Current trends in the world economy continue to motivate many professionals to leave their organisations and start their own businesses.
However, as we celebrate amazing startup successes, we tend to forget that 9 in 10 startups fail. Running your own business is a tough job that requires you to wear many hats at the same time. You also need to dedicate lots of your time to developing and building your company – without the certainty that it will all work out in the end.
Here are some things you should consider when setting up your own business, to help ensure its success.
1. Prepare for everything
You can’t predict market activity the same way you can’t predict the economy.
That’s why the most important things you should prepare for are cyclical downswings in your business activity and revenue. When you’re not providing your service or selling goods to users, it doesn’t mean you should sit around and wait for the operation to resume.
In fact, you should have a plan prepared for that situation.
A slow moment in business is a significant opportunity to improve your processes and get ahead with planning. Create a list of new marketing activities, reconnect with your contacts or organize your office.
Revenue always comes in waves, and while cash flow is not constant, expenses often are – so make sure that your business is prepared for that. You can either start with cash reserves, or try to get a line of credit at your local bank.
2. Create a business plan
It doesn’t matter if you are seeking outside funding or not. Writing out a formal business plan is essential to the success of your company. Taking the time to craft your business plan helps you fine-tune your vision.
When writing a business plan, you’re essentially planning out your future actions, and that’s why you should focus on these two key questions:
How will my business solve a problem of my target audience?
Does that represent a market opportunity?
It’s critical to think about these questions right at the start when you’re building your company. Otherwise, you risk developing a product or service in a vacuum, without the potential market to buy it. This, in fact, the top reason why new businesses fail.
3. Avoid hiring friends
Hiring and firing people is a daily reality of running a business. When things get tough, and you notice that an employee doesn’t properly contribute to your business, you can’t feel bad about letting them go. This can also happen when hiring friends.
It’s normal to feel reluctant to fire an employee who is also a friend of yours, but if things aren’t working out between your business and them, you need to put your feelings aside and let the person go, trusting that they will find a better environment elsewhere.
This is why hiring friends is so problematic – not only because you’re exposing yourself to that problem, but also because people can easily let others down, be it due to laziness or outright fraud. Having blind faith in people you are hiring always leads to trouble.
(Editor’s Note: I have personally had plenty of success in joint ventures with friends and family members, however the writer here does still raise a very valid point).
4. Do your research
An essential step in launching a business is researching the competitive landscape. Just because you came up with a brilliant idea, it doesn’t mean that other people didn’t have a similar one. That’s why you need to offer something better or cheaper than your competitors.
Survey your target market, focusing on your target demographic. Make sure that you are delivering a product the customers want or need – and not what you want to create. Gain customer insights into their needs and preferences to make sure that your offer is accurate, without putting in time and resources to experiment after the launch.
5. Know why you’re doing it
Launching your own business is a significant life decision. That’s why you need to have full certainty of your motivation behind it. In other words, you need to be able to answer the question: “Why are you doing this?”
It may seem like a simple question, but when things go wrong, and your resources dry out, you will need to remind yourself of why you’re here in the first place. Building and growing a business is a never-ending process, and if you have a mission statement to keep you on track, you will be able to maintain your focus on the intertwined project and personal goals.
6. Find a mentor
If you’re a new business owner, it’s a good idea to find a coach or mentor. The advice you’ll receive from them will help you make smarter business decisions.
Experienced entrepreneurs are often eager to share their knowledge with others, so have a look at LinkedIn and research your niche. You’ll find professionals who are well-versed in the intricacies of both your sector and business in general.
7. Create an online presence
Every business today needs a compelling online presence, and that starts with a website. Make sure that your website offers a great user experience. Create an interface that is easy to navigate and fully informative without overloading users with product or service information.
Take your time when creating a website. Hire a professional web designer to create an online space for your business – you won’t regret that investment when your website starts to generate leads.
8. Boost your credit score
It may come as a surprise, but your personal credit score can play a significant part in running a business, especially if you need bank funding at any point. Before you launch your business, make sure to get your credit score as high as possible.
They say that no other life event except divorce will ruin your credit score as much as starting a business!
It’s normal to get into debt when starting out, so try to finance your personal life with your savings. If your credit score isn’t high, you’ll be able to borrow less money and at higher interest rates. By increasing your credit score, you will gain a greater ability to borrow the money you need at reasonable rates.
Most importantly, don’t be afraid of failure. The sooner you experience failure, the closer you will get to discovering what works for your business.
Your path as a business owner will be bumpy from time to time, but instead of getting stressed and expecting the worst, keep on following your dreams and invest your energy into your business. It’s worth it.
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