you want to attract. According to Alleman, this is one of the most important lessons he has learned.

“You want your customers to feel comfortable in your salon, so make it a place they want to visit,” he says.

This means taking what you know about your target market, and working to create a brand for your salon based on their interests, tastes, and habits. Don’t overlook the importance of building a brand for your salon; the idea of “branding” might feel like something only big businesses do, but it’s necessary to tailor your look to your intended client base, and creating a brand is a key part of that process.

Provide excellent customer service

After you’ve created an environment that your clients will love, you have to follow through by offering excellent customer service.

“Provide an experience for your customers, not just a service,” Shenkar says. “The overall experience is what keeps customers coming back.”

Consider thinking through your customer service strategy early on, including hiring for emotional intelligence, rather than just skill set. And, you may want to look into tools to help you deliver better customer service, like a shared inbox tool to manage inquiries and booking requests. 

Set aside money for marketing

To be successful, you need clients. To attract clients, you need a solid marketing plan. Alleman suggests setting aside some money to market your business; without it, you’ll struggle to be able to really execute a marketing strategy. 

Create an attractive, well-thought-out website

For starters, you need a good website. Alleman suggests hiring a professional to create your site if you can afford it. That said, if you’re tight on cash, there are plenty of DIY website platforms out there. Your site should be attractive, easy to navigate, and ideally include helpful information for your customers, such as hours, location, contact info, and pricing. As most salons use an online booking system nowadays, that’s also an important element to look into (or you may lose customers to salons who do offer this convenience). 

When designing your website, it’s important to return to your brand vision and what you’ve learned about your target market. Your site is an extension of your brand, so it should be cohesive and match the image you want your salon to present to customers. 

If you’re building your website yourself, check out our guide to building a website.

Find creative, low-cost marketing ideas

You want to get the word out about your salon, and getting involved in your community is a great way to do that. Consider hosting an event like a ribbon cutting or a small charity event to attract more customers—for example, sponsor a school play or have the staff volunteer at a local baseball game. 

For more marketing strategies that can be relatively low-cost and will help you build your presence within your local community, check out our article on how to attract customers for your opening day. 

Set up and utilize social media accounts

Social media is an important component to your marketing plan, Shenkar says. 

If you wish to set up accounts on a variety of platforms, it’s not a bad idea to do so. However, make sure you can confidently say whether or not your target market uses the platforms, and that you have the bandwidth to post content on multiple platforms before you commit. 

At a minimum, it’s a good idea to build your presence on Instagram, as it lends itself well to a visual business. Start by getting a sense of what hashtags are popular within your niche and creating a content strategy, as well as following other local businesses and encouraging your customers to tag your salon when they visit. 

Don’t assume product lines will generate huge revenue

As an owner, you’ll need to select a product line. There are lots of options to choose from; while some shop owners sell a variety of product lines, Alleman advises against it.

“I find that choosing one brand to work with is less confusing for the client and the staff,” he says.

Some shops sell a lot of product, but Alleman says you shouldn’t look at it as a big revenue source. You’ll spend money up front to buy inventory, and even though you’ll sell it at a price to make a profit, that money usually goes right back into purchasing more product. So, it’s smart to consider starting small, and perhaps focusing on one product line in the beginning.

Once you’ve thought through all the details of how to open your salon to the public, you’ll turn your attention to how to grow your business. Here are some areas you’ll want to keep in mind. 

Hire staff based on personality

When you’re first starting out, you might be the only employee. But hopefully, your shop will be so popular that you’ll need to hire additional help, as well as bring on more stylists. When that happens, Alleman suggests hiring someone based more on personality than skill.

“I don’t hire for talent—I can teach a new hire the skills I want, but I can’t train someone to love and nurture my clients,” he says.

You want your clients to enjoy coming in. Of course, you want someone who is good at what they do, but you shouldn’t base your decision on skills alone. Personality matters.

Plan for finding new customers and retaining them

When a customer finds a stylist he or she likes, they usually become repeat clients. However, this doesn’t mean you should let up on your marketing efforts. Even if you have a steady stream of customers, you should build on the marketing efforts that you’re already using.

“I don’t believe in depending on any kind of business,” Shenkar says. “New client acquisition should be a full-time job and should never be overlooked. Contentment will kill a salon.”

Revisit your business plan regularly

A business plan should always be viewed as a work in progress. With each passing month, you learn more about your business and your customer base. 

It’s a good idea to go back to your plan, read it over, and make sure you’re still on track. A monthly plan review meeting can be helpful, as can running a SWOT analysis on your business. 

Look for ways to save on overhead

When you first open your doors, you may have splurged on a few things that you thought you needed, but really don’t. With your business established, review your inventory and see if you can make any changes or cuts to save money. Take a look at your monthly expenses too—is there anything you can trim back or get rid of? Maybe you can downgrade your internet service, or cut back on the amount of product you’re buying each month.

Opening a salon is a bold endeavor. As with any new venture, it’s important to plan as much as you can and be willing to adapt as you learn what works best for your business. You’ll spend a lot of time and money to get your salon off the ground, but Alleman says there is nothing like running a sought-after, successful salon.

Startups and high-growth businesses can learn a lot from angel investors, regardless of whether you’re seeking funding to grow your business or not. And if you pitch and get turned down, their feedback can be really valuable in helping you think about what you need to do next to meet your funding goals.

