Owning a business is a dream that can become a nightmare without adequate planning. But if you follow some simple steps, a business can be a satisfying and lucrative venture. The following are six steps you can take to ensure that your business idea has a chance to succeed.
1) Evaluate Your Personality
Not everyone is meant to be an entrepreneur. Are you driven to be in business despite the inherent risks? Or do you prefer regular hours and the certainty of a steady paycheck? If the latter describes you, owning your own business might not be your cup of tea. Are you willing to work hard? Do you thrive on risk? Are you self disciplined? Think carefully about what it takes to be an entrepreneur and understand the risks; only you can choose the right course for you.
On the other hand, an uncertain job market can create new entrepreneurs out of necessity. If you can’t find the right job, making your own job is an option.
2) Get Professional Advice
The Small Business Administration and an organization called SCORE (Service Corps of Retired Executives) are among the organizations that offer free resources for entrepreneurs. Make full use of the resources available to ensure you get the best possible advice about starting your business. Also, meet with business attorneys and tax consultants (CPAs) to get questions answered about starting your business.
3) Find a Good Idea
Every business idea requires thought and research, even those that strike you with a sudden burst of inspiration. No matter how excited you are about your idea, it must meet a demand or solve a problem in the marketplace. As you’re brainstorming for ideas, ask yourself:
- Does my product or service solve a problem or fill a need?
- Does it improve upon an existing product or service?
- If my product or service is similar to one already being offered, can I do a better job of selling it than my competition?
Whether your idea springs naturally from a hobby or requires intense brainstorming and research, find something that interests you, that you are passionate about and that you can sell.
4) Do Your Market Research
Once you have identified an idea, get some feedback from potential customers to make sure it’s viable. Search online for similar or identical businesses. Can you compete with others on price? Is there room for your idea in the marketplace?
Present your product or service to potential prospects to see how many would buy it and at what price. However you choose to test your idea, this step could save you time, money and disappointment. Market testing will not only reveal your idea’s potential, but it will also help you learn about your customers. Knowing your buyers makes it easier to target your marketing efforts.
5) Write a Business Plan
A written business plan makes it easier to take your new business from concept to reality. And if you need funding from lenders or investors, a business plan is essential. Even if you don’t need financing, writing a business plan will force you to do your research and help you establish the details of your new business, including sales and marketing goals, expenses, business structure, target markets, sales channels, anticipated profits, competitive analysis and much more. If you need help, the Small Business Administration offers free business plan writing resources.
6) Find Your Financing
Depending on the type of business you choose, you may or may not require outside financing, but you should expect to invest some capital to get started. Online businesses will probably require a smaller investment than a brick-and-mortar store, which requires a building, utilities and other overhead expenses. You might need to buy inventory, pay for website development or hire employees.
Besides the standard funding sources, such as small business loans, your sources of capital can come from “bootstrapping” (personal savings, income from a job, credit cards, etc.), loans from friends, venture capital or even online “crowdfunding,” which allows you to solicit very small investments from many sources, minimizing risk for any single investor and saving you the hassle of loan applications.
Get Started! There are many other elements to consider, such as business tax structure, location, business name, licenses, permits and others, and a good business plan will cover all of these details.
Starting a business can be a long, complex process, but if you lay the proper groundwork, you can save yourself time and money and ensure yourself the best possible chance of success.