Starting your own business is every entrepreneur’s dream. It’s a huge business, but the rewards of owning a business have proven to be worth it to millions of people around the world. In this article, we will discuss specifically how to start your own business and how to make it successful.
We’ve all heard statistics about the high failure rates of new businesses.
- About 20% of small businesses fail within the first year.
- About 33% of small businesses fail within two years.
- About 50% of small businesses fail within 5 years.
- About 66% of small businesses fail within 10 years.
As these figures show, starting a business and being successful are two very different things. Knowing how to start your own business can mean the difference between long-term success and failure.
There is an old saying that people don’t plan and don’t plan to fail. There are many truths to this. Starting a business is more than just coming up with a good idea and jumping into it. You have to have a plan for success, which means you need to know how to set and achieve your goals.
Table of Contents
1. Evaluate Yourself
The sober truth is that there are dozens of good business ideas. Realistically, it is unlikely that your idea is so original that it will be revolutionary.
That doesn’t mean you have to give up. It means you need to do more than just bring them to market. The phrase they will come when you build it works better in movies than in real life.
Be Honest – Doing honest self-evaluations is notorious. Humans are not particularly good at assessing themselves accurately.
Here is a simple experiment you can do with a group of 10 or more. If you know how to drive, almost 100% of your hands will go up when asked to raise your hand. Then, ask him to raise his hand if he’s better than the average driver. 90-95% of hands stay up. advertising
What does this tell us?
Because it’s statistically impossible for everyone to be above average, it shows a phenomenon known as the Dunning-Kruger Effect, a cognitive bias in which people overestimate their knowledge or ability in a particular area. This tends to happen because a lack of self-awareness prevents them from accurately assessing their skills. [2]
Because of this Dunning-Kruger effect, it can be helpful to counsel about what others see as our strengths and weaknesses. Make sure you care about their real opinions. You won’t be hurt or offended if they tell you that.
A few things you’d like to include in your self-evaluation:
- Are you a self-starter? Unlike being an employee, nobody stands over your shoulder and tells you what to do or when to go to work. If you are someone who needs a lot of structure, starting your own business may not be the best option.
- How organized are you? Planning and organization skills are especially important in the early stages of starting a business. Entrepreneurs who fly in the place of their pants rarely succeed.
- How do you deal with risks and failures? The problem is that starting a business is a risky proposition. Success is never guaranteed. Smart business people are a planned risk, but still a risk. If you’re someone whose thoughts about failing or losing money are disruptive, entrepreneurship probably isn’t for you.
- How well do you get along with people? How are your communication skills? Most of us consider ourselves people, but business owners take communication to a whole new level. When starting out, the business owner is the jack of all trades. Be able to interact accurately and decisively with customers, business partners, industry partners, suppliers, employees, accountants, attorneys, regulators and many others.
- How trained are you? Resilience and perseverance are the two biggest determinants of success. As mentioned earlier, mistakes can occur, some of which are costly. It takes enough resilience and patience to keep getting up after a fall. The only way to fail is to give up.
Now that you have everything you need to become an entrepreneur, it’s time to move on to the next level.
2. Evaluate Your Business Idea
Again, the ability to honestly evaluate your own business ideas is key. However, this step is usually not as difficult as the self-assessment, as the criteria used in the evaluation process are more objective than subjective.
Identify your target market – Who will buy your product or service? At this stage, it is important to change your mindset. Don’t think like a seller, think like a customer.
Can you articulate the answer to the following question?
- What problem did your product or service solve?
- How does your product or service solve that problem?
- What makes your solution better than the competition?
- Are people willing to spend money to solve problems?
You will also want to gather as much information as possible about the people in your target market. At a minimum, you’ll want to know about your prospects: advertising
- age
- location
- income
- gender
- job
- education
- married
- ethnicity
- number of children
All of this information helps us tailor our product or service to better meet the needs of our customers. It also helps you develop your marketing strategy.
3. Competitive Assessment
In general, we can divide our competitors into three categories:
- Direct competition – These are companies that offer the same product or service. Same target market as your business. You can think of Burger King and McDonald’s as direct competitors.
- Indirect Competition – These businesses offer products and services that are similar but not identical to those you offer. Another type of indirect competitor might be a competitor who sells the same product or service only to different customers or market segments. Subway and McDonald’s will be indirect competitors.
- Substitute competition – These are businesses that offer different products or services to the same customers in the same market segment as you. Examples of alternative competition to McDonald’s include local mom and pop restaurants.
Once you know exactly who your competitors are, you need to gather the following information:
- What is the range of products and services they provide?
- Are they expanding or shrinking their business?
- How long have they been in business?
- What do customers see as their positive/negative attributes?
- Can you identify the competitive advantage they have?
- What is their pricing strategy?
- What is their advertising/marketing strategy?