I’ve seen this over and over in my dealings, both as an angel investor on my own and as a member of a local angel investment group. Most angel investors don’t just reject startups—we explain why. And we don’t just say yes either; we explain what else is needed.

What we did at the Willamette Angel Conference (from 2009 to 2017) was the rule, not the exception. We took a $100 fee for submissions, and what we offered in return was real feedback. To see what I mean, take a look at the blog posts and videos available at Gust and do a web search for AngelList.

Angel investors are individuals willing to invest their own money to fund new startups. Most of them have made money with startups; they’ve been through the wringer, they’ve succeeded, and they are in a position to share. They can teach you a lot. So if you’re a startup, always focus on listening first.

Lesson 1: Not all good businesses are good investments

One of the most common misunderstandings is the assumption that angel investors invest in startups that will become strong, independent businesses.

However, the angel investors don’t make money from their investment until they can sell their ownership for actual real money—that is, until an exit, such as the business being acquired by a larger business, or registering for public stock sales. So, somewhat paradoxically, investing in a startup that becomes a healthy small business, generating its own cash and profits, can be a loss for investors. If that business never gives the investors a way to sell their ownership for actual money, then there is no return. No matter how good your business is, if it doesn’t offer investors cash out at some point, it’s a bad investment.

If the investors end up with a minority share in a healthy business, one that never sells out, then they never get their money back.

I think of it like the diagram here below—many really good businesses are not good investments:

This explains one very important point for your startup: If it has the potential to start, grow, and be healthy without needing outside investment, you could be better off without investors.

Keep in mind that when you take investment, you’re giving the investor a part of your business. When they have a stake in your company’s success, they have a vested interest in influencing your day-to-day operations for profitability. Never seek investment when you don’t need it.

Read more of my articles on seeking investment:

• 10 Good Reasons Not to Seek Investors for Your Startup
• Startup Myth: Investors Want the Best Companies

Lesson 2: Don’t sweat meaningless numbers

My personal favorite in the “pure nonsense category” is the IRR, the internal rate of return, something that was interesting for about one hour as part of the MBA curriculum, but which has no relevance in the real world.

Combine a wild guess on future growth for several years, add in a wilder guess about future valuation prices and exit opportunities, and then pretend that the combination means something. It really only means that you haven’t recovered from your MBA years. Forget it. You’re out of school now.

I have to admit, I’ve seen some judges of graduate-level business plan competitions care about IRR, but never an actual angel investor during actual due diligence.

A close second is projecting stupid profitability into the future.

Please, get a clue: Real businesses usually turn out net profits in single digits, and only rarely up as high as 20 percent. Angel investors are not impressed by projections of 30, 40, 50 percent or more profits on sales. They don’t think that means you’ll be profitable, but rather that you don’t understand what you’ll need to spend. If your sales forecast is reasonable, then you are probably underestimating costs, expenses, or both, in your expense forecast, budget, or projected profit and loss.

And it gets worse—a lot of angels, in a lot of tech business markets, prefer high growth and deficit spending to profits. I was told once that my business was too profitable for VC investment. Many investors believe that startups have to choose between profits or growth, and can’t do both at the same time (more on this in lesson 5 below).

Finally, depending on context, those big market numbers can work against you. Not that bigger markets aren’t everybody’s goal—the investors’ as much as yours—but because top-down market numbers are annoying. Angel investors hate projections of sales based on some small percentage of a huge market, as in “if we get just one-quarter of a percent of this $20-billion market.”

Read more of my articles related to meaningless numbers:

• You Can Take That IRR and Shove It
• Your Profits Are Too High
• I Hate Those Huge Market Numbers

Lesson 3: You have to be able to scale up

Good investments need growth, and growth requires what investors refer to as being “scalable.”

This is a very important concept: Scalable means a business can ramp up, increase its volume enormously, without increasing its fixed costs proportionately.

Can you jump from selling 10 to 100 to 1,000 to 10,000 without a proportional jump in headcount and overhead? Product businesses usually can. Some web service businesses can. But a lot of businesses can’t. This is why investors don’t usually like service businesses. They tend to depend on the people more than the product. Key assets walk out the door every night. They can’t scale up.

Investors use the term “body shop” to refer to the many service businesses that depend on people doing specific things for each unit of sales. They will ask “do the assets walk out the door at the end of the working day?” Professional services such as attorneys, accountants, consultants, and design or product development companies are classic body shop businesses that can’t scale. Rand Fishkin’s book, “Lost and Founder,” gives some interesting perspective on a company that transitioned from an unscalable consulting business to a SaaS product. Fishkin is pretty frank about the pros and cons of scaling his business and taking on investors.

Read more of my articles on what investors want:

• 5 Things Investors Always Want
• 5 Shark Tank Lessons for Entrepreneurs

Lesson 4: You need a secret sauce

Angels want you to have some way to defend your business against competition.

They’ll ask, “what’s proprietary?” They’ll ask, “what’s to prevent a competitor with a bigger budget from jumping into your market and taking it over?”

They’ll talk about whether or not you have a so-called secret sauce that sets you apart from the competition. All that is about defensibility, also called barriers to entry.

