Starting a New Small Business? Find out where to start and how to find success.
- You want to make sure you prepare well before starting a business, but realize that things will almost certainly go awry. To run a successful business, you must adapt to changing circumstances.
- Doing thorough market research on your area and the demographics of your potential customers is an important part of creating a business plan. This includes running surveys, holding focus groups, and researching SEO and public data.
- Before you start selling your product or service, you need to build your brand and build a following of people who are ready to jump in when business opens your doors.
- This article is for entrepreneurs who want to learn the basics of starting a new business.
Tasks like naming a business and creating a logo are obvious, but what about less-heralded, equally important steps? Whether it’s determining your business structure or creating a detailed marketing strategy, the workload can pile up quickly. Instead of spinning your wheels and guessing where to start, follow this 10-step checklist to turn your business from a lightbulb over your head to a real entity.
1. Refine your idea.
If you are thinking about starting a business, you will already know what you want to sell online, or at least the market you want to enter. Quickly search for existing companies in your chosen industry. Learn what current brand leaders are doing and find out how you can do it better. If you think your business can deliver (or delivers the same thing, only faster and cheaper) to some other companies, or you have a solid idea and you are ready to create a business plan.
Define your “why”.
“In the words of Simon Sinek, ‘Why always start,'” Glenn Gutek, CEO of Awake Consulting & Coaching, told Business News Daily. “It is good to know why you are launching your business. In the process, [whether] it may be wise to differentiate between why the business is individual or why the market operates. When your market is what the market needs. Your business scope will always be larger than a business that is designed to meet an individual need.”
Brainstorm your business name.
Whatever option you choose, it is important to understand the logic behind your idea. Stephanie Desaulniers, owner of Business by Dezign and former director of operations and women’s business programs at Coation Center, cautions entrepreneurs to downplay the value of the idea before writing a business plan or considering a business name.
Clarify your target customers.
Desaulniers said that often people jump into starting their business without wasting time thinking about who their customers will be and why they want to buy from or hire them.
“You need to explain why you want to work with these clients – do you have a passion for making people’s lives easier?” Dessoulniers said. “Or enjoy creating art to bring color to their world? Identifying these answers helps clarify your mission. Third, you want to define how you will provide that value to your customers and How to communicate that price in a way that they are willing to pay.”
During the ideation phase, you need to pay attention to key details. If the idea isn’t something you’re passionate about or if there isn’t a market for your creation, it may be time to consider other ideas.
2. Write a business plan.
Once you’ve created your idea, you need to ask yourself a few important questions: What is the purpose of your business? to whom are you selling? What are your end goals? How will you finance your startup costs? These questions can be answered in a well written business plan.
Too many mistakes are made by new businesses without considering these aspects of the business. You need to find your target customer base. Who will buy your product or service? What if you can’t find evidence that your idea is in demand?
Conduct market research.
Doing thorough market research on your area and the demographics of potential customers is an important part of creating a business plan. This includes conducting surveys, holding focus groups, and researching SEO and public data.
Market research helps you understand your target customer – their needs, preferences and behavior – as well as your industry and competitors. Many small business professionals recommend collecting demographic information and conducting competitive analysis to better understand the opportunities and limitations within your market.
The best small businesses have products or services that set them apart from the competition. This has a significant impact on your competitive landscape and allows you to deliver unparalleled value to potential customers.
Consider an exit strategy.
It’s also a good idea to consider an exit strategy as you compile your business plan. Generating some ideas about how you’ll eventually get out of business forces you to look to the future.
“Often, new entrepreneurs are so excited about their business and so sure that everyone everywhere will be a customer that they spend little, if any, time showing plans to leave the business,” both ratchet up. Capital CEO Josh Tolly said and Kavana.
“When you board an airplane, what is the first thing they show you? How to get off it. When you go to a movie, what do they indicate before the feature starts? Where are the exits. Your first week In kindergarten, they line up all the kids and teach them the fire drill to get out of the building. Too many times I’ve seen business leaders who don’t have three or four predetermined exit routes. This adds value to the company There has been less and family relationships have also been destroyed.”
3. Assess your finances.
There is a cost to starting any business, so you need to determine how you are going to cover those costs. Do you have the means to fund your startup, or will you need to borrow money? If you are planning to leave your current job to focus on your business, do you have the money to support yourself until you make a profit? It is best to find out how much your startup costs will be.
Many startups fail because they run out of money before making a profit. It is never a bad idea to underestimate the amount of startup capital you need, as it can take some time for the business to bring in sustainable revenue.
Do a break-even analysis.
One way you can determine how much money you need is to perform a break-even analysis. It is an essential element of financial planning that helps business owners determine when their company, product or service will be profitable.
The formula is simple:
Fixed Cost (Average Price – Variable Cost) = Break-Even Point
Every entrepreneur should use this formula as a tool as it informs you about the minimum performance that your business should achieve to avoid losing money. Plus, it helps you understand where your profits come from, so you can set production targets accordingly.
Here are the three most common reasons to conduct a break-even analysis:
- Determine profitability. This is generally every business owner’s highest interest.
Ask yourself: How much revenue do I need to generate to cover all my expenses? Which products or services turn a profit, and which ones are sold at a loss?
- Price a product or service. When most people think about pricing, they consider how much their product costs to create and how competitors are pricing their products.
Ask yourself: What are the fixed rates, what are the variable costs, and what is the total cost? What is the cost of any physical goods? What is the cost of labor?
- Analyze the data. What volumes of goods or services do you have to sell to be profitable?
Ask yourself: How can I reduce my overall fixed costs? How can I reduce the variable costs per unit? How can I improve sales?
Watch your expenses.
Don’t spend too much while starting a business. Understand the types of purchases that are a good fit for your business and avoid overspending on fancy new equipment that won’t help you reach your business goals. Monitor your business expenses to make sure you’re on track.
“A lot of startups spend money on unnecessary things,” said Gene Palden, founder and CEO of Rare Form New Media. “We worked with a startup that had two employees, but spent a sizable amount on office space that could fit 20 people. They also hired a professional high-end printer that worked for a team of 100. It had key cards that tracked who was printing what and when. Spend as little as possible when you start out, and only on things it takes for the business to grow and be successful. are essential. Luxury can come when you are established.”
Consider your funding options.
Startup capital for your business can come from a variety of channels. The best way to get funding for your business depends on several factors, including creditworthiness, the amount required and the options available.
business loan. If you need financial assistance, a commercial loan through a bank is a good starting point, although these are often difficult to secure. If you are unable to get a bank loan, you can go to the U.S. You can apply for a small business loan through the Small Business Administration (SBA) or through an alternative lender. [Read related article: Best Alternative Small Business Loans]
business grant. Business grants are similar to loans; However, they do not need to be paid back. Business grants are generally very competitive, and come with conditions that the business must meet in order to be considered. When trying to secure a small business grant, look for ones that are uniquely specific to your situation. Options include minority-owned business grants, grants for women-owned businesses, and government grants.
investor. Startups require significant funding, looking to bring in an investor. Investors can provide several million dollars or more to a new company with the expectation that backers will play a role in running your business.
Crowdfunding. Alternatively, you can start an equity crowdfunding campaign to raise small amounts of money from multiple supporters. Crowdfunding has helped many companies in recent years, and there are dozens of reliable crowdfunding platforms designed for different types of businesses.