Ten Important Things to Know and Do When Starting a New Business
About half of all new American businesses fail within five years of opening their doors, according to the United States Bureau of Labor Statistics. Oftentimes, it is a lack of prior research, planning, and preparation that forces small companies to shut down soon after getting started.
Hopeful entrepreneurs can always improve their own odds of success by putting down a strong foundation early on. Being aware of and accounting for the ten following issues when getting a new business off the ground will always be helpful and prudent.
1) Assess Your Strengths, Goals, and Resources
Small businesses tend to fare best when they are led by founders who leverage their personal strengths effectively. Before making and moving forward with specific plans, it will always be wise to think about what you can specifically bring to the table.
That means taking an honest inventory of your skills, as well as your ability to commit time and effort to growing a business from the ground up. If your life is already filled to the brim with obligations, the moment might not be right to start a new company.
It will normally be helpful to define just what you hope to achieve with a proposed business, as well. For some founders, that means setting up a secondary stream of income that can be maintained with a few hours of attention each week. For others, it means becoming able to quit an existing job and embark on a brand-new full-time journey.
2) Come Up With a Great Idea You Care About
It is not necessary for a new business to bring something entirely novel and unprecedented to the market, even if it sometimes helps. Generally speaking, though, every contemplated company-to-be should have a distinctive, definite value proposition.
That means aiming for more than merely replicating the successes of future competitors, as this would mean playing catch-up all the while. Even if the goal is as modest as becoming the fastest, most responsive service provider of a particular kind, it helps to think about how a new business will be different.
It is also always useful to keep a small business’s mission tied to issues that you, the founder, personally care about. Whether you plan to spend a handful of hours each week on a new business or 60, motivation inevitably makes a difference.
3) Research the Market
With some ideas having been worked out, market research will be in order. That means arriving at relatively firm ideas as to important issues like the following:
- Your ideal customer. Thinking about things from the perspective of the customer is almost always helpful, and not least when getting started with a new business. Developing a picture of a new company’s ideal customer will make many subsequent decisions much simpler. Think about the needs and preferences of that person or organization and how best to serve them. Define these details as precisely as possible and be prepared to refine and update them however subsequent experience indicates.
- Your competition. There will almost always be other companies that are aiming to serve the same customers you are. Look into how these future competitors are faring and where they come up short. Reviews and references found online can be helpful, as can focusing on the issues those businesses emphasize with their marketing. Given the new context that develops, think again about how to position your new business as a clearly superior alternative.
4) Create a Detailed Business Plan
With plenty of brainstorming and research having preceded, it will finally be possible to start delving into more definite, specific details. A great place to start is with a formal business plan, a document that can be used for several different purposes and updated as time goes on.
The United States Small Business Administration has plenty of relevant, helpful resources for entrepreneurs who are ready to write their own business plans, including a wizard that walks users through all the steps. Get as detailed and specific as possible, but be prepared to leave provisional gaps, where appropriate, until they can be filled more definitively in the future.
5) Seek and Consider Feedback
Some entrepreneurs and businesses seem to thrive without any outside support, but such success stories are rare. New business owners who solicit feedback and advice from others tend to fare far better, as a group, than those who do not.
Volunteers with nonprofits like SCORE are ready to provide free mentoring and educational services. Local business and entrepreneurship groups in many areas are happy to assess the ideas and proposals of would-be owners.
Professional connections can often be leveraged to excellent effect by those who plan to transfer existing skills and experience to new businesses of their own. Even seeking out a bit of perspective from strangers online can reveal weaknesses or overlooked opportunities.
With there being so many ways to obtain independent perspective about a recently completed business plan or less-formal idea, it will rarely be wise to proceed without it. Be ready to accept some criticism and willing to change course when feedback makes the need for it clear.
6) Set Up a Comprehensive Safety Net
One of the scariest things about starting a small business, in many cases, is facing previously unaccustomed levels of vulnerability and uncertainty. Having developed a detailed business plan will help clarify how much money it will take to get a new business off the ground, but that is really only the beginning.
In addition to financial factors like saving up money in case should sales take a while to materialize, it will pay to think of other types of safeguards that might be helpful. Some new business owners end up finding the work so lonely early on, for instance, that they struggle to remain motivated and engaged.
In a case like that, simply having access to a previously identified social outlet could make all the difference. Every entrepreneur does best to have a solid financial safety net in place before getting started, and there are other types of fall-backs that can prove just as valuable. Make sure that loved ones are supportive before going all in with a new business.
7) Arrange for Funding
Some types of businesses can be started on shoestring budgets, while others are much more capital-intensive. Prior planning should have revealed, by now, about how much it will take to get a new business off the ground.
Just how to obtain the required money, though, will oftentimes still be an open question. Some of the sources that it is most often worth exploring today include:
- Self funding so as to retain full control and ultimate responsibility.
- Friends and family to leverage personal connections.
- Other investors like venture capitalists or successful local businesspeople looking to transition into new industries.
- Crowd funding online through sites like Kickstarter and GoFundMe.
- Grants or loans available from government agencies, nonprofits, credit unions, and others.
- Advances from future customers or suppliers eager to see a proposed business become established.
Each possible way of obtaining funding for a new company will imply certain benefits and drawbacks. Giving all the relevant, appropriate options due consideration should make the best choice or choices fairly clear.
8) Choose an Appropriate Corporate Structure
Many small businesses are sole proprietorship that, in most states, can be established without filling out any paperwork at all. It will often pay to at least consider whether a more formal, substantial type of structure like a limited liability company (LLCs) or even a corporation might be more appropriate.
While it is generally possible to shift between corporate forms later on, if necessary, it will make things easier to start off with an appropriate one. As LLCs can be formed quite easily and inexpensively online, today, for instance, many experienced entrepreneurs opt for that protective, low-maintenance structure by default.
9) Select a Registered Agent
A registered agent serves as the authorized, designated point of contact with businesses that are organized as limited liability companies, corporations, and the like. A registered agent worth considering will be responsive, reliable, communicative, and confidential, while also being cost-effective to use. Because a company’s registered agent can receive legal papers and other important documents, it will always be best to put some effort into choosing an especially trustworthy, capable one.
10) Develop and Implement a Marketing Strategy
Many of history’s most consistently successful entrepreneurs either had an inherent knack for marketing or developed significant skills along the way. Even a new business that has something truly special and valuable to offer can fall flat if it lacks effective marketing.
Fortunately, it should be relatively straightforward to develop an appropriate, well-informed marketing strategy at this stage in the process of getting a new business off the ground. Many of the decisions and discoveries that have been made earlier on should prove relevant and useful for this purpose.
Once again, it can also pay to solicit–or pay for–some advice from a marketing professional or a successful entrepreneur, however. Generally speaking, it will always be best to open a new company’s doors only once some carefully considered marketing plans have been made and put into motion.
Keep Learning and Searching
There are countless stories about companies that started with one mission, met with middling success at most, and saw their growth explode after pivoting to a different focus. Entrepreneurs do best when they are constantly looking for ways to improve and for new opportunities to pursue.
Preserving that spirit of restlessness and resourcefulness can be challenging when in the midst of a grueling entrepreneurial grind. What makes that possible for many successful entrepreneurs is the special feeling of being solely responsible for a young company’s future at all times. This is one of the ways by which having a passion for a new business’s mission can make a definite difference.