Sometimes, this discussion is about patents. Patents can protect inventions, formulas, and algorithms. In a perfect world, having patent protection would be a good answer to concerns about defensibility. In the real world, although patents are always an advantage, patents alone aren’t enough.

Investors look for what the patents cover and ways competitors will work around them. Not all patents are enforceable and not all patents rule out ways to work around them, getting to the same market without violating the patents.

The world of startups is littered with the carcasses of businesses that were protected by patents in theory, but not in fact. Patents require active legal budgets to protect aggressively against infringement.

There are other factors that make startups defensible. Trade secrets, effective branding, differentiation, and first-mover advantage can help. What investors will teach you is that you don’t want to identify a great market without having the resources to grow fast and seize market share before others do.

Lesson 5: Rapid growth costs money

Consider this the two sides of a single coin: First, angel investors want companies that grow fast and exit. Second, companies that grow fast are going to present both the need for more investment and the growth potential to justify more investment.

Therefore, companies that can fund their own growth are less interesting than companies that need to raise more money later to finance continuing growth.

Normally, attractive growth takes investment. It doesn’t fund itself.

The scalable defensible company that has a shot at increasing sales 300 percent per year for a few years needs to invest in marketing expenses, working capital, employee ramp-up, product development, infrastructure, and other factors that support that growth.

Product companies, for example, need to spend on product development and materials and prototypes before they launch, and they have to buy inventory to build products. Then, if they sell through channels, they have to wait months to get paid by distributors or retailers. All that absorbs cash resources. Web companies, as another example, need to develop the product offering in code, and test, before they launch.

Most of which boils down to: Listen and get a clue

If you’re working a startup and dealing with angel investors, it’s not up to them to understand your story and believe in you; it’s up to you to have something they want to invest in.

If they don’t get it, first listen carefully to what they have to say. Their most powerful tool by far is the simple use of the word “no.”

And, don’t expect angels to give uniform advice.

I’ve seen many times how a startup pitching a focused targeted ramp-up strategy, using a narrow market as a beachhead, will be told by angels that it’s too narrow—so the entrepreneurs change the pitch to go all the way to the huge market instead, to get turned down as “too broad,” or “too many moving parts.” Angels don’t do that on purpose to drive you crazy; they’ll have different opinions.

Read this article on unsuccessful pitches:

• Dealing with Rejection From Investors

And one final word: If you pitch repeatedly for angels and nobody is interested, get a clue.

You might not have a good investment to offer. Revise your business plan, do something else, or maybe you have one of those good businesses that isn’t a good investment.

The only general rule? There are no general rules.

Editor’s note: This article was originally published in 2015. It was updated in 2019.

A new generation of entrepreneurs is emerging onto the market, and it’s not who you may expect. Baby boomers are starting to become a huge part of the entrepreneurial world. Full retirement is becoming less and less popular, and many seniors are opting to earn their own income after they officially retire from their “day job by taking on independent contract work.”

According to Forbes, “people over 55 are twice as likely as people under 35 to launch a high-growth startup.” For some, this may mean a brick and mortar business. For many, this means considering the freedom and flexibility of an online business.

In fact, online businesses are increasingly popular among seniors looking to run a business from home. Smartphones, website builders, and social media platforms are becoming simpler to use and more intuitive all the time, making it easier to use online tools to reach a wide audience.

If you’re a retiree looking for business ideas or ways to leverage your skills and experience into a new project or business opportunity, consider the following online opportunities:

Online sales

Building an online store or selling products online through a marketplace or platform like eBay, Amazon, or Etsy is a great option. Whether you start your business after years of retail or sales experience, or you’re building a new area of expertise, ecommerce can be an exciting venture that doesn’t require a retail location.

Building your own ecommerce site is usually a heavier lift than using an existing marketplace, but you should make that decision based on your goals and the audience you’d like to reach and the resources you have at hand. Here’s a guide for thinking through how to build your first website.

Writing and editing

If you enjoy writing and editing, blogging is a great way to share your expertise and build an audience for your own company or as a freelancer for another business.

When a company is serious about blogging, they look to professionals to ensure that it’s done right. Again, Upwork and Elance can help you get started if you’re looking to blog for other companies. If you’re thinking of starting a blog for your own business, look into monetization opportunities—selling ad space on your blog to generate a secondary source of income.

Think about what you want your blog to accomplish. Will it be part of your sales funnel, the way to lead people back toward making a purchase on your site? How often will you update it? How will you make sure it reaches your audience—through a newsletter, your social media accounts, search engine optimization?

Coaching

Business and life coaching and consulting may be great options for highly-skilled and experienced retirees. Who better than someone who has worked in the industry or had experience in the area of need to coach others?

Services like Zoom, Skype, and Voxer have made it easier to have personal-feeling one-on-one or group video calls, making it possible to run a consulting or coaching business without a formal office.  

Online courses and instruction

Most seniors have something valuable to teach. Creating an online course or webinar can become a lucrative career for seniors, and allows them to create their own schedule and work from home.

In fact, entire platforms are dedicated to creating online products. Kajabi, Udemy, and Teachable are course platforms where you can build your product in an easy-to-use format for your audience. After you’ve finished creating your course, it becomes a mostly passive income stream, meaning that with little additional work on your part (beyond promotion), the course continues to be available to new customers.   

