Alright, you've decided to start a business finally! You want to be your boss and to gain the freedom you deserve. But before you even take foot in climbing your mountain, there is one thing you must do.
It's the most important thing that's needed when you start a business. It sounds daunting, but believe me, it's something very simple and often overlooked by numerous people.
What Do I Need to Start a Business?
To determine whether starting a small business is right for you, it's essential to know what will be required of you to start and maintain your endeavour.
Having sufficient time is one of the biggest stumbling blocks for many people who want to start their own business. One of the most important skills you need when balancing a day job with running a small side business is good time management skills. Learning to prioritize tasks is difficult, but if you fail to do so, you may end up alienating customers and vendors that you need to work with. Learn to take care of jobs that must be done immediately as soon as possible, and delay doing the projects that you know can wait.
Prioritizing business tasks is key, but it doesn't stop there. Prioritize personal tasks as well to make sure you can carve out sufficient time in your busy day to devote to your startup.
Starting a business requires cash (or credit) upfront, and buying an existing business often requires a large lump sum payment. Unfortunately, many people want to start a business precisely because they don't have any money. This can lead such unprepared entrepreneurs to bury themselves in debt.
It's simply a fact that your business will need capital. While investing more money in a business can't guarantee its success, you can pretty much guarantee the failure of a business that doesn't have enough. To avoid this situation, thoroughly assess how much you need to start your business and maintain operations. Then, treat that as your baseline, knowing that you will likely encounter several unexpected expenses along the way.
A few basic business expenses include:
- Business cards
- A website
- Advertising designs
- Accounting software
- Mailing supplies and postage
- A credit card processor account
Drive and ambition aren't enough – sometimes the early bird gets the worm, and other times slow and steady wins the race. Be patient, and don't fall prey to these common misconceptions:
- Don't Expect to Turn a Profit Immediately. Many people get discouraged when they end each day with less money than they started with, even if they made sales. It takes time and a certain volume of sales to see forward progress, and there will always be slow days. Be aware of your monthly "nut" – i.e., the amount you need to clear to break even – and make that your goal, not cash in your pocket at the end of every day. When a business is getting off the ground, it can take a while before the profit reaches or exceeds the fixed monthly costs you incur to run it.
- Expect Mistakes. I'm still kicking myself for things I did wrong in the early days of my first business. But while those mistakes cost me money, I learned from them, and I have used that knowledge to prevent similar events from occurring again. Mistakes can be valuable experiences.
- Realize That You Can't Make Everyone Happy. Unfortunately, the customer is not always right, but you can't let it get you down. For example, if you let one credit card chargeback ruin your day, you may lose other sales because you can't focus on your job or provide good customer service. Research your industry and market to get a sense of what the customer expects and what types of issues you may run into. When you encounter difficult customers, learn from the experience, and don't take it personally.
- Some Tasks Are Monotonous. Patience is key even for people who get into a business based on a hobby they love. Many people who turn a hobby into a business enjoy the day-to-day work but despise the rest of the work that running a business entails, such as accounting, doing taxes, advertising, and managing staff. You don't have to enjoy filing quarterly taxes, but you do have to accept that doing the unglamorous and boring tasks is what makes running the business possible.
An idea doesn't need to be unique to be profitable – as long as there's sufficient demand for your product. A unique idea won't necessarily translate into big sales. There's often a reason nobody sells a product like yours, and that reason may be that nobody wants one.
However, researching and developing your business idea is only the first step – you need to do additional research to find out how to make your idea a reality.
- Do You Need Retail Space? Can you sell your product or service online, or do you need a physical retail location? If so, you may want to rent booth space at farmers' markets, craft fairs, antique stores, or festivals. This is a low-cost and low-risk approach, as well as a great way to get feedback from real people regarding your product and what you could change or add to make it more appealing.
- Do You Need a Website? Almost every business needs a website (as well as a social media presence), but if you want to name your business something for which a good domain name is not available, you might want to rethink how unique the name should be. If the website is integral to your business, you need to budget a significant amount of money to create something attractive and fully functional.
- Do You Need Licenses, Insurance, or Permits? At the very least, you probably need a business license to operate – and if you have a physical location and inventory, you also need insurance. You may need additional types of insurance to protect yourself against liability from your customers, and whether you need professional licensing or other permits depends on the nature of your operation and the laws in your state.
- How Will You Obtain and Store Your Product? Whether you plan to purchase items wholesale to sell or create products yourself, you need to budget for needed materials and designate sufficient space to store necessary inventory and raw materials.
