Starting a business is a huge leap of faith, akin to going on a starquest. To give yourself the very best chance of opening a successful business in 2021, we are going to share with you 5 helpful tips that you should consider before becoming a business owner.
1. Developing A Business Is Critical
As the old adage goes, if you fail to plan, then plan to fail. A good business plan sets out your goals, the structure of your company, your business strategy, products and services, the math behind your business (expenses, sale prices, margins, size of the market, acquisition costs, etc.) which shows it has the ability to be profitable and so much more!
Business plans are used to structure the creation of your business and help simplify the concept process of beginning a new venture. If you ever feel lost or overwhelmed, you can simply refer back to your business plan, which will highlight what you need to focus on to achieve your business goals.
Another critical aspect of having a business is that it is essential if you want to receive funding from a bank. Unless you have a detailed and professional plan which explains how the business will operate, you won’t be able to receive a loan. If you want to increase your chance of success and access valuable financing, then start working on your business plan today!
2. Starting A Business Is Risky
20% of small businesses fail within the first year and 50% have shut down after 5 years. Before you find a perfect type of business for you, you need to be comfortable operating in a high-risk environment and accepting that the odds can be difficult to overcome. If you aren’t comfortable with the possibility of failure or you think the risk will prevent you from developing your business to its full potential, you should think long and hard if starting a venture is the right thing for you.
Fortunately, there are some things you can do to reduce your risk, including:
- Be in a strong financial position – You should be able to work on your business for 12 months without taking a salary.
- Work on your business as a side hustle – If your financial position is not secure, a great alternative is keeping your day job and working on your business on the side. Once your business starts becoming profitable and stable, you can quit your job.
- Set up a limited liability company – You need to protect your personal assets in the case of bankruptcy by setting up an LLC company.
- Limit your amount of debt – The more debt you take on, the more you risk acquiring, as you must make monthly payments, and missing even a few payments can result in your business shutting down. If you don’t have enough capital to fund your business, you should look for investors to purchase equity, as with equity there is no requirement to make repayments.
If you are ok with the high-risk nature of starting a business and follow our tips to reduce your risk, you can afford a business fail.
3. Don’t Try To Do Everything
A major mistake new entrepreneurs make is trying to take control of all components of a business. While it is fine to be in charge and develop the business model, you should not perform roles that are outside your expertise. The result is typically delays, poor performance, and money wasted.
For example, if you only have a basic understanding of accounting, you are going to save so much time and money by hiring a professional. The same goes for most technical skills such as digital marketing, programming, and anything else that takes years to master. If you focus on your core competencies and hire professionals to handle things that aren’t in your wheelhouse, your business will start developing at a rapid pace.
Due to the power of the internet, hiring others to help work on your business is no longer expensive. You can easily outsource tasks to motivated and skilled workers in developing countries who will produce amazing work for a fraction of the price that it costs to perform in your home country. With the power of outsourcing, you can keep your costs low and significantly boost your margins, making it faster and easier to make a profit.
4. Surround Yourself With Winners
Starting a business is going to test you emotionally and physically. There are going to be times when you feel like quitting or that you are never going to succeed. To help you power through these dips, you need a strong support team. It is critical that you find senior managers who are not only skilled, but have a positive attitude and are willing to go above and beyond to support you. When looking for key leaders, you need to find people who are with you from a personality standpoint and understand your vision.
A great way to attract high-quality senior managers and ensure that they fully buy into the success of the company is to offer them equity. As a new business, it is unlikely that you are going to be able to offer a highly skilled person the same salary package that they could get at an established company.
However, by offering them equity, these employees not only have the potential to earn millions, but they will be willing to work incredibly hard because their compensation is directly tied to the success of your business. Equity compensation plans are how startups are able to recruit top performers from tech giants such as Google and Facebook.
5. Find And Cherish Your Customers
If you can find your ideal customers and really establish a connection with them, your chance of creating a successful business shoots through the roof. By engaging with your customers, you make them feel special and are much likely to win long-term and loyal business. Also, you get to receive the most powerful form of marketing, word of mouth!
By identifying your specific target market, you can also significantly reduce your marketing costs. Instead of wasting money marketing to people who will never buy your products, you can focus on people who are interested, resulting in a fantastic return on investment. The best way to identify your target market is to think about what problems your products solve, who has those problems, who can access your products, and then conduct market research and speak to different demographics about your product.
After finding your target market, you then need to engage with them and build a relationship. This can be done by having an active social media presence, running different promotions and discounts, sending out regular newsletters, sponsoring events, and going the extra mile to show that you truly care about every single customer who supports your business.
We hope you have found our business tips useful! Remember, it takes great courage to start a business but if you understand the risks, create a detailed plan, and are willing to work hard, you have a great shot at creating a successful venture and reaping the rewards. Good luck!
We would love to hear from people who have managed to start a large or small business. Please comment on what you wish you knew before putting your business idea into action.
Arthur is a digital marketer with a background in web design. He believes every business should be at home with everything Google has to offer. This popular search engine gets used by millions of potential clients every day and presents an enormous opportunity for anyone to stay visible online.
The editorial team at CMS Beginners is a group of industry-leading freelancers and online entrepreneurs. Their main aim is to educate people about online earning and empower youth.