How to start up a business? If you are asking this, you have clearly made up your mind to start your own company. For now, the main question that occupies your thoughts is, “How do I start up a business from scratch?”
In this article, you will find out how to deal with multiple issues arising from your bold decision to become an entrepreneur: legal bearings, financial matters, intellectual property rights, HR, marketing, etc.
Though we have perfect confidence in your ability to succeed, you should prepare yourself for constantly changing business realities and make sure you can adapt to them. Before you run your business, you need to realize that things can go wrong at any moment, but it doesn’t mean that you and your newborn company are doomed to fail.
A business grows, providing that the owner invests enough of their time and effort into its development. It’s an enormous commitment that you must be all ready for. Aspiring entrepreneurs sometimes forget that their company should now be treated as a second family. Ensure you have sufficient energy to work to the max and prepare to acquire knowledge you never thought might be helpful.
What are the biggest challenges you will have to overcome?
1. Choosing an unmatched product or service to promote
One of the main obstacles in the path to success is the need to exploit a groundbreaking business idea. The goods and services you offer must be either one-of-a-kind or in high demand in your country or worldwide.
2. Writing a business plan
If you do not have a degree in business, this step turns out to be rather time-consuming and stressful. A business plan serves as a roadmap for how to start, grow, and develop your company - but what’s more important, it determines your business structure.
3. Finding funds and attracting investors
Well, you can skip this stage if you have a couple of extra millions in your pocket, but it’s a headache for the majority of novice business owners. A strong business plan might help convince potential investors to support your business idea.
4. Hiring great staff / firing weak employees
Small business owners should put a particular emphasis on this issue. The core value of any company is its employees, and many essential things depend on the degree of their skills or potential. That doesn’t mean that you should only hire people with years of relevant experience, as there are many young yet promising specialists in the labor market. However, you should certainly be ready to quickly get rid of bunglers in a way that doesn’t affect your reputation or result in legal liability.
5. Fighting down disappointment
This is probably going to be the hardest one on the list. It’s difficult not to give up when everything comes crashing down (in your opinion). You must have enough stamina to keep working harder and harder and, at the same time, take care of your mental well-being.
Build Up a Business Idea
Before thinking about how to open your own business, build up a business idea. There is a strong chance that you have already figured out what type of small business to start. What if you haven’t? The first step is to determine a niche you are particularly attracted to. Remember that your product must be at least good and stand out from the other offerings in the market. You need to digest much information before advancing into action, so we prepared a quick survey to help you plan the strategy.
1. What are you genuinely passionate about?
Is it fitness, animals, computer games, finance, fashion, or something else? Your choice defines your future because even five years later, your business must be one of the reasons you get out of bed in the morning and feel excited.
2. Do you want to work or just own?
You can build a company and handle it all by yourself or assemble a team of like-minded people to run it without being too involved in the routine. In the latter case, you will still have to make critical decisions, assess risks, and control your employees’ work quality.
3. Are you ready to turn your hobby into a business?
Unfortunately, losing interest in what was once your hobby after you started to cash in on it is a common practice. You must be aware of such a possibility. However, being passionate about something means that you know a good deal about the product or service; hence, you can benefit from this knowledge by creating a great marketing strategy and clarifying your target customers right from the start.
Answering these three questions should provide you with good insight into what can become your business idea. However, we recommend checking the relevance of your vision by using any of the available keyword tools (e.g., Keywords Everywhere). Such services help you analyze the long-term viability of your product and provide you with a clear view of the current situation based on the search volume in Google.
Keep in mind that even the most ambitious ideas are nothing but assumptions until you receive the first payment from a customer. Your friends and family feedback might seem insightful enough, but the best way to validate your product is to sell it. Every minute of launch delay deprives aspiring entrepreneurs of early customer feedback.
How to start up a company? Obviously, it’s better to begin with an MVP (minimum viable product); however, even that product should be well-designed and differentiate from the competition. It’s a great source of early user reactions that will help you improve your goods or service quality.
What can save you from costly mistakes?
- Set up pre-ordering. This step will help validate your products before they are developed and make sure that people are really interested in your goods. Modern people have already gotten used to paying for items today to receive them later - make practical use of this fact. Describe your product or service in detail, and do not forget to honor given promises.
- Consider crowdfunding. It won’t cover all your expenses, but it’s a great way to get funding from prospective customers. Besides, even small amounts raised from a large number of people can make a tidy sum.
