Anyone who’s ever gotten tired of the 9 to 5 office life has dreamed of becoming their own boss. Yet, as anyone knows, very few new businesses manage to become long-term commercial prospects. Over half of all small businesses don’t survive longer than 5 years, while only 4% manage to make it past a decade. Although many successful entrepreneurs have started failed businesses before they eventually hit the big time, many more business owners simply didn’t prepare themselves for the realities of owning and running their own company.
Starting a successful business requires financial acumen, market research, patience, and perseverance. You can improve your chances by putting in work on the front end that will reward you further down the line. So, let’s look at the factors and concerns you need to figure out if you want your new business to be anything more than a flash in the pan.
A Good Idea
All businesses begin as ideas, but some ideas are better than others. If you want your business to appeal to people, you’ll need to come up with some USPs that make you stand out from the competition. When conceiving of the core concept of your business, ask yourself why the market will respond positively to your business over the competition, and how you can improve on the offerings of your competitors.
You might have what you consider to be a winning business idea, but if it’s not going to meet anyone’s needs then you’ll struggle to find customers. So try and conceive of your business as a solution to a particular problem your customers might have. This will be your “niche”, I.E. the source of any demand your product will meet. Think about how your business can best meet this need, and you’ll have a workable business idea on your hand.
Research for a Plan
Once you have a basic idea for your business, you need to accrue expertise to enhance your chances of success. Study your niche, the marketplace, and your potential competitors for ideas and inspiration. Use this to inform a business plan that will help you get a clear idea of the robustness of your concept. A good catch-all system is the SWOT test that you can apply to any market:
- Strengths: What are the USPs that will offer customers the most value and that will help define your brand?
- Weaknesses: Where can you improve on your business idea to strengthen your core concepts?
- Opportunities: Where are there gaps in the marketplace that your business can best exploit?
- Threats: How could your potential competitors threaten your business, and are there any broader economic concerns that could undermine your profitability?
The answers to this test can help form the foundation for your business plan before going on to make a more detailed study of the market.
Research the Market
Once you’ve settled on your business idea and have some concepts for the products or services you want to offer, it’s time to make a comprehensive study of your chosen marketplace. Begin developing audience profiles for the kind of demographics you want to appeal to. Then establish the following information:
- What’s the approximate amount of potential buyers for your product?
- Is this number likely to grow or contract in the short and long-term future?
- What size of market share can you reasonably expect to pursue?
- What are the purchasing habits of your intended audience?
- What are the profit margins that you can realistically expect from the market?
Once you have studied the theory behind your business idea and how it fits into the marketplace, it’s time to crunch the numbers for the budgets and investment you’ll need to get your business off the ground. This can vary hugely depending on the type of business you want to run. A manufacturing business would require an intense initial investment in materials, a factory lease, machinery, staff, and so on. Conversely, an e-commerce operation would be more concerned with outlays such as wholesaling, inventory storage, freight, and logistics.
In addition to the spending on overheads, you’ll have to consider how a capital stream can keep your business running day-to-day, with spending on things like insurance, inventory supply, and staffing. You need to get these figures to balance to ensure that your business can sustain itself, especially while you’re trying to build up a customer base, and you should also put money aside for unforeseen events.
Even the best idea in the world will need a reliable source of capital to make it a reality. The kind of business you’re looking to create will dictate the scale of investment that will be necessary to maintain your operating costs. Whatever the particulars of your entrepreneurial ambitions, you need enough capital to carry your business model through its startup phase.
Money is likely to come from a combination of your own personal savings along with funds that you manage to secure from business loans or investors. If you want to try and self-finance the whole operation, you need to make sure that you have enough money to weather rainy days and even the occasional worst-case scenario or acts of God. If you’re planning on borrowing, you’ll have to take the terms of the loan into account. These are likely to include the rate of interest, terms of repayment, and collateral assets to indemnify your borrowing.
Start by asking around banks and business lending schemes for quotes, to give you an idea of which financing model will best suit your enterprise. In general, you should only be pursuing long-term funding to finance the purchases of fixed assets. Otherwise, short-term loans should be enough to furnish sufficient working capital to maintain your supply and operating costs. This makes it easier for you to start paying back the loans once you start seeing some progress with your business.
Build a Web Presence
No matter your business or industry, every company needs a web presence. This will help provide visibility for your brand and provide you a platform to market your product. Making an informative website isn’t quite enough, however, if you’re serious about developing new audiences online. For this, you need to hire an SEO expert who will be able to optimize your site’s pages so that they show rank well in Google searches. Effective search engine optimization is a delicate art, so outsourcing to an experienced professional is a better solution than trying to optimize your site by yourself.
Hire the Right Staff
Your team will be the engine behind your business, and you need staff that you can trust to bring your business idea to life. Depending on your business, you can choose to hire staff with the appropriate experience or provide sufficient training to bring new hires up to speed with the necessary specializations. Fortunately, online hiring tools like SignalHire make it easy to find and contact the best candidates for the job and will save you time and money on using the services of a recruitment agency. Just ensure that your team has the necessary skills for executing your business model, and don’t overlook outsourcing for specialized tasks if the work calls for it.
A great business idea can take you to the top, but you need smarts and determination to bring that idea to fruition. We’ve discussed some of the foundational considerations that need to be squared before embarking on your journey of entrepreneurship, but you’ll find that challenges and obstacles can come from every direction once you start launching your business. However, if you ready yourself to deal with the worst possible outcomes, you may actually find that things start going your way.