How to get started

Knowing that these opportunities are available is great, but how do you get started? For seniors looking to utilize online tools and technology to build a business or work from home, here are seven tips to help you get started:

1. Have a business plan

If you are starting any type of small business, it is important to have a business plan—you may not need a full, traditional plan, but you should at least put together a Lean Plan. Don’t let planning be intimidating. It’s possible to work through a basic plan in less than an hour.

Make sure that you truly think through your next steps. This applies even to those who are looking to primarily specialize in gig (temporary) or freelance work. Your overall goal might be financial freedom, sharing your skills or expertise, or to create an entirely new and innovative product or service. Use your business plan to help you map the steps you’ll take to achieve your goals. Here’s a free, downloadable template to help you get started with Lean Planning.

2. Create an online presence

If you plan on working independently and capitalizing on current technology, you need to have a presence online. Think of your presence online as your office. It is a place where potential clients or employers can visit you. It should lend credibility and seem trustworthy to your audience.

Where you build your online presence will depend upon the type of exposure you are looking for. This guide can help you think through whether you want to use a simple website builder like SquareSpace or build your own site yourself or through a web design firm. The stronger your online presence is, the larger an audience you will accumulate.

For example, you are looking to market digital projects, you will want to create a strong social media presence, and start building your email list. If working freelance is what you prefer, you may want to focus more on building a strong online resume on major freelance sites.

As an aside, make sure your website is mobile-friendly. You want people viewing your site on their phone or tablet to have a great experience—no super tiny text or impossible to click links. Plus, Google is making it harder for people who are searching for to find you if your site isn’t mobile-optimized.

3. Learn the right skills

If you’re intrigued by work from home or entrepreneurship opportunities but aren’t sure if your computer skills are up to snuff, don’t let that stop you. Many of the available platforms that will make your dream lifestyle a possibility are easy to learn, and offer free training.

For example, Wix, a popular website design platform, offers training on how to use their platform and make the most of it. MailChimp offers similar training for those looking to reach their audience through email. So do other platforms we’ve mentioned, such as Kajabi and Zoom. Don’t forget those course platforms—for example, Udemy offers a valuable course on entrepreneurship. It’s never too late to continue your education, and learning new interfaces and products can prove invaluable to your quality of life.

4. Invest in the right equipment

If you are going to be working through technology, you need to have the right equipment. A computer with a good webcam and sound system and access to high-speed internet are good investments for those looking to conduct meetings online.

Your smartphone can get you started, but it can only take you so far. An external webcam or enhancing lens can give you a more professional look, and a higher quality external microphone will help with conference calls and videos. For those looking to build an online store, a camera that takes quality pictures is a must.  

5. Be smart about social media

Social media platforms are a resource for building an audience and looking at those in similar fields. Depending on your target market, different social media platforms can be used to reach different audiences. It is best to start with just one platform and focus on building your audience there.

Keep in mind that it’s increasingly difficult for businesses to get benefit from social media platforms for free. Most were built as platforms to serve advertisements to users. That means if you really want to leverage social media, you should treat it as an advertising opportunity.

Some popular platforms for entrepreneurs to take advantage of:

Facebook: Facebook reaches a wide age range and varied demographics. It’s possible to reach really targeted audiences with Facebook ads—you can make sure your ad is seen primarily by people of a particular gender, age, and location who have demonstrated certain interests, for example. Other platforms do sometimes steal the limelight on occasion, but Facebook keeps advancing to try and keep up.

Twitter: Twitter can reach a large audience faster than other platforms, but it isn’t quite as targeted. It’s a great way to reach millennials, but the overall demographic reach isn’t quite as wide. However, baby boomers are quickly catching onto Twitter, using it both in their personal and professional life.

Instagram: Those in the creative field will love Instagram. Ask yourself, is a picture worth a thousand words when it comes to explaining your product? If so, Instagram is a great platform to start with. They also reach a narrower, young demographic, but if your business is particularly photogenic, it might be a good fit.

Snapchat: This platform allows you to snap photos and short videos of your day, so if your business is a lifestyle brand or is travel-based, this can be a great platform for you. Snapchat is unique in that after your recipient receives your photo or video, it disappears, but they offer some unique advertising opportunities for brands. Right now, it is still somewhat limited in audience and appeals more strongly to a younger crowd, up to mid-thirties.

6. Use virtual hiring tools

With the ability to use online tools to build your best team, you don’t have to rely on local recruiting resources anymore.  

If you’re looking for an expert to help with a project, like building your online presence or designing a logo, look to freelancing platforms like Upwork or 99Designs to find talent and request bids on your job from around the world.

If you’re looking to hire regular employees, posting your job online through platforms like ZipRecruiter can also expand your reach and help you find the right talent.

7. Check out the AARP Encore mentoring program

In addition to online resources, mentoring events can help seniors take advantage of small business opportunities and continuing education. The Encore Entrepreneurs program through AARP and the Small Business Administration is designed to help Americans over 50 get the resources and information they need to start a business. They host counseling and mentoring events across the country, and offer access to online resources.

Some of the most successful people in business started their careers later in life. Retirement is a brand new opportunity to pursue the career you’ve always wanted or to start your own endeavor. With the technology available today, these opportunities are easier than ever to take advantage of. Start thinking about the endless possibilities still available to you, and try the tips in this article to make your dreams a reality!

