Everyone can become an entrepreneur. You don’t need to be an expert or have a college degree. You don’t even need to have unlimited funds. A good idea, a strong plan, and the drive to succeed are the basis of any great startup. However, those three elements are not enough to create a business. It will take a lot of effort on your part. Starting a business requires a huge commitment as well as a lot of sacrifices. Also, you will need to be aware of the proper steps you need to take to build your future empire. It is naïve to just dive in and expect to reach your goals without learning what it takes to run a company. Legal, financing, human resources, sales and marketing, and liability protection are just a few of the aspects of running a business that you will need to handle. So, let’s take the guesswork out of the equation.
If you want to learn how to start a business, we have the tools and steps ready for you to succeed. This step-by-step guide we’ve crafted should help you learn more about what you’ll need to get a business up and running. More importantly, it should help you evaluate whether becoming a business owner is the path for you. And as a bonus, we decided to give you some new business opportunities you might want to look into.
Pros and Cons of Starting A Business
Before you get started on the hard work of starting a business, you should first consider the advantages and disadvantages of being an entrepreneur. Are you ready to reap the benefits as well as take in the risks of starting a business? Let’s find out!
Benefits of Starting a Business
- You are your boss. You can choose how to run your business and how to approach the problems ahead of you. You also have control over who you hire and choose to work with.
- You gain a lot of knowledge and experience. Instead of just performing one role, you learn about every aspect of the business, enabling you to practice various disciplines such as accounting and human resources.
- You can enjoy a flexible schedule. You can decide when and where you want to work.
- Running a business can be quite exciting. Each day brings new experiences. No two days will be alike.
- You can become more involved in your community partly due to your need to network and gain brand awareness. But also, because you want your business to bring about change in a good way.
- You can create your own career, one that has the flexibility to grow with you.
Drawbacks of Starting a New Business
- You will work longer hours, much more than you ever did for any job. And you won’t get paid overtime for it. You’ll always be thinking about your business, maybe even dreaming about it. It will take over your life. You’ll be at work on weekends and holidays. There’s no work-life balance, at least at the very beginning. Running a business can be emotionally and physically tiring. There’s a reason why the percentage of depression is much higher among entrepreneurs than among Americans in general.
- 90% of startups fail within the first five years. There are no guarantees that you’ll succeed.
- You will get paid very little. You may not even get paid for a while. There may be times when there won’t be any income at all. There’s a huge financial risk because you not only will be relying on your savings to live on; you may even end up in debt because of the business.
- You will experience a new level of stress. You will worry all the time, wondering if you made a mistake and thinking about the possibility of failure.
- You might be your boss, but so are your customers. If you want your business to be a success, you can’t afford to ignore their feedback. In addition, if you got funding from outside sources such as investors, then you will also answer to them. They will ask you what you’re doing with their money and when they’ll get a return on their investment.
- You can get lonely. You are ultimately completely responsible for the success or failure of your business. If you have employees, then their livelihood is dependent upon you as well. It’s not going to be easy being the only person at the top.
Guide to Starting A Business
After having understood the pros and cons of starting your business, we can begin to discuss the necessary steps to take to create one.
What do we mean? We’ve already covered how much of a rollercoaster this ride will be. You need to be sure that this is a step that you’re ready to take. Ask yourself why you want to start a business. Is it a business, or do you just want to earn extra money? The former will require a lot of commitment on your part. The latter can be a part-time job, such as driving for Uber. Do you want more freedom? Maybe you should look for a different job that offers more flexibility. Or, you can opt to be a freelancer instead.
Aside from questioning why you want to start a business, ask yourself if you have what it takes to run one. What skills do you have? What’s your business idea? Is it your area of expertise? How much capital do you need? Do you have enough funds to support yourself while you are still starting? Make sure to answer these questions honestly. It will help you determine whether you can move forward with your plans.
Do Your Research
We’ve already mentioned that you need a good idea to start a business. If you have the drive to become an entrepreneur but have not identified your business idea yet, then this is the time to do it. Do your research. There are plenty of good new business ideas floating about. Just ask Google.
Of course, having an idea is one thing. You also need to determine whether it’s a good one. To do this, you’ll need to ask yourself several questions, such as why you think your idea is a good one. Does it solve a problem or a need? What value does it bring to the market? Are there any companies that offer something similar? How is your idea any better? Who will be your customers? Why will they want to buy from you or hire your services? Are you passionate about your idea?
By answering these questions, you’ll be able to clarify the mission and vision of your company. You’ll also be able to correctly identify whether your idea is a good one or should never see the light of day. But don’t just trust your word for it – ask other people about their opinions. Scour the net for similar products and services. As we said, do your research. Such a simple step can save you a lot of time, money, and energy in the long run.
Create a Business Plan
Once you’ve determined you’ve got a brilliant idea for a business, it’s time to write down a business plan that will transform it into a reality. Your plan will serve as a blueprint for your startup. It doesn’t matter what industry your business will be in or what product/service you’ll be offering. All businesses need a plan to succeed.
