Every entrepreneur dreams about opening their own business and getting all matters in their own hands. However, starting a business is not a straightforward process that you can glaze through. It requires a lot of preparation in order to build a successful business.
In fact, over 50% of all new small businesses fail within five years. This should not be the benchmark that gives you fear for starting your business. The biggest reason why many businesses fail a few years after the start is poor preparation and research. There are many things to consider before you start your business, and in this article, we will highlight some of the steps into your independency journey.
- Choose a Business Idea
This is where all things can go wrong. Choosing a business idea requires a lot of research, and there are no shortcuts. If you start with a business idea that has great potential, you cannot fail. You need to understand that your business must stand out and offer something different to customers.
Coming up with a unique business idea is not something that everyone can do, which is why you need to do research and test each idea individually. You just need to ask yourself does your product or service provides some kind of solution to people’s problems. That is the only reason why people would choose your business in the first place.
- Knowledge or Expertise
Obviously, you cannot start something without knowing anything about that business. Knowledge is power, so you need to be prepared for your journey. You must go through every process in your business until you fully understand all procedures and become an expert.
Knowledge can help you avoid unnecessary costs and come up with clever solutions for growing your business or make it more profitable. That is why if you do not have the necessary knowledge for your business choice, you need to hire a professional. Entrepreneurs seeking to enter the restaurant industry for example may wish to seek an experienced hire, or offer online food handler certification training opportunities for fresh hires.
- Research the Market and Demand
When you are building your business idea, one of the most important things to pay attention to is the size of the market you plan to get in as well as the demand. The only way to do that is to research the local market and create your audience of focus. Without a targeted audience, you will be swimming in muddy water with no sense of direction.
You can start asking yourself, who are your customers? Why would they choose your product? What is the approximate number of potential customers? Can the business grow? Who are my competitors? – All of these questions will determine the size of your business and potential income.
- Startup Costs
Depending on the type of business, startup costs can be very high. You must consider all costs such as land or building, buying equipment and machinery, furniture, employees, office equipment, product design and so on.
Costs can run your business into the ground since you don’t have enough resources to make mistakes. That is why you need to fully analyze every possible cost, at least for the first year, and estimate a budget that will make your business maintain its liquidity.
- Start-up Capital and Finance
This is probably the biggest issue for entrepreneurs since they don’t have enough money to support their initial business idea. Remember, no business in the world can run without investing money. After you analyze your financial situation and business costs, you will have an idea of how much money you will need in order to start your business.
Most small businesses (77% of them) rely on personal savings when it comes to investing in their business. Others decide to borrow funds from a bank as short-term or long-term loans, which might get tricky after you calculate the rate of your interest. You must be extra careful when you plan your capital and finance methods just because there is no turning back from a bad decision and can run your business to the ground.Coming up with a successful business plan is not a straightforward process, and there are no shortcuts. However, if you go through all things and develop a business plan with huge potential, you will succeed, just like if you had just guessed the winners of the Kentucky Derby race.