What does the idea of being your own boss look like?
The idea of creating a business model that solves a relevant problem and monetizing it, along with the freedom to make decisions, strategize, and go with the tide of the market – if all of this excites you, it’s time to unleash the hidden entrepreneur within you.
Starting a new business is something almost everyone has thought of doing at some point in their life. But making it flourish or keeping the idea alive is no easy task.
Identifying a problem, understanding the need for a solution and its viability, and then launching services to market are crucial steps a business owner must take before embarking on the journey. Then comes the full spectrum of fundraising, investing, spending, and paying.
However, if all of this sounds difficult, there is nothing to be discouraged about. At some point, giants like Facebook, Google, Reliance and Amazon had taken their first steps before becoming the reputable names they are today. Therefore, no matter how high your valuation or how much start-up investment is involved, if there is vision and potential customers, there are opportunities for growth.
Moreover, the rise of the entrepreneurial wave due to the increase in the number of startups and small businesses shows huge potential in the country that can be tapped as an asset to boost the economy.
[Hero Image Credit: redd/Unsplash; Featured Image Credit: Avel Chuklanov/Unsplash]
8 things to keep in mind before starting a business
1. Refine your business idea
In today’s highly competitive world, standing out is no easy task. As a business owner, one needs to be very clear about their business idea, purpose, and the viability of the product or service they want to sell.
All hobby entrepreneurs need to do extensive market research and refine their ideas. Often, companies start off well but eventually falter in the first year as startups try to take on too many new products to diversify their brand base. It might sound like a good idea, but it often backfires because there’s no clarity or a sense of dominance in one area.
Simplifying thoughts, focusing on a viable product or product, and keeping services simple and accessible are likely to ensure better understanding of the market.
2. Determine your target audience
Not all products can serve and benefit everyone. Therefore, another important thing to keep in mind before starting a business is to understand your market and have a clear view of your target audience (TA).
Every business has a niche and caters to a specific market that will buy the bulk of the product or service. For example, branding a sweet popsicle for the health-conscious crowd won’t fetch much compared to the AT of kids and young adults.
Similarly, setting up a fancy restaurant next to a school or college may not be very profitable as the TA should be upscale customers rather than young people who would prefer fast food that is easy on the wallet to main courses. signature of a renowned chef. .
This brings us to the point of deal flow or how to achieve TA. Determining whether to adopt a business-to-business (B2B) plan or a direct business-to-customer (B2C) service will have a profound impact on brand reach and awareness.
3. Financial planning and cash flow
From laying its foundation to sustaining it, every new business requires capital. Additional expenses incurred by various departments and processes, such as technical support, packaging costs, marketing efforts, and shipping, require careful cash flow and financial planning.
Although putting your money or funds from friends and family can help in the beginning, the initial amount of corpus will not last long and spending it will affect the business along the way. Additionally, you need to be careful not to overspend and incur hidden costs such as fees, permits, and administrative fees. If expenses exceed cash inflows, this will create an imbalance from which it will be very difficult to recover.
To help you acquire more funds, you can contact angel investors or venture capitalists who can invest in your business and help it grow.
At a later stage, applying for small business loans from banks is also an option.
4. Establish a business structure
Another important aspect to keep in mind before starting a business is to be sure of the business model and have an appropriate structure in place.
Now that you have a clear vision, it is important to sort out according to the structure of the company as well as its legality. Registering your business is one of the first steps.
This will help to establish the responsibilities of the co-owners, to distribute the tax burden, any legal documentation and other financial and legal responsibilities.
5. Build a strong team
To make any business a success, you need the support of a group of hardworking, smart people working for you.
Having like-minded people as partners, strategists, and co-founders on board is one of the key steps to building a new business. Distributing roles and shares of the business among each team member is one of the crucial things to do before starting your business.
However, not all support teams need to be strategic business advisors. Hiring mentors for professional guidance and to manage junior team members is also a valuable addition for a company as it puts processes in place.
A strong and motivated team will give a major boost to the business, as there will be a reliable group working towards the same goal who will also bring new ideas and perspectives to the table.
Also, reaching consensus on issues will be easier. However, business partners should understand that stakeholder opinions will need to be aligned with the business purpose. Offering shares is another way to keep employees motivated and involved in company procedures.
6. Understand the risks involved
No business is a bed of roses. One of the key things to keep in mind before starting a business is that there will be some level of risk involved.
Understanding market risks, the scope of your product’s scalability, and assessing your business prospects are some of the points that need to be considered.
Spending all your time building a business and then realizing the risks involved can be a huge shock. Therefore, being honest, foresighted, and upfront with the risks will help assess the downsides of a business plan and work to overcome the shortcomings.
It is true that you have to take risks to succeed. However, it’s equally important to stay realistic and be aware of the kind of risks you can take while keeping the business afloat.
7. Generate income early
At the end of the day, money matters and that’s what all businesses aim to do. Seed or help from investors can help bring in the capital and generate income initially, but long-term sustainability is the ultimate test.
The most crucial aspect here is determining when the business can start generating revenue and profit. Small business owners or those just starting out should be extremely aware of this.
It is made to understand your position in the market and build a strong technical support base as soon as possible.
Businesses, whether big or small, need to start generating revenue so that entrepreneurs can reinvest and sustain it. Pre-orders, deposits, online sales or even off-the-shelf purchases – getting the money flowing is extremely important.
8. Numbers matter
It’s a harsh reality that all budding entrepreneurs need to know and accept. You may be extremely passionate about your business, implement big strategies and have all the necessary funding, but sales numbers and records matter most.
It’s not enough to get customer engagements on your ads and posts. Seeing clicks turn into transactions and charting sales growth is what you should be aiming for.
One of the important things to keep in mind when starting a business is to be thorough with your numbers. Each service’s gross margin, net profit, cost of service, month-on-month, annual growth and other evaluations should be done throughout the year.
This will help you get an idea of how to maximize the margin and if the cost is worth it.