Starting your own small business can be exciting to think about when you are ready to take your career to the next level. Many people have the entrepreneurial spirit and are ready to launch their own small business. The more information you have about starting your business, the best chance it has for survival.
Although many small businesses fail, many survive past the fifth year. According to the Small Business Administration (SBA):
- Survival rates improve for most businesses as it ages although half fail within 5 years.
- About two-thirds of businesses with employees survive at least two years.
- Survival rates are similar across industries.
By conducting thorough research about your potential customers, your competitors, and the industry, you have a better chance to succeed. Many times, you uncover important information with great research. Then, you can make good decisions with the information you uncover.
The following steps should be followed to help you effectively start your own small business:
Find the business which suits you the best.
Many small businesses don’t require much at startup except some basic tools. Think about what you can do well. Is there a potential opportunity for you to start your own business?
Make a list of the known pros and cons. Many people start a business out of their homes, which makes start-up costs easier. Do you mow lawns or perform handyman services? Do you have skills such as writing or graphic design which you can freelance?
There are more opportunities to freelance than ever before. The gig economy has helped people find work and have the opportunity to work on many different projects. It has also helped small businesses as well. They are able to pay someone to complete small projects instead of bringing them on as an employee and offer benefits.
Think about what you love to do. Research and determine if you can start a business doing what you love.
Think about a problem you or others have. How could your new business solve it? Henry Ford once said, “If I had asked people what they wanted, they would have said faster horses.” He knew what he needed to do to solve a problem for others and take it to the next level. Whatever business you decide to start, ensure it is something you want to do for a long time. There are many small businesses you can start on a budget.
Before starting your business validate it will make money.
Once you know the business you would like to start, you should research and determine if your business idea will make money. Sometimes, entrepreneurs are so excited to start their own business because of a new idea, and they don’t take time to research whether the product or service will sell.
It is important to conduct competitive research. You should know what other competitive businesses are doing in your area. Ask yourself these questions:
- How will you be different?
- How many other competitors will be selling this product or service?
- Could you improve the product or service?
- What are your company’s advantages?
- Who are your customers and who are you targeting?
Once you have gotten feedback from the community and you have conducted your research, you will then conduct a break-even analysis. This will tell you if your business will be profitable. It will show you the revenue you need to cover your expenses.
Think about what problem you will solve for others and know the demand for your product or service idea. Ensure you follow the steps to validate your new business idea.
Write a business plan to organize your business ideas.
A business plan is a document outlining your business goals and strategies for achieving them. It will help you to organize your thoughts, identify the competition, and generate more ideas to make your business successful.
It is important for you to think about what you want to achieve long-term for your business. By making your plan, you are developing a roadmap for your success. You want to know your short-term goals as well as your long-term goals. Obviously, those change as time elapses, but once you write them down, it is easy to see your vision.
Writing a business plan is necessary if you plan to ask for funding, and it forces you to organize all your plans in one document. Much of your research may already be completed if you followed the steps to validate your business idea.
By writing a business plan, you are showing yourself, your financial institution, and your team or partners you are fully committed to making your business happen.
Create a marketing plan.
Before starting your business, it is imperative to ensure your product or service will sell. By creating a good, thorough marketing plan, you will be much more knowledgeable about your potential small business.
A marketing plan helps you identify your target market and its needs. Conducting market research doesn’t have to be expensive. You can conduct surveys by email or mail, telephone interviews, or have focus groups. Your local library also has some information you will need.
Potential customers who hear your business is opening would love to share with you what they want. How many times have you visited a business wishing they had certain products or services?
Ensure you follow all the marketing plan steps including setting goals, identifying a strategy, determining your budget, and your return investment to ensure it is thorough and gives you all the necessary information you need.
Find ways to fund your small business.
Some small businesses may be expensive to start, but starting a home-based business is a low-cost option. For example, if you start a landscape business you will be able to start from working out of your home.
According to the SBA, you should know the costs that it will take to start your business. It will help you determine what financing you need and what it takes to reach your break-even point.
Once you have your business plan and your estimated budget with planned expenses, you can go to a variety of resources to help you gain funding, attract investors, and estimate when you will turn a profit.
There are several ways to fund your small business such as bank loans, SBA loans, and crowdfunding.
Determine the legal structure of your business.
Once you know the business you would like to start, you can think about what legal structure is best for your business. This decision will impact your taxes, how much paperwork you will have to complete, and your personal liability. Legal structures include Sole Proprietorship, Partnership, Limited Liability Company (LLC), C Corporation, and S Corporation.
Review the advantages and disadvantages of each legal structure and choose the one which fits your business and personal needs the most.
Consider liability insurance for your business.
Every type of legal structure or business owner should consider liability insurance for their business. This is especially important if your company does not offer worker’s compensation or health insurance. Even business structures with limited liability can be personally liable for certain things that happen. Liability insurance protects businesses’ assets and pays obligations. It comes in many forms such as general liability, product liability, professional liability, commercial property, and home-based insurance.
Most small business owners get general liability because it covers them in case of lawsuits, injuries, or negligent claims. Consider all options and ask yourself what type of liability insurance you need for your small business.
Starting your own business is exciting and if you follow the above steps, you will be prepared. Also, ensure you obtain the required licenses and permits for your company.
Adopt the lean startup methodology
Once you make your decision to start your business, you may want to adopt a lean start-up approach at first. Create an MVP, which is a Minimum Viable Product. It is a product or service that offers just enough qualities to satisfy customers but needs more to make it great or to solve a problem for others. Then, you ask for feedback for future product developments. You will also be able to tweak your marketing plans to ensure you are reaching your target market. This technique will allow you to build the right business without spending a lot of money or effort upfront.
Implement Good Systems
As you grow and hire employees, you should consider creating systems and automating your workflow. One way to do this is by using an affordable mobile time clock app. This will allow you to create work schedules for your employees and assign employees to a specific worksite. In addition, your employees can clock in and out using their phone, saving you time and money.
Other great features you get from a time tracking app: overtime reports, labor job costing which allows you to calculate how many hours each job takes, and settings to stop employees from clocking in early to prevent overtime.
Also, consider investing in a website, a Facebook business page, and an Instagram business page. Join Facebook groups so you can be an expert in your area.
Starting a business requires a lot of planning. However, if you’re willing to put in the work and do things properly, you can have a thriving small business.