Come Up With a Catchy Brand Name
A business name is an extremely significant facet of a company, so your task is to ensure it’s not confusing or irrelevant. Excite your ingenuity to invent a short and sweet brand name that will align with your mission. For starters, you can take advantage of name generators to provide you with an initial set of ideas to lean on for direction. If you manage to choose a perfectly suitable and memorable name for your company, it will undoubtedly positively impact your business success. Alternatively, opting for a wrong name (e.g., used by another business entity) could result in legal and business hardships.
Tips on How to Brainstorm a Successful Brand Name
- Choose easy-to-spell names. Your clientele should be able to remember your brand effortlessly. If people often ask you to repeat the name, that’s a red flag. The ideal length of a brand name is one or two words.
- Avoid names that can limit the growth of your business. Pick a universal name to evade problems down the line. Names like “Cakes of Seattle” will put certain limitations on your business and lock it into a particular region or market.
- Conduct a free trademark search on a chosen name. Google it, check social media, and make every possible effort to protect yourself from stealing a competitor’s name.
- Collect feedback on the name. You and your employees should feel happy and proud saying the brand name aloud. Choose a few potential names and then survey your family, friends, or coworkers.
- Register your business name. Legal protection of your business name is a crucial step that can’t be skipped. There are several ways of registering a business name, and some of them (e.g., DBA) are required by law.
Write a Business Plan
Writing a business plan helps you streamline the startup creation process, formalize the existing business idea, and predict potential risks or difficulties. Plans are often ignored once a product is launched, but there is value in sitting down and thinking your ideas through. You should at least have a firm grasp of your weak sides and make a list of questions you don’t know how to answer - forewarned is forearmed.
A well-written business plan can make your life as an enterpriser considerably easier, so here are some tips for you on how to create it:
1. Describe the Purpose of Your Business
It’s important to understand one thing: all successful businesses solve vital problems for their customers. The better your company copes with problems, the more money you get. That’s why the first thing you should mention in your business plan is what kind of problems people can overcome by using your service. Find a working solution and sell it!
2. Identify Your Target Customers
You can understand your target clientele better when performing deep market research on the field. So yes, crafting an applicable business plan entails demographic analysis, conducting surveys, creating focus groups, and many more.
You need to understand your target customer’s preferences, behavior, and needs, alongside the peculiarities of the chosen industry and tactics of your competitors.
A well-defined target market is everything. Targeting every single person in your city is a waste of money and resources. A tiny company that knows how to target the right niche can quite efficiently compete with business sharks.
General targets are almost always useless. You must know a thing or two about your audience and consider the following factors when customizing your target adverts:
- Level of income
- Level of education
- Marital status
3. Determine Your End Goals
Naive hopes are the main reasons for failure in business. Almost every young entrepreneur today seems to have a basic knowledge of the economy and business processes. However, there are still people who pour vast amounts of money into advertising and end up with a big nothing.
What is a realistic scenario? The first year is going to be a disaster. Try to avoid false optimism, and you will have a better chance of overcoming it.
Your goals must be reachable and concise, so the best decision is to set them as S.M.A.R.T. objectives:
4. Conduct a Break-Even Analysis
A break-even analysis entails the calculation of the margin of safety for a business. An essential element of financial planning, this analysis is used to determine how much money you need to build a successful business and how many products must be sold to cover manufacturing costs.
The key element of the analysis is a calculation of a break-even point according to the formula:
Fixed Costs / (Average Price - Variable Costs)
This formula is a very important tool to obtain information on the minimum performance that your business must accomplish.
5. Think About an Exit Strategy
Having an exit strategy is a must. Your business plan will be incomplete if you don’t hammer out a plan of how to exit a business once it runs down.
Protect Your Personal Savings and Intellectual Property
You should never start your business as a sole proprietorship (also known as individual entrepreneurship) if you don’t want to put your personal assets at risk. Perform preliminary research and determine the most profitable and safe business structure for your company, e.g., you can form it as a corporation or LLC (limited liability company).
When deciding on which business structure to choose, you should consider the following factors:
- Business location. Your country’s laws determine what business structures and licenses are available to you as an entity.
- Types of businesses. A certain industry might require a specific business structure.
- Company size. Are you a solo founder, or do you have business partners? If you plan to share the ownership with someone, you will have to resort to more advanced options to set up everything right.