- How Will Customers Discover Your Product? Advertising is crucial for a new business, especially if you don't have a retail location. Create an advertising plan and get quotes for the costs of various advertising venues. Don't assume people will flock to your business just because you offer a great product – but don't count on tons of sales due to an advertising campaign either. Response rates on many forms of advertising are 2% or below, so be patient while building brand recognition.
- How Will Customers Buy and Receive Your Product? If you have a website, you need to apply for a merchant account with a company such as Authorize.net to accept credit cards. You should also have a business credit card and a bank account for your business to keep funds and expenses separate from your money. Determine how you plan to ship merchandise, as well as the most cost-effective method. You should also consider the cost of insurance, the cost packaging materials, and the time-frame your customers expect to receive the items.
- How Will You Initially Fund Business Expenses? If you start a business with only enough startup funds to run it for a month or two, you are practically guaranteeing that it will fail. There are some businesses you can start on a shoestring budget, but most require venture capital, angel investors, or money procured via a service like Kickstarter. Most investors want to see that you have money on the line as well – this ensures that you will be especially motivated to run the business well so you won't lose the funds you've invested. Many people charge business expenses to a credit card, but if you must use a credit card, it's best to open an account specifically for your business.
- How Much Will It All Cost? It's very important not only to find out what you need but to find out how much it costs in total. Money is the lifeblood of every business, and knowing how much various tasks or options cost can help you determine what is doable and what is not.
Important Things Needed in Starting a Business
Don't over-complicate your concept.
Most businesses start from a simple idea or solution to an everyday problem. Make sure that your idea doesn't end up turning into something too complicated. Simplicity is the best. The more elaborate your idea becomes, the more expensive it can get. Overly-complicated solutions to problems are more difficult to both market and to implement. Start small and narrow your focus.
Find out how you can deliver a simple, high-quality product or service, and then go from there. Simplifying your product can help cut down on costs, and also helps with determining your minimum viable product (MVP) should you choose to develop a software solution to scale in the future. This is exactly what I'm doing with a passion startup of mine now: We have proven a gap in the marketplace, gained proof of concept and used our lean business process to identify an MVP for a web-based software solution.
Study the market
Before you even take any steps towards starting your business, you need to do a thorough market study to understand the field, and more importantly, your audience. We live in an age where few if any, ideas are innovative or new. This means that the plan you have in your head probably has been done before- but that doesn't mean you should drop it. Instead, you need to know who exactly provides that service or product and in what way. This will give you the knowledge you need to either develop your idea and tackle the business from a different angle or drop it altogether. People always have unfulfilled needs, and you need to spend a lot of time studying your target audience to discover those needs. Whether it's via asking friends, conducting surveys, or just researching, get a feel of the market and find out if people really want or even need that service or product you want to provide.
Focus on the market instead of the product.
Many startups and small businesses make the mistake of relying too much on their product to drive sales. What this means is that they fail to take into consideration the market they're getting into.
Small businesses should focus on delivering a product that people are willing to buy. You can come up with the most revolutionary product in the world, but you won't get anywhere if there isn't a market for it. Focus on niches. Getting a small market share is better than trying to invest in a market that doesn't exist.
Understand the commitment behind starting.
Before you start, determine if you're prepared to start a business. Running a brand, no matter how small, takes a ton of dedication. Expect your day-to-day life to change. Not only will you need to put down a significant financial investment, but you'll also need to put down some emotional investment as well.
Be prepared to lose sleep and feel stress. Be prepared to build connections. Remember that as your business grows, you'll need to dedicate more and more time to it. Failing to manage this aspect of running a business properly can damage your relationships with other people.
You can't possibly hope to start a business without getting funding. What you need to consider, though, is where you'll get that funding from if you don't have the money yourself. First of all, you need to set an estimated budget so you can understand your options. You have the typical sources like your friends and family from which you can borrow money to get you started –– always a good option because most likely, they won't be charging you any interest rates. If that doesn't work you have the option of taking a loan, whether it's from a bank or any other place- and that always works- but you have the downside of paying interest rates. Another very important direction which has become very popular over the past few years is accelerators. These companies fund rising businesses in exchange for a share in their stocks, and it's a very good option to consider.
Always overestimate costs.
Give yourself some leeway when it comes to expenses. Chances are, you're going to be overspending a lot. Prepare for the worst and overestimate your business's costs. Give yourself room to work. Don't assume that your expenses will always be in the green. Be prepared for emergencies.
Leverage the power of the internet
If you plan on starting a business in today's world, you're going to have to leverage the power of the internet to spread the word about your brand. Most people look online for any service or product that they're interested in now, and this is why you need to invest in creating the strongest online presence possible. This starts with creating a website that can draw in customers and keep their interest long enough so that they can complete the action you need.