Dr. James R. Bailey, of George Washington University School of Business and the Centre for Management Development, London Business School.

As a founder, you’ve probably been focused on writing your business plan, building out your financial forecasts to position yourself to get funding, and managing the day-to-day minutia of running a business. But have you thought about how your leadership skills and your ability to shape positive company culture can affect your startup’s survival?

The relatively high rate of startup failure is worth considering. Think about the costs of poor leadership and company culture left unattended: high turnover, disengaged and less productive employees, and even reduced revenue or financial penalties—just ask Uber how their leadership issues are affecting productivity in light of the recent resignation of their CEO.

But according to leadership expert Dr. James R. Bailey, there’s hope for those who know they need to improve. Dr. Bailey is a professor and Hochberg Fellow of Leadership Development at the George Washington University School of Business, and a fellow in the Centre for Management Development, London Business School.

He’s getting ready to release a new book called “Lessons on Leadership,” so I chatted with him about how founders can intentionally shape a positive company culture that encourages innovation and productivity.

He says, “Anybody can improve their leadership skills if they really want to do it and they’re willing to practice. It’s not going to happen overnight.” So, the earlier the better, but it’s never too late to take the time to self-assess and improve your skills.

Founders of young organizations sometimes feel like they’re under a microscope. It’s true, your employees are watching. They’re looking to you to set the tone, not just in terms of overarching strategy. “Those first five people you bring on board, they’re looking closely to you to give them clues or cues about the state of the business. If you’re anxious, they’ll be anxious, though they might not exactly know why.”

The power to set an intellectual and emotional tone is way beyond the scope of of a CEO of a huge organization, but leaders of small organizations have a heavier burden, and a greater opportunity to shape the culture of the company. And it’s not just about internal working relationships—the way your team feels about working for your company will have an affect on how your customers and the rest of the world view what you’re doing and how you’re doing it.

Put inquiry before action

Dr. Bailey has been researching and teaching about leadership for more than 20 years; his interest grew out of his relationship with his father, a high school principal. His father was known for treating students, staff, and administrators with respect and dignity. Issues would come up, like lower than expected scores. But instead of pointing fingers, he would start by asking questions like, how can we diagnose and then implement plans to improve the problem?

“He never went on witch hunts,” Dr. Bailey says. “He believed in a state of institutional grace that starts with inquiry and leads to action. Most leaders start with action and then may or may not ever move to inquiry.” Dr. Bailey believes the action-first approach is counter-productive, especially for young businesses that are constantly changing and growing.

In many organizations, people don’t think they will be forgiven for mistakes. “This creates a downward cycle. It’s antithetical, the height of hypocrisy for startup leaders to punish people for their mistakes.”

Those mistakes, Bailey says, are required for innovation. For example, James Dyson created the first bagless vacuum cleaner as a response to frustration about diminishing performance in his own machine. But it took five years and 5,127 prototypes to get there. It simply would not have been possible to innovate if Dyson hadn’t been comfortable with making literally thousands of mistakes.

The ability to foster this sense of organizational grace, or the willingness to absolve the mistakes that do actually lead toward innovation, is critical, especially for founders working with small teams.

Be a steward of emotional intelligence

Dr. Bailey posits that good leaders are actually cultural change managers and stewards of emotional intelligence. In short, they should be on the front lines, helping people adapt to constant shifts and recalculations. If not, startups will find that they struggle to be nimble and innovative. “Some sources of resistance to change run deep, like fear of failure. People worry about whether they will be successful with new opportunities, and that triggers anxiety, which is not conducive to performance.”

Establishing some simple routines can help startup teams foster some sense of stability, even as things change rapidly within a young organization. “A baseball player goes through exactly the same body movements each time they’re up to bat. They swing a few times, dig their spikes in the dirt in the same way, rotating an ankle, setting up so everything is the same, so they can focus on one thing: the ball.”

To put an even finer point on it, think about the routines that you set up in your personal life to reduce stress. I put my keys in the same spot every time I walk in my front door so that I simply don’t have expend any brainpower on a key hunt at dawn. Barack Obama and Mark Zuckerberg are known for wearing roughly the same clothes every day.

Why? So they can focus their decision-making power on things that really matter. Dr. Bailey suggests giving your staff that same freedom by encouraging them to create routines around regularly expected tasks and events. They’re more likely to be able to be flexible as your organization changes if they don’t have to reinvent the wheel around their basic duties every day.

Source.

Try an evolutionary (not revolutionary) approach to change

Managers would do well to remember that all change is loss—even positive ones like promotions can feel like a loss because routines are disrupted. People have to transition from doing work that they understand and have been successful at, to facing the unknown. They’ll need to build new systems and relationships—and they will probably stumble a bit at first.

Dr. Bailey says that when founders encounter resistance to change, they should take care to impart the news and its ramifications in small and digestible ways. Take time to reinforce the idea that the team has and will have the resources they need; there are probably even solid examples of times when they have already overcome challenges or found ways to innovate.

Reminding your team of those successes, Dr. Bailey says, actually leads to a dopamine release in the brain which lays a better foundation for introducing the next small step. “This approach gives people time to adjust so they’re not as worried about failing. It’s actually an evolutionary rather than revolutionary approach to managing change.”

So, avoid dropping sweeping and potentially shocking announcements before considering how you want your message to be received. You’ll also have to walk the line between managing the flow of information and the desire for transparency among your team.

