Things I Wish I Knew Before I Started my Own Business
For different motives, many people started and kept on starting their own businesses. However, experience has shown that a good number of business owners stay in business for a short while and close their businesses. Many of them stay in business for a period of between three to five years only with reasons of going bankrupt or not knowing the do’s and don’ts for running the business. I thus find it important to share this article which focuses on the important things to know before starting a new business.
What does it involve to Start a New Business?
Starting your own business involves above all spending your own money on the business with the expectation of making a profit. Thus, before starting any new business, you should know some basic things/ steps necessary before starting your new business.
Steps necessary for starting a new business
Before starting your business, you should consider undertaking the following steps:-
- Develop a Strong Business Idea
- Prepare your Business plan
- Decide the legal structure of your business
- Formalize the Business
- Determine your capital/funding
- Choose your Business Location
- Market and Promote your product or service
- Mobilize your Team and operate your business
1. Develop a Strong Business Idea
It is not a sin to want to start a new business but you do not have any business idea in mind. Thus, developing both a business idea and a strong one is essential before starting your new business. A strong business idea is one that results in a product or service that is capable of addressing an ongoing need for an identifiable customer. The following are the essential steps for developing a business idea:-development include the following:
- Detect problems and challenges facing the community members in their daily life activities.
- Shortlist all potential solutions for the problems and challenges facing the community.
- Where a possible solution exists, think of how you can make your solution better than the existing ones.
- Polish and narrow down the ideas to get the most vital idea as per requirements. This step is also known as honing the business idea.
In the process of narrowing down the solutions consider your passion. Your passion speaks of what you can easily identify and successfully work on it. Do not allow yourself to venture into a business that you are not passionate about. Passion is an inner force, desire, and appetite to do something. Doing business that comes from your inner desire is a great strength. The process of narrowing down the business plan should thus be guided by what will make you up and excited every morning.
2. Prepare your Business Plan
Once you are comfortable with your business idea, the next step is to prepare a business plan that will help you keep your house in order. A business plan is an important document, especially for start-ups, as it allows you to keep defined objectives in place and chart out how to achieve the goals. A business plan provides a roadmap toward funding, technical know-how, marketing, and operational guidelines. It is also, a practical resource allocation gadget necessary for proper resource allocation.
Furthermore, the business plan provides a short analysis of the existing competitors as well as the funding plan. For the new business owner, a business plan is a microscope of your business that can prepare you for the best way to handle the business challenges that might arise. In other words, a business plan facilitates you knowing where you are and where you will potentially be in a while. A wise man once said, “If you do not know where you are going, any road can do.”
3. Decide the Legal Structure of your Business
One of the legal things to know is about the legal structure of your business. Deciding the legal structure of the business is key before registering your business. The selected legal business structure has an impact on the way you will manage your business. The impact cut across from the management of taxation issues to the personal liability of the owners or directors. The available legal business structures/ forms include sole proprietorship, partnership, corporation, and limited liability company.
4. Formalizing your Business
Formalization of your Business is the step that considers the legal acceptance of the business. The step includes registering your business with the business registration authority or agency, obtaining a Business License, and registration with the tax authority as a taxpayer. The exact steps here differ from one country to another, hence, visit your country-specific requirements for more information.
5. Determine your Capital/ Funding
Starting a new business requires money. Thus, establishing mechanisms for getting funding is among the critical steps before starting your business. Determining to fund for your business entails among others the following steps: –
- Determine how much funding you need
- Consider the optimal source of financing. Available sources of funding include: –
- Personal savings
- Small loans from friends and relatives
- Loans from formal financial institutions
- Consider partnership as a means of mobilizing more capital
6. Choosing a Proper Business Location
Choosing a proper business location is one of the steps before starting a new business. It is worth keeping in mind that the appropriateness of a business location depends on the type of business. Further, it is key to remember that the consequences of a wrong location may be difficult to cure.
7. Market and Promote your product or service
One of the motives for starting a business is achieving financial independence. Financial independence is possible if the business can sustainably generate revenue more than you actually spend in operating the business. Hence, you need to know where the market is and undertake some market promotion activities right from the beginning. Consider the Marketing Mix while planning for your marketing and business promotion.
The Marketing Mix phenomenon is also referred to as the 4 Ps of marketing covering Product, Price, Place, and Promotion. The marketing mix concept should help you to offer the right product or service needed by your customers, at the right price accepted and managed by your customers, at the right place, and at the right time.
8. Mobilize your Team and Start Doing Your Business
If your business requires the involvement of people other than yourself, you will need to start building not only the team but the right team. You will therefore need to determine the composition of the team and the cost of maintaining that team before putting it in place. Key personnel includes though not limited to those responsible for keeping books of account, and those responsible for the distribution of the goods and services.