Whether you have a great idea for a tech startup, are considering becoming a sole proprietor from your own home or hope to run a more traditional type of business, it’s important to lay the right groundwork for success. Businesses that might otherwise have succeeded may fail simply because of a lack of preparation. Below are the steps you can take to ensure that your new venture thrives.
1. Manage Your Debt
You may think that you can’t start a business because you have debt, but this is not the case. In fact, it’s very likely that if you went to college, you have student loan debt. Taking out a student loan from Earnest.com can be a great way to pay for education, and while it is important to prioritize paying it back, you can do so while still becoming an entrepreneur. You may want to consider a few strategies for paying down this or any other debt or lowering your monthly payments to increase your cash flow. You could wait a year or two to start your company, paying off as much as possible in the meantime. You could start your venture on the side while keeping your day job for the first couple of years. You could also look into refinancing the debt. Whether you choose one of these or a combination, keep in mind that while you may need to be more cautious financially, debt should ultimately not be an impediment. It’s more important that you have a solid plan to manage your debt than that you be entirely free of it.
2. Do Your Market Research
No matter how in love you are with your idea or even how much your friends and family tell you they like it, you need to provide a product or service that others want or need. If there are already companies that provide that same service, what can you do that they cannot? You need to be serious about the research you do. This means not limiting your research to what you find online, doing your own marketing assessments instead of relying on secondary sources and researching beyond your circle of acquaintances. You might need to hire someone to help you with this, but it will be worth it. Surveys and focus groups are among the approaches you can use to fine-tune your idea and identify your potential customer base.
3. Write a Business Plan
You’ll have to do this if you are seeking funding, but even if you aren’t trying to get outside financing, a business plan can help you stay focused. A plan designed to attract investors or inform lenders is quite extensive and includes such elements as an executive summary, market strategies and plans for operation and management. This may be 20 or 30 pages long. You don’t need to go into this level of detail if you are only writing it for yourself, but it is worthwhile to take a look at some of those types of plans and adapt them in a way that will be useful for you.
4. Making it Legal
First, you’ll need to decide whether you want to be a sole proprietorship, a partnership, a corporation or a limited liability company. You may want to work with a professional, such as an attorney, to determine what structure is appropriate for you. Depending on the nature of your business, you may need to register it, get a tax ID number and apply for various permits and licenses.
5. Consider Financing Options
You could self-finance, try to attract angel investors or venture capitalists, or join a startup incubator. You could also crowdfund or get a small business grant. There are many ways to finance your new company, but keep your spending under control. Just because you have access to funds doesn’t mean you should use them.
6. Find a Location
Whether you’ll be working from your dining room table, retail space or a beautiful suite of offices, it’s important to find a place to work. If you are working from home, you may face challenges in training family members to understand you are generally not available to deal with home issues. If you plan to see clients at home, you need to have a space to meet with them. Make sure that you are not violating any zoning laws. If you are renting outside space, you may need a certain look or address to make the right impression on your clients or customers. However, be sure that you don’t overspend on costly office space, especially early on.
7. Assemble Your Team
Ideally, you have some background in the field you’re entering, but you may still need experts to help you. Whether you’re a chef opening your first restaurant, an attorney striking out on your own, a new franchise owner or a work-from-home life coach, you may need mentors, contractors or employees. Identify your needs and who would best fulfill them. For example, you might find that you only need an assistant about five to 10 hours per week and that the work can be done remotely. In this case, a virtual assistant might be your best bet. If you’re developing an app but lack the technical expertise to create it, you might need to partner with someone who can.
8. Plan for Promotion and Expansion
Expanding too quickly has sunk many a business, but you don’t want to wait until you are bursting at the seams to start looking for a bigger space either. The key to promotion and expansion is to keep thinking several steps ahead of where you are now. To promote your business, you might want to work with a marketing consultant. The research you did early on will come in handy at this stage as well since you will know your customer base and what they want. For example, some people might appreciate loyalty cards and 2-for-1 promotions because it makes them feel thrifty, but if your brand is more exclusive in nature, this approach might backfire. It’s important to continue doing market research as well to ensure that you are still providing your clients with a service or product that they want.