But how can startups avoid getting bogged down in constantly processing change? Hiring the right team is a good start. People who are drawn to work for small businesses and startups generally have stronger risk-taking inclination, which makes their natural risk tolerance higher. But on the other hand, balance your team.

Some specializations are more likely to attract more risk-averse personalities. “Don’t paint the more conservative members of the team as scared school children that need protection, but do balance those personalities with those who have more risk tolerance so that there isn’t an informal pecking order.”

Also, make sure that you take the time for everyone on your team to meet prospective new hires to see how they mesh. Ask behavioral interview questions that focus on getting candidates to tell the story of how they actually handled a real situation, rather than giving them a platform to tell you what they think you want to hear. Make sure you ask questions that will give you information about how they have handled change and the quality of their working relationships with past colleagues.

Dr. Bailey also cautions founders about hiring people they know, particularly if they don’t quite fit. It can seem enticing to hire someone who knows you and is enthusiastic about your startup, but at some point you’ll waste time and resources if you haven’t focused your hiring on the practical skills that you need to actually run your company.

Acknowledge your shortcomings

Managing change is generally easier for leaders who have cultivated their teams’ trust, and if employees have the sense that founders are operating with integrity. One of the best ways to be seen as authentic is to actually be authentic.

“Good leaders reveal their weaknesses—everyone knows you have one. If you don’t reveal, you’re being disingenuous. If people don’t trust you, they won’t follow you.” Self-revelation is humanizing, and it lays the groundwork for hiring in areas where expertise is lacking.

Source.

Consider former Prime Minister of the United Kingdom, Margaret Thatcher, for example. “She was know as the iron lady. Unbendable. Brutal. She would eviscerate staff and dignitaries,” says Dr. Bailey. Thatcher recognized this Achilles heel, and either didn’t want to or couldn’t change.

“But she was savvy enough to find someone who could deal with the scorched earth and replant. Her deputy, William Whitelaw, would follow behind her to remind those she offended that Thatcher actually admired and valued them.”

Thatcher famously said, “Every prime minister needs a Willie.” It’s a good reminder to acknowledge your shortcomings and make sure you hire to compensate for them.

Dr. Bailey says that everyone has a ceiling, but most people are operating significantly under their potential and have room to improve in terms of their leadership aptitude. Set some goals for yourself around fostering a culture of forgiveness for mistakes. Use those mistakes as opportunities to help your team grow and improve—and don’t be afraid to acknowledge your own weaknesses.

This article is part of our Cafe Business Startup Guide—a curated list of articles to help you plan, start, and grow your cafe business!

Whether you’re just getting started on your dream of opening a coffee shop or are considered Barista Champion of the World, there’s sure to be a resource you’ll find indispensable.

If you have any of your own to share, let us know in the comments below!

Listen and watch

My Cafe Supplies YouTube Channel

This Australian couple runs a cafe and a website that sells cafe equipment. Their YouTube channel contains straightforward videos with first-hand advice on running a cafe, including useful accounting tips and some fantastic product reviews.

Coffee Awesome Podcast

This monthly podcast hosted by Bjørg Brend Laird explores popular topics in the coffee industry. Bjørg also interviews industry experts for the finer details.

Engage

Sweet Maria’s Web Forum 

Sweet Maria’s Coffee is an online retailer of green coffee (unroasted, still green coffee beans) and coffee equipment, that also features an online forum. The forum is a good place to get in the weeds on conversations concerning types of coffee, roasting techniques, and equipment for your shop.

CoffeeGeek Discussions

CoffeeGeek is an online community and resource site that has a forum dedicated to all things coffee, including an international section so you can connect with people in your area. They also have a multitude of resources ranging from a podcast to in-depth, how-to guides.

Be sure to check out their guide on how to buy the best espresso machine for your business.

Network

The Specialty Coffee Association of America

The Specialty Coffee Association of America is a U.S. trade organization that focuses on a broad swath of issues in the coffee industry, including sourcing, equipment, and retailing.

This organization seeks to educate business owners and buyers through membership, classes, and their annual expo, which is one of the largest coffee symposiums in the world.

National Coffee Association Resources

National Coffee Association is also a U.S. trade organization, with a slightly different focus. It is more consumer-facing and focuses on promoting and marketing the consumption of coffee, keeping the coffee business thriving.

The industry resources provided include a business directory of members and a market research library.

Great regular reads

Roast Magazine

Roast Magazine is a bimonthly trade magazine that covers the latest coffee industry news, including information on the industry’s growth. You can subscribe and read online.

Fresh Cup Magazine 

Fresh Cup is a story-driven online magazine with in-depth content on a broad selection of coffee industry topics, from details on running a business to the role of teas and tisanes in the industry.

You can check out their Cafe Basics section for case studies and articles on best practices.

In the digital age, the power and ubiquity of business tools has helped level the playing field and reduce the discrepancy between small businesses and large corporations.

Continuous innovation around cloud-based software solutions and increased competition for market share have made sophisticated technological tools available and affordable to smaller businesses. This type of technology allows even small startups to perform on the global stage in a way that has never been seen or even imagined before now.

