More than 28 million small businesses exist in the U.S. which is 99.7% of all U.S. businesses. The idea of being self-employed is often portrayed as glamorous and financially rewarding. Unfortunately, many businesses struggle or fail at the out-set and only two-thirds of businesses with employees survive more than 2 years. There is no magic formula for starting a business. Understanding the risks and time associated with opening and maintaining a business is essential. You need more than money. You need a solid business model and top-notch team of supporters. To counteract the non-glamorous aspects and many sacrifices involved with starting a business, you must know yourself. Are you a highly motivated individual? Procrastinators need not apply. How much money are you able to risk? It takes time for a business to become profitable and you can expect your finances to be tied up in your business for a while. What exactly are you willing to do to be successful? There is no such thing as business hours – the norm is a 7-day work week and 56% of business owners feel they can’t be away from the business. If you feel up to the challenge, starting a business can be a rewarding experience. Here are some things to consider as you begin your journey.
1. The Idea
Choose the right business for yourself and for the market (fill a need). Build your business around solving a problem. The best businesses identify a problem and find a solution but don’t overcomplicate the concept. Consumers have to believe that your product or service is solving one of their problems. Understand the market conditions in your industry, especially the current challenges. By focusing on the market, or the need, and not the product, you give yourself a better chance of delivering something people are willing to buy or use. Do your research before deciding on a business concept. Talk to people established in the industry and prospective consumers. And remember, if you wait for things to be perfect, your business will never launch. Launch when your idea is good enough and then work towards perfection.
2. The Team
You limit potential for growth if you try to do everything yourself – you can’t do everything. Choose carefully your partners, employees, consultants, and vendors. Common values and the ability to trust one another are essential. As are varied skill sets. Think of every definition of the word “strong” - they should apply to your team members individually and as a whole. Compensate and train your team well; hold everyone to the same standards and remove any proverbial bad apples as soon as they overripen. If you form a partnership of any size, you may want to have your lawyer draw up an operating agreement – a sort of business pre-nuptial.
3. Your Network
Respect your competitors, learn from them. Get out to conferences and business meetings. Running a business can be incredibly lonely. Network within your industry and view those folks as a resource, not competition. Have a strong mentor who has done what you aspire to do. Surround yourself with competent advisors and consultants who will lend their expertise to your situation. Learn to take constructive criticism. Don’t take things personally and, instead, use the opportunities for learning and growth. When change is needed, change.
Your network is also part of your emotional support through this process. Neil Patel said, “Starting a business is like riding a roller coaster.” There will be unpredictable highs and lows, mistakes will happen. Learn from them and, more importantly, learn from others’ mistakes. Know that your daily life will change – sleep, relationships, hobbies will all be impacted. You will have to endeavor to maintain a work-life balance. Lead with your head, not your heart. Fear is a part of the process. You will have to face your doubts and dig deep to move past them.
Don’t depend solely on the knowledge of others, they might leave. Educate yourself on a myriad of topics such as accounting, sales, software, legal aspects and marketing. Fully understand your costs so you can accurately price your services/products. Keep track of the advice and feedback you receive and integrate into your practices the things that will make your business more efficient and effective. Take courses or webinars on topics you are weak in – these are also excellent venues for networking.
In regards to finances, know that most new business owners put all of their money back into the business for some time. 30% of small business owners don’t pay themselves a salary. Have a financing plan that outlines grants, loans, or investors. Your debt should always be within manageable limits. Be an employee or shareholder – there should be a clear line between personal and business finances. Always overestimate costs, both startup and monthly, and be prepared to spend money on things that really make a difference like attorneys and marketing. 76% of small business owners report marketing challenges and with the complex, ever-changing field of digital marketing, it can pay off to hire an expert to handle your marketing strategy. At some point, the business needs to generate revenue. You can have the best startup idea on the planet but if you don’t have a solid financial plan and follow through, it won’t matter.
There are, obviously, more than these five areas to consider when starting a business. This list is simply a compilation of ideas that can and should be synthesized with others. That being said, if your determination to succeed beyond the norm is absolute, there are amazing advantages to be gained in starting a business. When you have your own business, you are in control of your professional existence. 59% of business owners say they feel that their choice gives them the freedom to control their professional life. You get to build something from the ground up – an incredibly satisfying experience to go through. You get to help people by providing solutions to their problems. Your business products or services can make the world a better place one client at a time. And if things work out, you can have a more flexible lifestyle.
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