Tips for Starting a Business
Read this before your new venture starts up.
Aiming to start a business? What steps could you take that might promote success and longevity for your company? Here are several.
Write a business plan. You will have a tough time attracting an investor without one. Potential hires may want to see your business plan as well. Your plan should establish milestones for your company and include metrics by which you can judge your success. It should detail your revenue model, incorporate an analysis of your competition and the changes that may affect your industry, and contain a marketing strategy.
Make sure your business meets legal standards. That means registering your company with your state if needed, adhering to federal and state labor laws, and managing tax liabilities. Your business will likely be a sole proprietorship, but consider other business entities. The form of ownership you choose will directly affect your tax situation.
Double-check that you truly have the funding you need. Frequently, small businesses owners are overconfident and misjudge the level of capital their new ventures will require. Estimate the costs of starting up as thoroughly as you can, then multiply that total by three or four. Is it outrageous to presume your start-up costs could balloon so much? No, because starting a company comes with all manner of unforeseen expenses. Could you handle three or four times the start-up costs you now anticipate? What might help you do so?
Try a little crowdfunding or other creative ways to raise capital. Since your company is brand new, you will probably be unable to secure a business loan from a worthwhile lender. If you need help financing your start-up, consider options like a crowdsourcing campaign or exploit business-to-business financing or franchise financing opportunities if they exist.
Think about starting the business in phases. Ideally, your business represents an evolution: it stems from a side gig you have had while working for an employer, and now you are confident you can earn a living from that work alone. If you can continue working or earning income from another source besides your new business, keep it up. The worst-case financial scenario you can put yourself through as a business owner: quit your job, launch your business, amass huge debts, earn almost no income from your business, and declare bankruptcy.
Conduct some market research. Talk with or survey some people who represent your target customers or clients. Will your company provide what they really want, or does its offering or business model need to be altered in order to do that? Will it fix a problem or address an issue that these individuals or businesses currently have? If your business is not their solution, it is less than essential.
Find a mentor or two. Who has walked down the road you are about to walk down? Input from entrepreneurs who have succeeded (and failed) can be inspiring, sobering, and illuminating. It may not be always what you want to hear, but it may be what you need to hear. Their advice may save you from making some serious, costly mistakes.
Retain a good accountant. Look for a CPA who has helped many small business owners such as you.
Do 90% of small businesses fail? Statistics challenge that old myth. The failure rate within the first year is only 20%, according to the Small Business Administration; that percentage has been unchanged for about 20 years. The hard part is surviving for five years or longer. About half of small businesses shutter within five years of their origin, and just a third of them make it to their tenth anniversary.1
Pair passion with pragmatism, wisdom, a good business model, and perhaps a little luck, you may have the recipe for a good business launch. You may soon build a great company and a great future for yourself.
1 – fool.com/careers/2017/05/03/what-percentage-of-businesses-fail-in-their-first.aspx [5/3/17]
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