Based on a combination of observations in the sector, the rapid growth of the number of solutions in particular areas, and the findings of corporate studies, we have compiled a list of seven business technology trends for 2016 that will help to drive performance to facilitate growth for your small business.

The workforce goes virtual

A 2015 survey conducted by Virgin Media Business predicted that 60 percent of office-based workers will regularly work from home by 2022. This trend is supported by the rise of productivity applications and collaboration platforms such as Slack or BaseCamp, with companies like social media management platform Buffer leveraging this technology to maintain a fully-distributed team.

[pullquote]Sixty percent of office-based workers will regularly work from home by 2022.[/pullquote]

It may not be necessary for you to split your team up, but for some small businesses, this technology dramatically increases the size of your potential talent pool when looking to outsource tasks or fill a position.

By making use of this technology, you can overcome the limitations of geography by adopting a virtual workforce.

Marketing is automated

Marketing automation software removes the need for small businesses to exhibit comprehensive marketing experience to drive success. It also allows companies to avoid the considerable fees associated with using a dedicated marketing agency.

This type of platform allows marketers or business owners to specify a goal and have the software handle the tasks involved, such as publishing a single post to multiple social media platforms.

Solutions such as HubSpot or Eloqua handle all of the CRM, funnel management, and website optimization, delivering customized messages to prospects at the right moment during the consumer buying cycle, reducing the burden on business owners.

The cost of HubSpot’s social media analytics, integrated SEO, and A/B testing of calls-to-action starts at $200 per month for a basic plan, ranging to $2,500 for the enterprise plan. Eloqua’s marketer service starts at $2,000, but the platform’s Social Suite provides advanced features, including drag-and-drop of social content directly onto landing pages from within the Eloqua editor.

Small businesses get into the app game

With marketing tools driving traffic to your business, it is now more important than ever to capitalize on mobile’s dominance over desktop, and offer local customers a dedicated mobile application.

While this may seem more appropriate for more established businesses, platforms such as Appy Pie and the recently announced Microsoft PowerApps allow even non-technical users to easily create apps for iOS, Android, Blackberry, Kindle, and Windows Phone with extreme ease.

Furthermore, the advanced capabilities of the platform make it easy to embed click-to-call voice and video communications like those offered by technology company Agora.io. This means you can seamlessly integrate video chat into your app for enhanced communication with customers in a way that works for small businesses.

Another way to approach this is to have customers interact with each other. For example, startup Company HelloTalk has leveraged Agora.io’s technology to create a worldwide language learning app, which connects those who want to learn a new language with users that speak that language natively, and the two help each other. For instance, it connects an English speaker who wants to learn French with a French speaker who wants to learn English, so they can both enhance each other’s learning.

This technology can help the niche market of learning new languages, but how would it apply to your business? When integrated into your app, this technology can be your business’s customer service.

By giving the consumer the ability to show exactly what is wrong to the representative, and giving the representative the ability to visually walk the customers through the issues to resolve the problem, you are giving your business the advantage over your competitors who can’t do this. It can even give your representatives the chance to visually pitch new products and services, in a more personable way.

Creating an active and well-functioning app for your small business that lives on your customers’ phones gives your brand the prestige and credibility that was once reserved for big businesses.  

Customer relationship management goes digital

Customer communication is key to the survival of almost any business.

A comprehensive Customer Relationship Management (CRM) system enhances the customer experience by offering a full range of services. It also streamlines the internal processes related to customer care by offering a single location for all customer data for efficient handling of interactions.

Salesforce is probably the best-known CRM solution, but there are also simpler and lower cost packages like One Page CRM, and free products like Insightly offer comprehensive social media integration to allow businesses to learn more about their customers through public profiles. The data collected from the CRM system, such as customer demographics and response rates, should be fed back into your automated marketing software to improve the focus of your marketing goals.

Acceptance of new payment methods

In addition to revolutionizing the way we communicate, smartphones have completely changed the way we live our daily lives. We rely on them for entertainment, information, time-keeping, and increasingly for business.

All of these now happen on-the-go, and the latest trend migrating to mobile devices is payments. The growing acceptance of Apple Pay, as well as the PayPal App’s allowance for paying for store purchases and even restaurant bills from within the app, will bring this trend to the fore in 2016.

Other options include LifeLock Wallet, which turns your credit, debit, ID and insurance card information into a barcode that can be scanned at checkout. Alternatively, Google Wallet allows users to save card details to a Google account and delivers that information to merchants via Near Field Communication (NFC), and so relies on a handset that supports this technology.

Embracing this movement will not only streamline payment processes, but it will show that your business is forward-thinking and embracing the future as it happens.

Inventory management is smart

According to a 2015 study by Wasp Barcode Technologies, 46 percent of small businesses with 11-500 employees don’t track inventory.

This means that stock can lie around unaccounted for, reducing sales potential, interrupting cash flow and even affecting warehouse management. Fortunately, solutions like Fishbowl Inventory make it quick and simple to track and manage stock levels. Fishbowl is the most-requested add-on for QuickBooks, the small and medium-sized business accounting solution, and it integrates easily with various other types of accounting and CRM software, making it adaptable to many technology implementations.

Leveraging this type of smart software will reduce instances of unaccounted stock sitting around collecting dust, improving the impact of even limited budgets.

