Keys to success: planning, capital, concept and management.

So how do you know if you are in the initial phases of a burgeoning business or not? What does it take to muster up the courage to leave that job and stable paycheck for the benefits and rewards, along with the risks, of owning your own business?

Do you just put all of your faith in knowing that everything can happen if you work hard enough? Or, do you strategize and plan to grow and expand the sideline into a business that can support you, your family and perhaps some employees?

After reviewing some client case files at the USC Business Expansion Network, it seems that those would-be entrepreneurs who simply believe in their good idea and work hard to start a business, are in a fledgling stage much longer than those who have done some planning and strategizing while the business is still in its infancy.

We have identified four common problems that keep "ideas" from growing and expanding into "businesses." These are: Lack of a well-developed concept, lack of a professional business plan, lack of adequate capital, and lack of management experience.

Before you decide to quit your day job, assess the strengths and weaknesses of your idea against these business basics.

Do you have a well-developed concept? What are you going to sell, who are you going to sell to, where and when do they buy it, and how much will they pay for it?

Determining this includes identifying the market that needs and wants your product, assessing the size of the market, including competitors and substitutions. Further this by pinpointing a market niche, if possible, so you can target specific clients and understand how they make decisions to buy these products.

Determine, if possible, how much of the market you can capture. Product distribution to a large customer base involves costs that you might not have incurred selling from your trunk or at the swap meet.

Karen Hicks, owner of Red Suspenders, makers of "Komfort Kits," started out making earthquake kits for her child's preschool class. Soon, other mothers wanted them.

But did that signal the launch of a real business? "No," she says. "I placed some articles and announcements in newspapers and magazines that parents would read, and soon the phone was ringing with orders, nationwide. At that point, I began to realize the market potential, outside my local neighborhood."

Although the sideline may be successful from home, once the entrepreneur attempts to develop a full-fledged business he or she may uncover issues and considerations that were overlooked or ignored during the micro stage. Certain changes in the business may be inevitable. These areas and issues will require investigation and planning.

Business considerations such as permitting, regulatory or zoning issues, as well as the legal structure of the business (e.g. sole proprietor, partnership, corporation), marketing and production elements will require attention. Hicks attended a 12-week business planning course, and developed a business plan which would be the roadmap for growth and expansion.

An important factor in determining whether or not the business is viable is knowing how much capital is really needed to grow the business, so you can let go of that day job.

According to Karen Hicks, "the only way to really know how much you need is to go line by line and develop a budget, investigating prices for materials, packaging, distribution, labor, facilities - everything." And she's right!

Businesses that continue to straggle were generally undercapitalized from the beginning, and often didn't understand how the business could or should reinvest in its own growth.

Lastly, assessing your own management experience will be a very telling indicator as to whether your business can really grow or even sustain itself. Can you accept and deal with the ambiguity and provide the flexibility needed to launch a small business?

Once the business begins to take off, the entrepreneur is usually the one left holding the bag as chief cook and bottle washer.

Again, we examine Komfort Kids as an example of this. Hicks was not just the strategist, she also did the marketing and advertising, purchased the materials, packaged the kits, delivered them to the school or post office, prepared and collected the invoice, took the check to the bank, until she was able to hire some employees or outsource some of these activities.

Her background included being a manufacturer's representative for other products, which proved to be excellent experience in follow-through from beginning to end.

If you have a sideline or hobby, or are moonlighting with a microbusiness, there are several organizations that can assist you in exploring key areas, including concept, planning, capital and management experience - before you take the plunge, and quit your day job.

Debra S. Esparza is director of the USC Business Expansion Network, which provides small-business owners with training and consultation throughout the Greater Los Angeles area.