Parts of a Business Plan
- Executive Summary: This is where you provide the company description, the problem that you are solving, and the solution you came up with.
- Company Description: Here, you state the type of business you plan on starting and what industry your business will be in. Include a brief description of the current state of the industry and what you think it will look like in the future.
- Market Strategies: Write down who your target market is and how you will price, promote, sell them your product or service. Make sure to include statistics about the industry.
- Competitive Analysis: List the strengths and weaknesses of your competitors. Describe how your company will be able to succeed against them.
- Design and Development Plan: This portion of your business plan details how you will be designing and developing your product or service. You will also need to include a budget for creating that product or service.
- Operations and Management Plan: This describes how your business will operate daily. You will need to state who will be running the business, describe the different departments within the business, and introduce the key employees.
- Finance Plan: This is where you will provide information on the current financing your business has, what you will need to grow your business, and your projected revenue and operational expenses.
Assess Your Financial Situation
You can’t start a business without some sort of capital. It doesn’t have to be a lot of money. You may only need money in order to cover the initial expenses of running the business. This means that you will need to create a spreadsheet detailing the costs of creating your startup. These costs may include permits, licenses, legal fees, insurance, market research, trademarking, office/store lease, inventory, etc. You will also need to detail the costs of operating your business for at least a year, which will include rent, utilities, production, marketing, supplies, salaries, marketing and advertising, etc. Take note that all of these are estimations based on research you have conducted. They aren’t set in stone.
Once you have a rough estimate of your total costs, you now know how much money you’ll need to start a business. The question then is, where will you get the money? Do you have savings to fund your business? This option is better known as bootstrapping. Are you going to get a loan? There are plenty of new business loans that you can consider. What about a grant or an investor? Speaking of investors, you can choose to go with crowdfunding as your source for working capital. There’s no right or wrong answer here. The goal is to get the funds. Choose the financing that works best for you.
Choose Your Legal Business Structure
What business entity do you prefer? You can choose from the following: a sole proprietorship, a partnership, a limited liability company or LLC, and a corporation. Your choice of business entity will have an impact on many aspects of your business, including your liability and your taxes. Take the time to learn the advantages and disadvantages of each one before deciding. Look at your current needs and your business goals to help you determine which type works best for you.
Choose Your Name and Register It
Your business name is your brand, especially if you’re a small business. It’s how customers will recognize you and differentiate you from the rest. It can be difficult for some to come up with a good moniker that compels and encapsulates who you are and what your business stands for. So, don’t rush it. Try out different names and ask for opinions. Also, be sure to explore your options and see what is out there.
Once you have a name, you should register it with the government and, more importantly, the IRS. You should also start getting the licenses and business permits you’ll need to operate your business.
Get a Good Accounting System
To be effective in running your business, you need to make sure that you’re keeping an eye on the money. Where does it come from and where does it go? A good accounting system does all that and more. It should help you set rates and prices, create your operating budget, file your taxes, pay your employees, etc.
Find a Business Location
Where will you be selling your product or service? Will you need an office or a store? Will you be operating everything entirely from your home? Do you need to set up near your customers (i.e. high traffic areas)? Make sure that you choose a place that will work for the type of business you’re in. If you’re selling craft beer, for example, you need to make sure that your location has no ordinances that prevent you from setting up there.
Aside from location, you will also need to consider equipment, your overall setup, utilities, and other costs. Even if you’re just going to be running your business out of your home office, you still need to consider the expense of a laptop, electricity, Wi-Fi, office supplies, etc.
Build Your Team
Sometimes, it takes a village. While you may want to do everything on your own, it’s not always possible. There may be gaps in your skills that need supplementing. If you can’t afford a full-time employee, consider hiring an independent contractor. Figure out how you will work together, roles and responsibilities, etc. Another aspect to consider is company culture. While it takes a while to build a good one, you need to establish the building blocks as soon as possible. Because when you build it, they will come. By “they,” we mean both employees and customers.
Develop Your Product or Service
It’s time to put your idea to the test. Literally. You will need to turn your idea into reality. Consider what you need to get that outcome. If you’re thinking about creating an app, then you’ll need a software developer. If you’re thinking about creating a product, you might want to consult with a product designer and manufacturer. You probably won’t be able to do everything on your own.
After product development comes product testing, you will need to try out your newly developed product or service to see if it works as you intended. Of course, you can always ask family and friends, but it’s not ideal. Test the market by using focus groups or something similar. User feedback can help you develop your product and make it ready for launch.
Promote Your Business
You now have everything in place. Your business is up and running. You’ve got a product ready to launch. There’s just one thing left to do – attract your customers’ attention. You will need to create a marketing plan based on a unique selling proposition. You will also need to do a bit of research to find out where your customers are at. Do they pass by your store during certain hours? Do they watch TV regularly? Do they scroll through Facebook frequently? You need to reach them where they are. Keep in mind that your marketing plan probably won’t produce significant results right away. Just follow the marketing plan and make sure that you’re able to retain your customers after you’ve caught their attention.