Ten Critical Considerations before Starting a Business
People with regular jobs are often looking for that one opportunity when they can start their own business. The freedom of being in control and not having anyone on your head to order you to do things is quite a motivating factor for many. However, a job comes with a certain sense of predictability wherein you know you will get a fixed salary at the end of every month. On the other hand, starting a business is a brave step that only the daring ones take. There is not enough predictability, and you have to be at your best every day to keep your business afloat.
Highlighted by marketing expert and entrepreneur, Guy Galboiz, here are the most important considerations if you are planning to start a business:
10 Things to Consider before Starting Your Business
Know Yourself First
As clichéd as it may sound, self-awareness is the biggest strength of any successful businessperson. In this particular sense, self-awareness is all about knowing your strengths and weaknesses. When you know what you can and cannot do, you are in a position to start a business that you can manage. You don’t want to do something that will be difficult for you to manage. It’s not just about your passion. Maybe you have always been passionate about starting a restaurant, but are you someone who can take the pressure without panicking?
If you think you can’t take immense pressure on a daily basis, starting a restaurant might not be the best thing for you. Think of these facts, your weaknesses and strengths. Start a business wherein you can capitalize on your strengths and keep out your weaknesses.
Research the Business Type
Once you have decided the type of business you want to start, you have to start researching this particular business. You must know the starting points, the areas of concern, and the common reasons for failures of such businesses. You must also identify your audience. In addition to identifying the audience, you will have to research the audience to know what it likes and where you can find it easily. For example, if you are thinking about starting an online store, you must know the many ways of starting one. You must also familiarize yourself with how payment processing works, how you can create a merchant account, how to sign up for cash on delivery, etc.
Register the Proper Business Structure
One of the most important things that most new business people often overlook is registering their businesses as the right structure. When you talk about structures, you can have your business registered as an S-corporation, C-corporation, LLC, etc. Why you want to register your business using the proper structure is because this decision will directly impact the taxes you have to pay. When you have a sole proprietorship, you are the only owner of the business and responsible for everything. You can pay your taxes like you do from your personal income. Things can get complex when you enter into S and C corporation realms.
You must know that there is a huge difference between the ways two corporations pay taxes. Sometimes, people choose the wrong entity and end up paying more in taxes than they should. Such decisions continue to hurt your business every month.
Arrange the Capital
Yes, you already know that you need capital to start your business. However, this point is more about knowing the options you have available. In most cases, businesspersons think that banks are the only institutions they can go to for getting the loan when that’s not the case at all. You have more options available to arrange the capital for your business than you had in the past. In addition to banks, you now have many private entities that provide you with specialized loans. These loans can be suited exactly to your business type.
Most importantly, you have the crowdfunding option available at hand today. You could just sign up on a crowdfunding platform, create an impressive pitch, and get the funding from investors from around the world. You don’t necessarily have to return the money to the investors if the amount is small. These online funds are completely different from venture capitalist funds. The rules and regulations are not as tight and you can reward the investors with a sample of your product or some other souvenirs for their investments.
Know the Importance of Location
If your business is not purely an online entity and you have a physical address too, you have to pay special attention to the location. For a brick and mortar business, location is the backbone to the success. There is a lot of research required before you finalize a place. First, you have to think about a location where your target audience comes regularly. You don’t want to start a business that targets teenagers in an area where the audience that frequents the most is over the age of 50. Other things to consider include the buying power of the people in that area and the volume of foot traffic.
After the external considerations, you have to look at the internals. Is the space enough for your operation? Are the utility bills paid? Is the landlord friendly to the tenants? Is the structure sound? Is the monthly rent affordable for you to bear in the starting months when your business is not producing a lot of return? All of these are important questions you have to ask before you pay the advance for the location of your business.
Have an Exit Point
It is never enough to emphasize this point because of how important it is. When you are starting your first business, you are not fully aware of the emotional side effects of doing so. In your mind, it is a lifeless entity. However, your business will be like your baby. Once you have started it, you will find it nearly impossible to shut it down. The idea of closing down the business can be immensely discomforting. However, you have to set an exit point before even starting the business. You want to write down at what point you will not continue any further.
