The thing that most attracts people to starting their own business because they think they will be their own boss living freer of the constraints of a 9 to 5 office job. There are others who are more interested in having a side income and the business they imagine is one that will always be a supplement to their regular income.
Most people, indifferent to their motivations will encounter unforeseen issues early on. These issues are more weighty if the new business is your main economic activity but there are problems that plague any type of start-up. Below are a few things that should be considered in the process of starting up your own business.
1. Initial considerations
First and foremost, you want to choose a business model that will help you scale quicker. Then, you need to think how much do you need to live on? Your daily, monthly, and yearly expenses need to be mapped out. Another aspect to consider is the amount of fixed cost you will have and calculating enough investment cash to cover the first months before making a profit that covers them.
Second, you want to make sure that you choose the right industry when you start a new business. Pick something you’re interested in but also make sure that niche is not too narrow or too saturated already.
One of the largest fixed costs will be the office space used. The size and type of space will depend on the style of the operation you are developing. This should be influenced by your personality and drives. The best businesses are those that suit the entrepreneur. Some businesses like running airlines require people that are comfortable with risks and tight profit margins.
2. Finding a good mentor
When breaking new ground, it often helps to have someone experience in your field to guide you along the way. A mentor is also someone who will be able to hold you accountable for your actions so it is important to choose wisely. It should be someone who already has a track record of success in business and believed your idea will succeed. A good mentor will be someone that will be honest with you when giving feedback about how you are progressing.
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3. Market research and feedback
General information about the product or service you are looking to offer can be found through online research and surveying potential clients. Those who use only this information run the risk of getting only part of the picture regarding the market demand they are about to work with.
During this part of research, you can find out if the product or service you are looking to provide is already being sold by someone else and how big of a competition they would be. Before Growth Hackers introduced structured research and product testing to one of our clients, decisions were based on assumptions but after gathering real feedback, our client entered the market with confidence and a stronger product.
To improve the amount of information you have about the market you are about to enter is to let people interact with your product. Allowing people to test your product before you market it openly will give you an insight into the possible reactions it will generate.
These product testers may also pick up on problems that you may have overlooked. Gather feedback and most importantly act on it to accelerate your company’s growth. Additionally, if they enjoy your product, they are likely to be the first advertisers for it by spreading the word amongst their friends. The pattern to follow in using product testers is to set out a prototype of your product and improve it based on the comments received before selling it in the general market place.
4. Business plan
Don’t get me wrong, you don’t need a 300-page business plan like 20 or 30 years ago to launch a business. But, you still need to know about your target audience, your market, your competitors, the problem you’re solving, your growth strategy and more. There are 9 essential elements that you need to include for an effective business plan.
This is both the backbone for your everyday tasks and an outline of your expenses. The more detailed the description of how your business will grow towards the final product will help you navigate better the entire process. It should be about 20 to 30 pages with another 10 pages of appendices that contain monthly projections, management summaries, and other finer details. If it is longer than this than you did not summarize your points very well.
However, you need to understand that your business plan will change over time. It’s made to give you a direction but it’s not a fixed plan. Why? Because the market will chance, the technology will chance, the consumers will change, etc. So, if everything changes, you need to be flexible as well.
Describing the type of business it is and the marketing strategies that will be used are central to any plan. Another important aspect are the financial factors. The most obvious being responding to the question of where the initial investment money will be coming from. Additionally, what your projections are for profits made and where initial profits will be allocated.
Growth Hackers helps entrepreneurs build lean, strategic business plans that provide clarity, direction, and measurable growth without unnecessary complexity. Crafting a business plan is an important initial step but you shouldn’t stop there. There are various things an entrepreneur has to accomplish after creating a business plan.
5. Making it official
There are legal precautions that startups and small businesses need to know before launching. Being aware of the regulations, licenses, and taxes that your business will need to deal with in order to respect the law will guarantee a smooth or rough process of acquiring investors or grants to begin your business.
