5 things to consider before starting your own business
Establishing yourself as a business owner is one of the most enthralling experiences, wherein you can be your own boss, unleash your creativity without restrictions and let go of your full potential towards a personal idea. Many people are lured in with the idea of “doing their own thing” but to every start-up there are certain pitfalls that need to be overcome.
Amongst many other considerations, turning your work idea into a start-up needs careful planning and practicality. Your business blueprint might be unique, but traversing the path from ideation to execution takes a lot of business acumen and sheer determination.
The business reality
Did you know that approximately 50 percent of small-scale businesses fail during the first four years of establishment? Some of the top reasons for start-up failure include running out of finances, not having the right teammates, lack of market need and/or losing to competitors.
So, instead of having to regret an avoidable loss, here are the five crucial things that you must carry out before you step into the “being your own boss” sphere:
- Skill identification
Having the right kind of knowledge about an industry is key in taking risks in a business. Once you are fully aware of your strengths and weaknesses, you can conduct your work in a methodical manner. The desired skills of a budding entrepreneur can be divided into:
- Interpersonal skills: Being able to develop great professional relationships with clients and investors.
- Personal characteristics: As a business leader, your personality should be a concrete amalgamation of excellence, drive and optimism.
- Practical skills: Decision making, goal setting and business knowledge can really take you far.
2. Planning from A – Z
A concrete business plan can be an extremely useful tool for start-ups. It not only forms a pathway for businesses to walk through but helps them achieve both short and long term goals.
Now, it is important to remember that as a professional, you should aim for formulating a well-documented blueprint that speaks for itself. The level of clarity and easy-to-understand language speaks volumes about your business acuity. Before beginning to write a plan, consider these two essential factors:
- Who is the reader going to be?
- What kind of response do you want from them?
For instance, if you are interested in joint ventures, a financial lot is likely to be your target audience. Whoever these people may be, your focus must be on the key message so you can receive the kind of response you want.
3. Research the idea-in-demand
Before venturing into building your personal company, you need to learn more about your customers and if the service you are offering is in demand. Market analysis and research can help you determine which products are mostly “in” and how you can possibly increase your market share with the correct USP (unique selling propositions).
Some research papers show that around 88% of consumers rely on online reviews and recommendations before interacting with a business. As a result, these reviews can provide your team with valuable information to help avoid taking risks, predicting future trends, and picking out the right kind of sales windows.
Here is a small list of some key aspects that make up a detailed market audit:
- Study the industry from the basics. That is to ensure you are able to get relevant information on your consumer base.
- Evaluate the products. Understand why you are selling the product in the first place.
- Again, do some trend analysis. Since customer preferences keep changing, an in-depth research data will help you keep up with all the latest trends.
4. Keep an eye on the resources
Let’s be real. When you are in the process of turning a “classroom” idea into a proper business, it takes honest effort and of course, money. To make procuring resources an easier affair, make a list of whatever resources and capital is required by your start-up to function, and if it is an offline plan, their associated costs from production to setting equipment for the small space.
Make sure to create separate lists of the assets needed for the online store, from your home amenities to the gadgets you need to buy. A solid list of business needs always makes the start-up journey more streamlined.
5. Your financial map
Before stepping full time into the business, you need to build a financial map of all the investments you are going to make and a way forward to cover up the costs eventually.
Here are some of the key points you need to consider while drawing an investment map for your start-up:
- Estimate the monthly sales and costs. Create a sales projection for three scenarios: the best-case scenario, the worst case and the most likely.
- Calculate the monthly variable expenses. Gather information on all the monthly utilities such as rent, packaging and shipment.
- Do a break-even analysis. Analyze the time frame when your small business will start generating profit.
- Have a cash flow statement. You can calculate the cash balance by combining the total costs of monthly collections and knowing all about your brand’s cash needs.
Yes, you thought it right. As a business person and marketer, you will have to get out of your comfort zone and make sacrifices – like working 12 hour days on a college-noodle diet. However, by doing this in the initial years, you might be bringing in millions of dollars in two instead of ten years down the line. Then, the effort you put in all this time will eventually be worth your while.