The purpose of the analysis is to identify the strengths and weaknesses of competitors in order to compete better.
For example, a competitor mainly sells products to companies with 100 or more employees. You may decide to target small businesses with fewer than 100 employees. This means that your pricing and marketing strategies should align with what small businesses can expect and afford.
4. Assess The Financial Feasibility Of The Project
When developing a financial feasibility analysis, you need answers to the following questions:
- How much does it cost to start a business and make a profit?
- What is the initial cost?
- What are the ongoing costs?
- What are the sources of start-up funding?
- What is the revenue potential of your business and how long will it take to achieve it?
- How will you keep your business running and pay your bills until it becomes profitable?
Once you’ve got this information in your hands, you’ll need to build some extra shock absorbers for all the extra surprises that suddenly arise. Also, most people are overly optimistic when it comes to estimating the profitability of a business and how long it will take to achieve it.
How many cushions do you need? No one can say for sure. Some people will tell you to double or triple your estimate. You should add 50% to the minimum estimate.
It can be discouraging to find out that your business idea isn’t really financially feasible, but it’s much better to discover now than after spending the money.
5. Have A Professional Business Plan
If you haven’t already, come up with a professional business plan. When I say I’m an expert, I don’t mean that you need to hire someone to do it. This means that you need to know what a professional business plan is and take it seriously.
All too often, new entrepreneurs neglect to come up with a business plan in favor of flying in their pants spot. This is not a good strategy. Without a plan, you never know where you are going.
It may seem like a daunting task when you’ve never been faced with writing a business plan before, but it’s an important task that will allow you to start and continue your venture on a solid foundation. You also need a business plan if you are looking to secure funds or investments. Basically, a business plan is a vision of how the business will operate, what it expects to achieve, and how it will be achieved.
6. Use Common-Sense Monetary Principles
Successful startups keep costs under tight control. Owners need to know exactly where every penny goes. In any business, costs tend to increase over time. However, in the early stages, you may think that your expenses are more than your income.
In the early stages of becoming a startup owner, you will face a variety of challenges. You will need to familiarize yourself with your chosen business environment and look for options to expand your business venture while reducing operating costs.
Reducing operating costs during this period is not optional. In fact, it is a matter of life and death for startups. You can’t keep moving in a certain direction. Leading your business toward a single goal through smart planning is essential.
7. Start With A Narrow Focus
Too often I see new business owners overachieving their goals and causing problems. It happens that people work outside their area of expertise.
For example, a website designer will take on clients who want SEO optimization in addition to design. advertising
Assuming the web designer is not an SEO expert, there are several potential problems with this scenario.
- Pricing – Not knowing or not understanding the scope of the SEO involved increases your chances of underestimating and losing money on your project.
- Quality – They may be the greatest web designers on the planet, but that’s still only half the job. The client expects the whole project to be done correctly.
- Reputation – There is no second chance to make a first impression. If you want a referral business opportunity, you need to do these first projects well. It also determines whether the first few customers become repeat customers.
Amazon started selling books. They slowly expanded their business until they could now get almost everything on the site.
Be like Amazon. Start with a narrow focus and expand from there.
8. Searching For And Using Specific Resources
There are many free resources that every new business owner should take advantage of. They provide information, help, and, most importantly, networking opportunities. Some of these resources are generic and others are aimed at specific types of entrepreneurs. Both are worth checking out.
Here is a partial list of resources.
- Chamber of Commerce – Their slogan is a CO designed for business owners. A site that connects like-minded people and provides actionable insights for the next level of growth.
- American Small Business Association – Provides free business consulting services, SBA-guaranteed business loans, federal contract certification, and more.
- Women’s Business Clubs – especially for women to network and exchange ideas, but also useful if you are marketing specifically to women.
- Black Enterprise – Similar to the Women’s Business Club, Black Enterprise is designed specifically for African American entrepreneurs. They see themselves as the premier business, investment, and wealth accumulating resource for African Americans. From 1970.
- Hispanic Small Business Resource Guide – This guide is full of resources and networking opportunities for Hispanic entrepreneurs.
9. Just Do It!
Okay, I borrowed the phrase from Nike, but that’s good advice. Not only taking concrete steps to start a business but also getting out of your own way.
Many entrepreneurs (and people in general) suffer from a condition called analytics paralysis. We don’t act when someone thinks too much about a decision and can never make a choice.
If you’re a perfectionist, you should be especially wary of analytical paralysis. Perfectionists tend to wait until everything is perfect before starting a business, and many don’t go off the runway.
Last Thoughts
Accept the fact that you will make mistakes, you will not always make the right choices, and unexpected obstacles will always appear. advertising
If you are truly committed to an entrepreneurial lifestyle and business, dive in. The goal is not to be perfect, but to create a life-changing business.