Starting a business involves planning, making financial decisions, and spending a lot of time doing research and learning. But like Michael Jordan said, “Don’t be afraid to fail. Be afraid not to try.” Follow these easy steps to start building your empire.
Step 1: Do Market Research and Analysis
Without an extensive market research, your business can sink before it even starts. It is important that you understand the marketplace, know your competitors, and customer needs and wants. You cannot possibly research everything, so you need to prioritize. Here are some of the things to focus on:
- What is your industry size, growth rate, and trend?
- What are the government rules and regulations that you need to follow?
- What is your target market? And why?
- What services or products are you offering?
- Who are your direct and indirect competitors? What makes them successful? What are their strengths and weaknesses?
- Who are your potential customers?
- What are their shopping habits?
- How much are your potential customers willing to pay for your product or service?
- Why should your potential customers buy your product or service?
Step 2: Risk ASSESSMENT
Risk is defined as the possibilities of dangerous or bad consequences to become true. Although you cannot predict all risks, you should identify the basic characteristics of possible risk for your company and industry. Here are some of the risks to consider:
- Market Risk: The possibility that consumers might not be interested in your product or service.
- Development risk: The risk that development of the product or service is not completed on time or within budget
- Financial risk: The risk that funding will not be available at a level or timing required for the startup to succeed.
- Management risk: The risk that the management team lacks the skillsets and experience to run the business.
- Cybersecurity risk: The probability of exposure or loss resulting from a cyber-attack or data breach on your business.
Step 3: Set Vision, Goals and Objectives
Success means something different for everyone. What is a successful business to you? Do you define success base on gross sales, number of clients or net profit? It is important to set up realistic goals and objectives, so that you do not set yourself up for failure.
- You SEE a Vision: What do you want to accomplish?
- You HAVE a Mission: What is your business purpose? What differentiates you from your competitors?
- You BELIEVE in Values: how will you behave during the process?
- You PURSUE Goals: what are the outcomes you intend to achieve?
- You ACHIEVE Objectives: what are the actions that will help you achieve your goals?
Step 4: Decide on Financing
You need to estimate your startup costs and forecast operating expenses for the first 12 months. It may be hard for you to find investors who will be willing to invest in a new business from the start. There are numbers of ways that you can finance your startup.
- Dip into your saving
- Ask family members to invest
- Ask a bank for a loan
- Visit your local small business administration (SBA) for loan and grant options
- Consider crowdfunding
- Decide on equity vs debt.
- Equity financing means you are receiving money in exchange for some percentage of ownership in your company.
- Debt financing means you are borrowing money and promising to pay it back with interest by a set date
Step 5: Register Your Business
Register your business to make it a distinct legal entity. How and where you need to register depends on your business structure and business location.
- Decide on whether you want to register your business as LLC, S-Corp, C-Corp, or sole proprietorship. There are advantages and disadvantages to each of these structures.
- Find out if you need to register with federal and state agencies
- Get an EIN number from the IRS website. No matter which structure you choose, you need to get a federal tax id number.
- Do not use your social security number as your business EIN.
Step 6: Accounting and Administration
Although you don’t need to hire a full-time accountant at the early stage of your business, you still need to consult with an accountant on business structure, registration, financial analysis, forecast, bookkeeping, accounting system, and taxes. Most successful business owners work closely with an accountant. A study conducted by Intuit (QuickBooks) revealed that 89% of small businesses say they see more success with an accountant or an advisor. (1)
Step 7: Write Your Business Plan
It is a misconception that you only need to write a business plan when you are seeking external financing. A business plan helps clarify your business goals, anticipate challenges, develop an effective marketing strategy, and guide your decision-making. It is like a GPS; It tells you where you are now and where you want to be. You can decide between a traditional business plan and a lean startup business plan. (2) Regardless of which one you choose; your business plan should include the following:
- Management and Organization Plan: This includes legal structure, management team, advisory board, hiring experts, and determining compensation and ownership
- Service Plan: The purpose of your service/product, features and benefits, service limitations and liability, operations, and facilities.
- Marketing Plan: A summary of your market research and analysis, market penetration, pricing, and marketing strategy.
- Financial Plan: Start-up costs, revenue streams, cash requirement, and sources of financing.
Step 8: Learn Some Basic Skills
You must take on many of the day-to-day operations yourself—at least in the beginning. Having some basic knowledge across all aspects of business operations can make your business successful and help you save some money.
Step 9: Get Customers/Clients
Getting your first few paying customers gives you the validation that the marketplace is interested in your product or service. But this is not always easy to achieve. Here are few things you can do to acquire customers:
- Use your relationship
- Use social media
- Sell your products on buy and sell marketplace platform
- Attend industry events
- Start a referral program
- Write blog posts
It’s important to leverage multiple sales channels to increase sales and acquire new customers. When it comes to selling online, Amazon is the most popular and obvious choice. But you should also consider other smaller marketplace platforms with less competition such as Purposemart that promote sustainable products, women and minority-owned businesses, and eco-friendly items.
Step 10: Ask Your Customers for Feedback.
Feedbacks will help you understand where there is room for improvement.
It’s important to incorporate corporate social responsibility and environmentally conscious practices into your business from the start. It helps sets your brand apart, and consumers love supporting ethical businesses. Remember that nothing good comes easy. It takes time, dedication, and patience to build a successful business and a solid client base. It will take time to get your first few paying clients. You need to be prepared financially and emotionally.