Analytics tools improve business intelligence

The knowledge of your inventory position can be turned into a powerful tool when combined with Business Intelligence (BI) tools. This kind of software leverages multiple metrics across a range of business processes, to provide real-time access to data and analysis that drives a quicker understanding of business processes, to help owners make informed business decisions.

Tableau, for example, provides detailed access to interactive data while remaining simple to use, while QlikView integrates the building of the back-end calculations with the front-end user interface, to remove the need for separate business intelligence tools for dashboards, analysis, and reports. Large corporations realize the value of data, and your small business can leverage the power of information too by implementing this kind of software.

These technology trends are set to drive small business in 2016. The more your business gets on board with, the more ahead of the game your business will be relative to the competition.

With new technology comes new opportunities. Which tech trends are you excited to try this coming year?

Target is famous for its bold red bullseye. Starbucks is inextricably linked with a deep forest green. Coca-Cola has a script font that generations have grown up with.

The famous Coca-Cola logo

It may seem like these colors and fonts are randomly chosen, but usually there is a deliberate and careful planning process that leads to the selection and design of brand colors and fonts.  

What’s most important to realize when you’re choosing your brand colors and fonts is that you’re building a system that needs to work together harmoniously.

You’re also delivering a message to your marketplace. Make sure your colors and fonts enhance your core values and underlying personality, as opposed to working against them.

Given that you probably don’t have a Fortune-100-company-sized budget, how do you pick the right colors and fonts for your company? The ones that represent who you are and what you stand for, and help you stand out in the marketplace? Below are some tips to consider as you start building the framework of your brand—namely, your colors and fonts.

First, let’s look at colors.

Find an inspiration

Colors can evoke powerful reactions. From an early age, we’ve all had our “favorite” colors. We even make classifications according to color; girls are typically associated with pink and boys are associated with blue. Studies show that people’s emotions are deeply impacted by the colors of walls or even by the colors in nature.

So how do you tap into that power? Look for photographs that grab you. Then go to an online color generator (one of my favorites in Pictaculous), and plug in your photo. These generators will automatically produce a color palette for you based on the colors in your favorite photo.

Look at paintings. Which colors evoke the mood that you want your customer to feel? If you want them to be excited about your product or service, perhaps you should choose a bold palette with hot colors. If you’re hoping to calm and nurture your customers, perhaps a more soothing palette of pastels and neutrals is a better option.

Think of the whole palette

Colors exist in the context of other colors. McDonalds is a bold interplay of red and yellow. Pepsi is a blend of red, white, and blue. Dr. Martens is a tapestry of deep black with pops of neon yellow. To be most effective, colors need to operate as a palette, and not as single colors.

Ideally, your palette will have a few bold “driver” colors. These colors will be the driving force behind your logo and other core brand elements. Your palette will also include more neutral colors to ground these driver colors. A turquoise blue is so much richer when it’s used as a “pop” color against an ecru background.

Be cognizant when you’re creating your branding and marketing materials to use your driver colors sparingly. The majority of the colors in these materials should be more neutral: black, white, or tan. The driver colors should be used to call attention to a few key elements such as your headline and sub-headlines.

Be consistent

Once you do choose your brand colors and fonts, make sure you stick to them religiously. Know your Pantone colors or your CMYK builds and make sure you use the same ones throughout all of your digital and print materials.

In today’s digital age, color consistency can be a challenge and there will be some unavoidable discrepancies. Inherently, colors display differently in digital environments than in printed environments. Different people’s monitors can be calibrated differently. But as much as you can, make sure you use your defined brand colors throughout.

And now, let’s take a look at how to choose your fonts.

To serif or not to serif?

Example of a serif font.

Serif fonts are fonts that have a small line extending from each letter.

In the past, all fonts were serif fonts. Serif fonts are usually easier for the human eye to read, so this font will often be used for large blocks of text. Most novels you read are written in serif font.

Traditional brands like law firms and medical offices tend to use serif fonts to convey experience and professionalism.

Example of a sans serif font.

Sans serif fonts are those without the small lines, coming from the French word “sans” which means “without.” Sans serif fonts are viewed as being more modern. Younger, hipper brands such as tech startups and digital agencies tend to use sans serif fonts to convey innovation and bold ideas.

Serif and sans serif fonts can live together in the same font system. For example, a company may use a sans serif font in its logo, but use a serif font in the body copy for its website and email newsletter. It’s fine to mix these different fonts, just make sure you have a plan in place, as opposed to randomly putting them together.

Choose different fonts for different tasks

It’s best to divide and conquer when it comes to fonts.

First, decide what font to use for your logo. Then, decide what font to use for your headlines, sub-headlines, and finally your body copy.

Make sure these fonts don’t compete with each other, but rather support and enhance each other. Also, remember what role the font should play in each category. For example, the role of a headline font should be to draw attention; the role of the body copy font should be legibility.

One quick thing to note: The font that’s in your logo is a special font that should only be used for the logo. Often business owners assume that the font of their logo should be used everywhere. But the net effect is that the logo will stand out less if it sits in a sea of the same font.

Finally, have fun!

Just like all branding exercises, you’re playing in the sandbox of emotions when it comes to choosing colors and fonts. So it’s most important to have fun when building your color and font systems. Also, trust your gut. If the color doesn’t feel right, it probably isn’t. If the font feels off, it probably is.

Now, go find the colors and fonts that make your heart sing.