Make it a part of your business plan and stick to it. If things do not work out the way you had expected them to, exit the business as soon as you can. If you don’t, you will end up burning a lot of money without any returns. The last thing you want is creditors knocking on your door and you not having any money to return to them.
Create a Marketing Strategy
You must have a solid marketing strategy in preparation from the day you start thinking about your business. For you to market your business the right way, you have to know your target audience first. You have to know their interests and what platforms they use the most so you can target them there. Social media marketing is your friend and probably the best way to know your audience. Spend your money only on marketing channels that are working. Even when it comes to internet marketing, you have search engine optimization, social media marketing, pay per click marketing, content marketing, etc.
You have to know the type of marketing that works best for your business. If you have multiple campaigns rolling at the same time, analyze them to know the most potential one and put a stop to the ones that are only sucking up your marketing capital without any results.
Have a Strong Team by Your Side
Believe it or not, you can’t do everything on your own no matter how skilled you are at doing them. You need a team with you to run a business and your choice of the team members is a critical step in guaranteeing the success of your business. First, you want to have a team with you because when you go to the investors to pitch your business idea, they want to see the potential of your team. They usually will not invest in one person. Secondly, you have many different tasks to take care of such as internet marketing, accounting, sales, legal activities, etc. You cannot do it all with the same level of effectiveness.
You also have to know how to pick your team. If you are hiring employees, you are making a mistake. The first people on your team should not be just employees. These should be people who share your vision. You don’t want to lose them or treat them like workers. In fact, they should be willing to you even when you are going through tough times. That’s possible only when they believe in the same vision as you do. So, when it comes to hiring people, your focus should not be the responsibilities they have served on their past jobs or their achievements as workers. You should also focus on the “why” of things.
Define a Differentiator
So, unless you are doing something that more than seven billion people in the world could not think of, you need to find a differentiator. You have to realize that every business is there to solve a problem. If you are not solving a problem, you don’t have a business at all. However, there is another aspect that’s even more important than problem solving – it is knowing your differentiator. When you land in the market, you will notice many other businesses doing similar things and providing similar solution to yours. However, you can set yourself apart with a differentiator.
You have to define what makes you different. And then, you have to find effective ways to communicate your differentiator. You need a strong branding strategy to do that. Don’t rely on price being the only differentiator because that’s nothing special. Nike sells sports products and apparel, but so does Puma and Adidas. However, what differentiates Nike is the “Just Do It” attitude. It speaks within its branding, advertisement and marketing.
Pay Attention to the Cash Reserve
You might not pay a lot of attention to the expansion of your business at the time of starting it. However, it becomes a critical concern for most business owners once they have established a successful business. Of course, you can’t think of operating your business in one place forever. If you have been successful in your endeavor, you have to look for ways to expand your business further. One way to do that is to go to the banks yet again. If you have an established business, you won’t have a lot of trouble in getting a loan from the bank. However, bank loans can be back-breaking no matter how much profit you are making.
A loan is still a loan. What if you could expand the business without requiring any loan? That’s only possible when you have been building a cash reserve from day one. Building a cash reserve will require some sacrifice from you, and you will also have to do some math. First, you have to know your monthly net profit. Once you know your monthly net profit, you can decide how much money you can set aside every month to build cash reserve. Sometimes, you are making a lot of revenue but your net profit is not enough to set aside some money for cash reserve. You then have to look for strategies to increase your revenue in a way that it increases your profit as well.
It should be clear from the information above that there is a lot to think about when you start a business. It is not as simple as opening a store and waiting for customers to come. As a businessperson, you have to look into each and every aspect of what makes the world go around i.e. the inflow and outflow of money, consumption of money, salaries, profits, losses, expansions, customer experience, business reputation, etc. As a business owner, you are central to everything. Yes, there will be a lot of stress. However, once you have done everything like it should be done, the relief and pleasure are ecstatic.
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