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How important is [...] to starting a business?

Question from a reader:

how important is having a business license and a business plan to running a successful website that makes money? Is it more important then having a business idea and a product.

thanks J

First reply:

Business plan: 1/10, maybe 2/10

Looking at Threats

I've been thinking of evaluating opportunities lately from the perspective of threats.

There's a downside to it, which is that focusing on the negative can mean a lowering of personal affect, morale, whatever. You tend to get more of what you focus on.

However, evaluating "what are the threats in the way of this succeeding?" seems like a pretty good way to check into ideas that are already on their ways towards correct execution. What could happen, with yourself, your team, competition, or other external stakeholders that could derail your success?

If you identify for threats, you can prepare against them. A cashflow crunch is easier to solve far in the future by securing some lines of credit during good times. If a key client or contract might be paid late, get that credit. If a single client accounts for more than half of your revenue, start diversifying even if it slows down your revenue growth. If a single sector is all you deal in, look if you can pick up a couple side-streams of revenue, especially covering most of your overhead.

Don't obsess over threats, and don't start thinking of them until you're well on your way -- by far the biggest risk is that your project never gets ignited and gets off the ground, and the you or your partners just don't hustle enough. But once things are going, do a once-over on threats. It could be the difference between success and failure. An ounce of prevention and all...

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