Here is how to establish a firm startup using these six building blocks.
Starting a business can be a difficult, confusing and stressful endeavor. It will feel like there are hundreds of things you must do before launch. It doesn’t have to be so overwhelming, though. With some planning, you can act with purpose, deal with all key issues, manage expectations and position your business for long-term success.
With some fore-planning, you can direct your energy and resources to the most important tasks. We look at these below.
Do Your Research
You get into business to win. Nevertheless, no matter how novel you may think your idea is, there’s a high probability that there are already market players who offer a similar product. If you want to have the edge over your competitors in the battle for customers, you have to find ways of making your product different from and better than what’s already available.
Research is where you begin. Define your target market, know what your prospective customers want and understand what value proposition is offered by rival products.
Comply with Legal Requirements
Your business is first and foremost, a legal entity. You shouldn’t start selling before you decide on and establish the legal structure that would be most suitable. The legal structure will determine owner liability, paperwork, whether the business can hire employees, and its tax obligations (for example, Incfile has an insightful piece on how the S Corporation can be advantageous for the self-employed).
Actual legal requirements for starting a business will vary by jurisdiction. Work with an experienced attorney to ensure you are complying with the law.
Organize Your Finances
No matter the type of business you are getting into, you will need money. The amount of capital you need to start off will depend on the nature of your business (for instance, you will need much more money to launch a manufacturing plant than you would an e-commerce store). Most entrepreneurs won’t have enough personal savings or disposable income to fund their business.
There are a number of alternative sources of capital. Family and friends is a good place to start but this should be contingent on making clear to them that they might not get their money back if you crash and burn. If this isn’t feasible, get in touch with venture capitalists, angel investors, small business associations and banks.
Acknowledge the Risks
In the previous point, we mentioned that it’s important to let your family, friends or any other person or entity that you approach to fund your business, of the risks involved. Understanding the risks, however, starts with you, the founder. Take time to quantify the risks before and during the development of the business plan.
Once you’ve documented the risks, you can explore the different options available for mitigation. For instance, restaurant owners can benefit from general liability insurance to cater for accidents from slip-and-falls. Accountants would need a professional liability cover for protection in the event a disgruntled client sues them.
Alphabet (parent company of Google) is one of the most successful businesses in the world. But think about it – would Google exist if the Internet didn’t exist? If Google was established too early, it would have failed because the supporting ecosystem wasn’t present. On the other hand, if Larry Page and Sergey Brin waited too long, someone else would have developed a similar idea and run with it before they could.
This may be an extreme example, but it shows why timing is vital for business success. Of course, there’s no ideal time to start a business. The key lesson here is once the research checks out, you’ve proved the concept and established demand, don’t be indecisive. Get down to it.
For founders, the business is their baby. They are reluctant to entrust someone else with its care because of doubts that the third-party will be as committed to its wellbeing. Nevertheless, as difficult as it might be, you only have so much time per day. If you want to succeed and get things moving quickly, hiring external help is the way to go.
In any case, can’t be an expert in every aspect of running a business. Whether as permanent hires or as contractors, you’ll likely need at the minimum, an accountant, legal counsel, IT expert and administrative assistant.
Starting and running a business isn’t for the fainthearted. However, if you think through it from the start and cover the key bases above, you’ll greatly increase your chances of success.