Every business owner will have specific knowledge, skills, or experience that will be advantageous in building and managing a business. It can be tempting to start setting up an office, building a client base, and finding business management solutions to consolidate workflow right out of the gate.
However, there are certain fundamentals that every new or aspiring entrepreneur should take care of to lay the foundation for success — and growth. Below is a list of 15 tips to keep in mind when starting a business.
1. Conduct Market Research
Market research aims to understand why consumers buy a product by blending economic trends and consumer behavior. Marketing research can fall into two categories: primary research that looks at any data being conducted by you or a person you pay, and secondary research that consists of data that has already been published by others. It is important to utilize both primary research and secondary research to diversify data.
Primary Research can be conducted via:
- Focus/user groups;
- Test markets.
Secondary Research can be conducted via:
- Internal Research: Profit/loss statements, balance sheets, sales figures
- External Research: Government sources, the internet, competitor data
2. Ask For Feedback
Feedback offers business owners pertinent data about their products from a consumer perspective. This information can be essential in gauging customer satisfaction and product improvement. With better products, a business can be better at retaining their customers, avoiding negative reviews, and guiding future business decisions. Utilizing surveys, focus groups, and reading reviews, are all great ways to gain consumer feedback.
3. Evaluate Yourself
If an entrepreneur has satisfied the criteria necessary to start a company, they should consider doing a self-evaluation before conducting business. Ask what skills, expertise, funding, motivations, risks, requirements/responsibilities, and life changes will be necessary to convert a business idea into a tangible company. There are quite a few online tools, like the SBA, that will allow a potential business owner to gauge their business viability.
4. Build Your Support System
Support systems can consist of both personal and professional people or groups. These groups can help provide the right people to give guidance, insight, and personal support in the startup journey. Building this system can take time, but there are a multitude of sources to get started. Social media groups, classes, other tenured entrepreneurs, online groups, and friends can all be excellent sources of support and potentially more referrals.
5. Create and Finalize Your Business Plan
The difference between an entrepreneur that succeeds, and one that doesn’t, often comes down to how well their business plan was made. The following list consists of suggestions that can help transition intangible ideas into an actionable list.
- Identify business plan goals;
- Comprehensively research the target market;
- Recognize the target audience;
- Identify obstacles and needs;
- Understand what sets a business apart from competitors.
Virtually every business plan will have different elements and roadblocks that must be overcome to start successfully. Successful business plans will typically require comprehensive research and thoughtful planning in order to be implemented well.
6. Start While You’re Employed
Starting a business while employed may detract some from development time, but it’s also a great way to provide financial security while investing. As long as a potential business owner remains motivated and diligent, they can continue nurturing a business concept even while working a full-time job.
7. Remain Passionate
Remaining passionate can be difficult, especially when roadblocks such as time or finances start becoming impediments. Passion can be one of the best personal motivators for development, and can certainly help an entrepreneur reflect positively about business direction. Potential business partners and investors understand this, and frequently show informal interest in financing new ventures when interacting with potential business owners.
8. Line Up Customers and Clients Ahead of Time
With the rise of Kickstarter and other crowdfunding platforms, consumers have begun to increasingly support startups. Having customers ahead of time can ensure more product visibility, help find brand ambassadors, and generate revenue. Outreaching via social media, advertising, creating events, taking pre-orders, and producing content on blogs or press releases can help gather potential customers well before the grand opening.
9. Create a Financial Plan
A financial plan is fundamentally different than both business plans and accounting. It is an important piece of information that many investors, banks, and lenders will want to see before deciding to finance a business. The most important reason to compile a financial plan is for the business’s own benefit, so that they may project how they will perform. A list of commonly used strategies follows:
- Begin with a sales forecast;
- Create a cash-flow statement;
- Develop an expense budget;
- Project income;
- Create a balance sheet of assets and liabilities;
- Formulate a breakeven point.
A financial plan needs to be a realistic and continual part of business operations, and it takes a significant amount of effort and thought. Similarly, a business might be able to make a plan more monetarily appealing by trading services for help or receiving donations.
10. Make Sure All Legal and Tax Information is Correct
Complying with legal and tax information associated with owning a business is generally more complicated than doing personal taxes. It might be a good decision to consult a professional to help with compliance with legal and tax information, particularly if there is any ambiguity or confusion. A business owner should be able to verify the correctness of information related to listings, tax ID, necessary permits, bank accounts, trademarks, copyrights, and patents.
11. Build Your Team – Start Small
A company will naturally want to have the best employees available. Before hiring, make a list of positions and delegated tasks to better understand exactly what is needed.
It is important to know who is being hired, both personality- and skill-wise. Personality clashes and issues with the work environment are common; be sure to look beyond the resume to better help identify qualities that will promote a positive culture. Don’t be afraid to fire employees that will impact the company negatively. Employees that advocate negative work culture and personality conflicts will make it even harder to retain current employees in the long run.
12. Find the Perfect Location
Finding a good location for a business can be just as difficult as hiring new employees.
Each business will have different factors that must be accounted for before deciding on a location, the following list should be considered:
- Style of operation;
Not every business will need a trafficked area to operate successfully. Likewise, a shoe store and a software company may have entirely different locational goals.
13. Generate Word of Mouth Advertising
Studies show that 90% of word of mouth advertising is considered credible by consumers with 90% of all other forms advertising not being considered credible. Some strategies to promote WOM advertising include:
- Promote user-generated content;
- Create product rating systems;
- Influencer marketing;
- Involve communities;
- Create referral plans;
- Use social media to engage customers;
- Have exceptional customer service;
14. Get Professional Help
Seeking professional help is a great way to increase business efficacy. Hiring an accountant, bookkeeper, financial advisor, etc., can be costly, but they are most likely going to be of great help. There are also companies dedicated to providing useful guidance and resources to business start-ups, such as the SBDC.
15. Think About Your Short Term and Long Term Plan
It’s always important to have a game plan — especially when it comes to running a business. Having these plans will help set goals and company expectations that can be further analyzed to make improvements to revenue and profitability. For example, a startup HVAC company may not allocate the initial funding to purchase custom scheduling and field management software, but adding this purchase to the business plan will more than likely increase efficiency, communication, and profitability. Creating something like a 1-, 5-, and 10-year plan can help discern a company’s direction as well as how it plans to get there.