Want to Start a Business? Here are 5 Critical Steps You Need to Consider
Let’s be honest, starting a business can be difficult and downright frustrating at times. Especially if you don’t know what the next step should be.
Whether you’re in the beginning stages or somewhere in the middle, these steps will help you get crystal clear about what’s next.
So, without further ado, let’s get to the 5 critical steps to help you on the road to entrepreneurship.
1. What’s Your Business Idea?
Getting clear on what your business is about is critical to knowing its viability. You need to think about your competitors, customers, and your offer.
The first step is determining what your market needs and wants. Without a problem to fix or a thirst to quench, there won’t be much demand for your product.
Next, is your competition. Don’t worry though, competition isn’t necessarily a bad thing, it means your niche is profitable. But, you have to be smart about it. Do your research to find out what their offer is and how you can compete.
It’s important to do your research both externally and internally. Google is your best friend here. Find books, classes, blogs, or anything about your chosen niche. This will help you answer questions related to your idea.
Finally, make sure your ‘why’ is focused on the market and not your personal needs. You can check this by doing some field testing. You can make use of pre-orders, Facebook or Google ads, forums, and surveys.
Put your customer first, otherwise, even the best business plan in the world won’t cut it.
2. What’s Your Plan?
Every business needs a plan, no matter if you’re a one-person army or giant corporation. Your business plan is your guiding flame and it helps you stay objective when you’re under stress.
If you’re planning on getting funding from investors or securing a loan, you’ll need a traditional business plan. These are the small mountains of paper that lenders/investors use to scrutinize your business.
But, if you don’t need funding, a simple plan will do the trick. Giving yourself a rough overview will help you stay on track and keep you motivated when you tick off goals.
Your plan should have your purpose, goals, customer persona, strategies, activities, and milestones, among other things. The more comprehensive it is, the better, since you can refer to it when you hit a speed bump (or victory).
3. How Much Money do You Need? (And Where is it Coming From?)
Money is the lifeblood of your business and you should always be aware of its pulse. Expected revenues, expenses, loans, and more should be known before starting your business.
Make a note of all your one-time expenses like legal fees, permits, licenses, and equipment. These will all be your initial expenses which you will cover with some form of funding.
Some sources include business loans, grants, investors, and crowdfunding. Loans are your typical starting point. You can get a loan from a large bank or your local branch.
Business grants can help lower your expenses because you don’t need to pay them back. But, they come with specific criteria that you need to meet. An example is a minority-owned business grant. One place to check for grants is SBA.
Investors and crowdfunding are similar sources of starting funds. But, investors are usually wealthy individuals that invest a significant amount. And they might get hands-on with the business, or provide you with advice/mentoring.
On the other hand, crowdfunding is where lots of individuals come together and chip in small amounts of money. This can take the stress off having to be accountable to a large investor.
Regardless of which source you choose, your pitch will determine how successful you are. You need to paint a picture and tell a story to get potential investors hooked onto your vision.
4. What Structure Will Your Business Have?
Your business structure is important and will have direct implications for your business. You have the choice of being a sole proprietor, partnership, limited liability company (LLC), or a corporation.
And there’s also the option to operate under a different name. This can be handy in a few different cases.
Sole Proprietorship
This is where you run the business on your shoulders. You as an individual are responsible for all debts and obligations for your business. But, this can affect your credit if something goes wrong. So, it’s better to avoid high-risk businesses.
Partnership
A partnership is where two or more people are considered business owners. This can range from husband and wife teams to a solely professional relationship.
LLC
An LLC is one of the most common structures for small businesses. It’s a structural mix between a corporation and a sole proprietorship. It comes with the legal protections of a corporation, but the tax benefits of a sole proprietorship.
Corporation
There are many types of corporations, but their general purpose is simple. They create a separate entity from you and they can own property and pay taxes, among other things.
Doing Business As (DBA)
You can use a DBA with any structure above. It allows businesses to operate under a name that’s different from their registered one.
DBAs are typically used with sole traders. They can use their full name as their registered name while using a business name as their operating name.
Each structure has different implications for taxes so, it’s best to get it right the first time. Regardless of which one you choose, using an online incorporation service will save you both time and money.
5. Getting Your Name Out There
If people don’t know who you are, they’re probably not going to buy from you. Even if the quality of your product is over the top. So, you need to be active in the places where your customers hang out and marketing plays an integral role in this.
In the 21st century, building an online presence is a must, even if you have a physical store. This means having a company website and social media account. Social media has become an advertisers’ haven if you can do it right.
You can use promotions, giveaways, and coupons to drum up business. And, with the nature of social media, it’s easy to go viral if you have an enchanting post that people want to share.
An outside-the-box giveaway idea right now is cryptocurrency. With Bitcoin investments booming, you can use it as an incentive for certain actions.
Email marketing has also become integral for successful businesses. According to DMA, email marketing has an average return of 42x for every dollar spent. Not a bad return right? So, building an email list must be a priority for your business.
As a whole, knowing your Unique Selling Points (USPs) will help drive your marketing efforts. Make sure the customer knows exactly who you are, and why they should buy from you.
Now, this is by no means an exhaustive list but, these are among the most important steps. Having a clear vision, concrete plan, calculated finances, correct structure, and captivating marketing will help you cultivate success.
PS: Don’t stress, go at your own pace. Moving forward one step at a time is more important than winning an imaginary race.
Those are really valid points to consider when starting a business. But let’s not forget about other legal procedures that need to be followed, such as acquiring permits and licenses, registering the business name, etc.
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