6. Cash flow and profits
Initial investment is easier to find than a continued cash flow but it is the continuous influx of money that will keep the business afloat. For this you need to identify when drafting your business plan what aspect of the business will consistently, and from an early moment, general a continuous flow of income that will allow you to meet your fixed costs and any additional expenses.
Initial investment is the fuel that starts the engine, but cash flow is the oil that keeps it running. This is why at Growth Hackers, we ensure your business doesn’t stall after launch.
7. Crowdfunding and small business grants when a strategic partner is not forthcoming
If you lack the savings or a strategic partner that can invest the initial sum of money, you could start a start-up a crowdfunding campaign online. This could be done through Indiegogo or Kickstarter that will allow you to attract many small investors to your project.
The other option is to apply for a small business grant. grants.gov provides a searchable online directory containing over a 1000 federal grant programs you could apply to. The method you use will depend on the nature of your business. Some business, for example innovative gadgets or apparel qualify and fit better the model of a Kickstarter.
They tend to raise funds amongst people keen to test out their product as soon as it comes on the market. This provides a small business with immediate clients but also the first testers of their new product.
“Through a Kickstarter campaign you can discover the initial problems your product may have and be able to iron them out during the early stages of your business. The small government grant will fit other types of business better. It will also allow for a degree of greater freedom to shape your business as you see best,” says Gill Wats, a finance blogger at Australia2Write and NextCoursework.
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8. Always on the Job: the need to discipline
When you are your own boss, your business becomes like your baby. But, this can take over your life and lead to burn out. The problem with burning out of your own business is no one will be there to give you paid sick leave or pick-up the slack when you are not there.
Another danger is that you prioritize the tasks that you like most about your project and neglect those that may be of less interests. The danger lies in neglecting those things that need to be done more urgently than others. These essential tasks must be schedule in as the first things to be done in order to avoid getting done only those that you like most whether they are essential or not.
9. Employees are complicated, worse if they are friends or family
While extra hands will make the work go faster it may actually increase your stress levels. First of all, regular employees will need to be regularly paid. Supervising them will have to go beyond short-term task explanations. This is a type of avoidable cost that should wait until your business is secure enough to cover costs that go beyond fixed inevitable expenses.
“Matter often get worst when you make the mistake of hiring a friend or a family member. Sometimes they can be good partners or employees but it can also turn into a mayor problem. It is a lot harder to direct or reprimand a close friend or family member without fear of affecting the personal relationship,” explains Amanda Atkins, a business writer at Britstudent and Write My X. This fear will keep you from properly managing your business thus reducing its effectiveness.
10. If the business fails?
There are many mistakes you want to avoid when starting a new business. Knowing when to quit is essential to avoid sinking with your failing business. Having a failed business is not obviously a complete loss if you learn from your mistakes and failures. There are many lessons you can draw from closing your business down and what you learn could be used in other areas of your life or in another venture.
You need to consider whether there was a flaw in your business plan or did you market research lead in the wrong direction? These maybe two of the causes a business has failed but it could also be do to a faulty financial plan or to unplanned for loses that have depleted the business’s income.
Final thoughts about starting a new business
Starting a business can be exciting because it draws out some of your best ideas and talents. To make it a success, however, you need to plan properly based on previous research that has shown you the area in the market that needs the most action or provides the greatest scope for growth.
Growth Hackers is a modern Ai marketing agency helping entrepreneurs create and grow their businesses. We study the market, target audience and competition to start with. Then, we build brand identities, websites and the brand tone. This is just the beginning. Indeed, we also provide digital marketing (SEO, social media, advertising, copywriting, design…) and growth hacking (Conversion rate optimization, data analysis, product development, automation…) services to drive qualified traffic, generate leads and increase revenue of our clients.
We are growth-driven and data-driven so this is not a surprise to see us being nominated several times as some of the best creative agencies in the world. Now is the perfect time to reach out to the GrowthHackers’ team!