Having a website also means investing in search engine optimization to ensure that your brand appears high in the search results. Suppose you live in Australia, for example. In that case, Melbourne, in particular, is a great place to look for search engine optimization professionals to help with the process, as many local businesses thrive off of SEO optimization. Over 80% of all Australians go online to find their local product or service, and 92% of them don't even go beyond the first page of google search results, which is why using SEO services Melbourne would be of big help to any business who seeks this goal.
The numbers will not vary that much from country to country as the world turns to the internet for any and all kinds of services and products. You should utilize social media and the massive exposure it grants to promote your brand. People spend huge amounts of time on Facebook, Twitter, Instagram, and all the other platforms. So, create campaigns and post ads to reach your audience.
Create a brand identity
Before going off and posting on social media platforms and sharing your website everywhere, you need to ask yourself a question: does my brand have a distinct identity that people would recognize and identify with? It's crucial you create this identity before the world knows of your business, and you have to take your time creating it. Brands with a mediocre or hastily made identity rarely make it, and they make an awful first impression –– which is the worst thing that could happen to a business just starting.
A strong team
You can't run a business on your own. Establish a team to support you from the get-go. These people don't necessarily have to be your business partners. They can be family, peers, friends or mentors. They have someone to fall back on can help you in times of crisis.
A business is only as powerful as its team. You need to create a strong team on which you can rely on to get you through your journey to success. Try to find resilient people who won't give up at the first roadblock, because businesses in today's competitive world face a lot of challenges before they can make it.
A growing business should focus on three things: funding, exposure, and connections. To get those connections, you need to do a lot of networking. The people you meet and form relationships with will be of use for your business in one way or another in the future, so it's something that needs to be taken into consideration. Go to conferences, attend social events, and mingle with people you have never met before. They might be your next big partner or client –– or even just someone who spreads the word about your brand.
Always assess your business idea.
Understanding that a market exists for your product is only the first step. Don't neglect to assess your business idea. Market research is something that you should never skip.
Find out how the industry or niche you're getting into works. Assess the strengths and weaknesses of your competition. Find out what drives the interest of your audience. Look for opportunities that are just waiting to be discovered in your niche. Don't go into things blindly.
A lot of things are needed to start a business in this day and age, and honesty has got to be the most important of them all. When people are getting to know an up and coming business, they have certain expectations and impressions. If you don't deliver what you promised for any reason, or if it was less than expected, you can be certain your business will be doomed.
People don't deal with companies that lose their faith early on in their life cycle, and you'd do well to maintain absolute transparency with all your future clients. First impressions are key to starting a business, and you want to nail that.
Important tips for successful startups
Things will not always go according to plan.
No matter how detailed and well-constructed that plan is, it's never going to be flawless. It's not a matter of if, but when things go awry, and you need to be prepared for every contingency. Adaptability is one of the most important traits a new business owner can possess. Don't be afraid to go off-script if the situation calls for it.
You're only as strong as the team surrounding you.
Your biggest priority will be recruiting and retaining high-quality talent to your team. It's impossible to overstate the importance of hiring great employees and empowering them to do their jobs, then stepping back and giving them the room and resources they need to excel.
You can't succeed as a micromanager.
It's vital for new business owners to quickly grasp the difference between being detail-oriented and being a micromanager. As the owner, you certainly need to take an active interest in all aspects of your company. But you also need to trust the people you've hired. Micromanaging your business is a great way to stifle your employees' creativity and initiative, and create a turnover problem that will only get worse the longer it goes on.
Build a positive business culture.
Every business is unique, and the culture that works at Company A might not work at Company B. So find the atmosphere and philosophy that works for your business. While the details will be different in every business, all employees want to feel empowered to contribute to the company's success and appreciated for their efforts. They want to know management cares about them as individuals and understands the value of the human resources it uses to earn a profit.
Your business will evolve.
It won't happen immediately (evolution is a long process, after all), but at some point down the road, your business will look much different than it did when you started. This isn't something to fear. Generally, your employees and customers will play a significant role in shaping the evolution of your company, and it's almost always for good. Talk to them, measure their behaviour, get a sense of how they're using your product, and what they want to see.
Of course, every business is unique, and the only thing predictable about running a business is unpredictability. There's no doubt this can be scary. But by being adaptable, assembling a great team, building a positive business culture, and embracing feedback, you'll be doing everything possible to prepare for the unexpected and build a successful business.
Starting and running a business can provide a lot of satisfaction, but it's not for everyone. It can be expensive and time-consuming, and many people don't understand the vast amount of effort that it takes to create and maintain a successful enterprise. Furthermore, enthusiasm for your product and a willingness to sell can't be bought or learned. However, if you're up to the task, you may find years of joy and monetary gains by launching your own small business.