Opening up a new business is both demanding and exciting at the same time. There is nothing more rewarding than being your own boss and seeing your company get off the ground.
However, it can also be, stressful and frustrating especially if you are unable to manage the different challenges that come your way.
So before you take the plunge and make your start-up dreams a reality, it is best to consider these seven factors that can help your business be a success:
7 Things To Consider When Starting A Business
1. Is your Business Concept Unique?
A great business comes from an equally great idea but before you start doing the groundwork, make sure that your idea is a solid one.
If you are launching a new product or a service, evaluate if you’re really offering something valuable to your potential customers.
Jodi Goldstein, Executive Director of the Harvard Innovation Labs, recommends that you ask yourself how unique your idea is.
Do you have a first-to-market product without competition? Or if there is already an existing product, are you introducing an upgrade that adds value to the industry?
It’s also important that you have the necessary capability to make the business successful. Even if you have the best concept, if you do not have the required qualifications or the related background to operate it efficiently, then you should reconsider your options.
2. Do you have a Sound Financial Plan?
In the US, 26,000 businesses went bankrupt each year between 2013 and 2017.
When it comes to money, it is not enough to have the capital to launch your business.
You also need to ensure that you have enough cash flow to be sustainable even if you will not make a profit for the first few months or even years.
Do not overspend during the first few months. A lot of business owners get carried away with buying the most expensive furniture and equipment in decking out their offices.
Ask yourself and diligently consider what is REALLY necessary.
Should you lease or buy your office equipment? Do you really need that fancy coffee table in your reception area? Have you accounted for unexpected monthly expenses such as maintenance costs?
One of the things that can cause a business to fail early is not having the foresight to plan for the “rainy days”.
This can lead to delayed delivery of services, not being able to pay your employees on time and stressing about monthly dues.
In order to avoid this scenario, you need to create a budget forecast that takes into account your fixed and variable expenses, estimated sales, as well as contingencies. If you are not an expert on numbers, hiring an excellent accountant is critical.
3. Who is your Target Market?
- Who will buy your product?
- How often do they buy this product?
- How much are they willing to spend on this product?
Every new business owner must know the answers to these questions.
You need to know who your customers are and the more you specific you can get, the better.
This process is called defining your target market.
You have to understand their purchasing behaviour because having this market research beforehand will help you realise if there is really a demand for the product that you’re offering.
For example: if you are opening a beauty salon at a specific location, you have to investigate the dominant age group of women in that area, their spending capacity, and the types of services that they patronise. This will also guide your service offerings as well as how you set your price points.
4. Who is your Competition?
The saying “Know your enemy” is very applicable when it comes to opening your business.
It’s critical for you to know who your competitors are.
- Are their products superior to yours?
- Are your prices competitive enough?
- Are you offering something different than what they have?
Asking these questions will help you fine-tune your own products as well as give you an insight on how you can position your business better.
Another advantage in studying your competitor is that it allows you to learn from their experiences so that you won’t make the same mistakes yourself.
5. Who are the Essential People in your Team?
One of the most important factors that can make or break your business is human resources. Assess how many employees you really need in order for you to jumpstart your operations.
As a start-up, one way to save on cost is hiring remote employees. In doing so, you can hire from a wider talent pool without being restricted to people available in your area.
Having a remote workforce can also help you save a lot of money on real estate costs because the less people you have in the office, the less square footage you need.
Another way to keep your team tight is by applying automated business practices which can lessen the tasks your employees need to do.
This means that they can dedicate more time in doing valuable work than tedious tasks like answering the phone, responding to emails or posting real-time to social media.
For example: if you are expecting a massive amount of incoming phone calls and emails, using automated systems can allow you to respond to queries instantaneously without needing to hire multiple employees.
6. What types of Paperwork do you need to File?
Depending on the location you’re establishing your business in, you have to adhere to rules and regulations applicable to your industry. This affects several factors including your business entity structure, your ownership agreements, and your tax obligations.
(It is advisable for you to consult a professional lawyer or a business consultant early on to make sure that you fulfil all of these requirements and that there are no legal hindrances for you to proceed.)
One classic example of a start-up legal mistake is naming your business with a name that has trademark issues.
Using a name that another existing business is already using will not only create confusion among your customers but can potentially get you into more serious and costly legal disputes.
Some entrepreneurs delay the paperwork process up to the last minute only to find out that a legal glitch will slow them down.
Prioritise having the licenses and permits registered and all necessary paperwork filled out and completed before you do anything else.
7. Marketing Plan
In order for you to drum up interest for your business, you should create a marketing plan that is specifically tailored to your target customers. There is no “one size fits all” when it comes to promoting your business.
If you have a consumer business, you can employ digital content marketing and social media advertising as effective ways to reach your audiences at an affordable cost.
But if you are a business to business service provider, then email campaigns and trade events can get you better results.
Off to a good start
Being prepared is very essential to the success of your business. This way, you are less likely to run into unexpected surprises that cost time and money. Keep these tips in mind to help your business get off to a good start.
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