To prevent any possible liability, you must register your business on day one or at least once you earn a certain amount of income (set by the federal government) from your business activities. You must also obtain a tax ID from the revenue service of your country. Sometimes it's possible to get the required identification number online, so check out the available options at your place of residence. Remember that you can prevent many legal troubles by paying your taxes timely and accurately.
Managing your professional finances will be much easier if you take some time to open a company bank account and get a business card. Banks will indeed inquire about your tax ID and licenses when you try to open a business bank account.
There is one golden rule: keep your personal and business finances separate. It will be perfect if you manage to set up a customized accounting system to keep an eye on your finances (income, expenses, profit, loss, etc.) and understand your business’s cash flow situation better. FINOM is an advanced financial tool that combines a business account, invoicing services, and accounting software integration. Try it to get your finances in order and save yourself some headaches.
Before your company launches officially, you should attend to purchasing the right business insurance. It will cover the costs of such incidents as customer lawsuits, property damage, injuries, or theft. The list of insurance events varies from the type of business insurance.
Consider protecting your business’s intellectual property (IP), even if you are unfamiliar with the process or afraid that it turns out to be costly and complex. It’s imperative to protect your core inventions and ideas; otherwise, you may end up watching your competitors make use of them.
There are many ways to protect your business in terms of intellectual property; you can pick one or consider several of them:
- Trade Secrets
- Confidentiality Policy
Form a Team of Professionals
Solid professionals build a profitable business. One of your top priorities is to recruit a great team and make sure its members work well together - unless you are going to be your one and only employee.
You should thoroughly prepare before interviewing job candidates to avoid hiring people unable to provide high-quality work, perform their direct duties, or blend into the team. Some people lie in their resumes and falsify their employment history. That’s what you need to do in order to conduct a comprehensive reference check:
- Verify the required skills for the position
- Verify job titles and dates of employment
- Verify educational degrees
- Verify prior responsibilities
- Ask why the applicant decided to leave the prior company
- Estimate the prospective employee’s strong and weak sides
- Evaluate the applicant’s ability to get along well with people (colleagues and customers)
These checks are not obligatory, but they will certainly help you ensure that the prospective employee will fit into the corporate culture and successfully keep up with their responsibilities.
Even if your company doesn’t produce innovative technological products and services, it’s better to make sure all employees sign a confidentiality agreement. This is a preventive measure to counteract possible security and data leaks, as some employees are granted access to confidential and valuable information.
Create a Company Website
We live in the digital age and have every right to enjoy the niceties of technological progress. Today it’s much easier to create your own website and start an online business than 15 years ago. However, it would be best if you still put much effort into building a modern, user-friendly, professional, and stylish website for your business. Your website is your visiting card that should impress prospective investors and potential customers. Besides, your own website simplifies matters when it comes to pre-orders or email marketing.
What do you need to do to create and run an effective website?
- Check out the websites of your successful business rivals. You shouldn’t be afraid of copying ideas that work. Make a note of the interface, button positioning, feedback forms, information blocks, etc.
- Choose a template for your site. It’s better to start with something less complicated and improve the interface as your income grows. You can try to create your first website for free using Tilda Builder, which allows you to build a website from pre-designed templates.
- Choose a few websites that you like. Share at least five examples of the sites you find attractive and intuitive with your developer, so he can embrace the result you want to get.
- Take care of SEO. Search engine optimization entails publishing high-quality original texts, smart page block layout, fast page load, optimization of your website for mobile devices, and many other things.
- Get rid of visual clutter to make your website user-friendly and intuitive. Navigation bars, images, and all blocks, e.g., a “Contact us” form or a “Buy” button, should display and work properly. Poor structure of the website can drive your visitors away.
- Get a memorable .com domain. Aside from being visually good-looking and interesting, your ideal website should have the “.com” domain name. It’s a good business investment, as prospective customers associate this domain name with a successful business.
Should You Open a Business?
The door to success is not easy to open. Starting your own businesses is a complicated task, and you never know whether you will be able to make a profit at all. Don’t be fooled by the false sense of control during the planning stage; once your business is launched, you will have to explore an utterly stranger world.
While our tips might be of some help, you must set up to encounter multiple obstacles on the difficult path towards prosperity. Sail into the unknown and boost your personal growth - we wish you the best of luck!