Starting a business can be a thrilling adventure – one filled with dreams of hopes of amazing success.
But in the back of your mind, there’s the realization that any business can fail. After all, fully half of new businesses fail within 5 years.
Should you stop implementing your business idea as a result? No. Because so many businesses succeed amidst the difficulties.
What do successful businesses do at the start? Frankly, there’s no fool proof way to prevent any business from failure. But there are a plethora of ways that you can leverage to have the best chances of success.
In this blog post, discover 8 steps you need to take when starting a business in 2020.
1. Have a profitable business idea
Every business begins with an idea.
But how do you find the right business ideas? You have to be able to ask the right questions. Some of these include:
- What are your skills and strengths?
- What hobbies do you have that people will pay for?
- What problems are people looking to solve that other businesses aren’t solving (or aren’t as great!)
- What problems require a different approach than the current approach other businesses are using?
- What products can you create better and cheaper?
Sometimes, a business idea might be obvious. But other times, you need to think deeply before settling on an idea. Your business idea sets the tone of your business and you have to get it right.
2. Conduct market research
Frankly, not every business idea is financially viable. Therefore, market research helps to validate or invalidate your business idea. It’s an essential step, even if you might be tempted to believe you already know it’ll work – putting it all on paper can show you some huge opportunities and threats that you might otherwise miss.
While carrying out market research, you have to look into:
- The market size
- Number of potential customers
- Your ideal customer profile (buyer persona)
- The competition
- The potential profitability of your idea
To get all these details, you’ll have to research online, talk to entrepreneurs in the industry, potential customers, and speak with reputable business consultants.
With a thorough analysis, you get a clear picture of how you can execute your business ideas to reach the right people and attain profitability.
3. Create a business plan
After market research, you can start drafting your business plan. By now, you should have an idea of your business approach to gain market share.
Your business plan is a document that will provide details such as:
- Executive summary of your business
- Business description
- Competitive analysis
- Market strategies
- Operations and management plan
- Development plans
- Finance sources
By the end, a business plan of about 20 to 30 pages should capture every important detail about your business and its opportunities.
Without a doubt, there are many advantages to having a business plan. First, it increases your focus as a business owner and improves your chances of success.
Second, an effective business plan is vital when you’re seeking funds through bank loans or investors.
4. Obtain knowledge and use the right resources to grow your business
In most cases, the difference between successful and failed businesses usually start from what they know. As a founder, seeking knowledge about various aspects of your business is vital.
Using resources like books, websites, and programs can give you an edge and help you find opportunities to grow your business. Here are examples of resources that would help any entrepreneur:
- Startup Grind: through this website, you find a community of startup founders across cities of the world. More importantly, Startup Grind organizes conferences around the world where successful entrepreneurs provide useful insights.
- Coursera: over thousands of years, people have gained a lot of knowledge about business. By taking courses from reputable educational institutions on Coursera, you gain knowledge from experts on how to run your business.
- Odoo Startup!: if you’ve never created a business, the closest to an experience is to simulate it on Odoo Startup! This interactive game simulates how to start and run your business, which makes it one of the easiest, most fun way to learn how to start and grow a business
- The Lean Startup: a book by Eric Ries that teaches how to create robust business processes. The lean startup teaches lessons that will make your company nimble and ready to adapt to inevitable challenges that every business faces
This is definitely not an exhaustive list. With a simple Google search, you’ll find so many resources and recommendations to build your business – it’s just a question of making the most out of them.
5. Register your business and take care of other legal processes
Without the proper legal backing, you can find yourself in trouble or even lose your company down the line. First of all, you have to register your business to establish it as a legal entity.
Other aspects of your business to consider include:
- Business structure
- Business name
- State tax ID
- Federal tax ID
- Bank accounts
- Trademarks, copyrights or patents
To go through this process, you need an attorney who will guide you.
6. Hire the right people
Having a solid business setup is great. But without proper execution, it will fall flat.
To execute your business ideas and plans effectively, you need the right people. As former president of Pixar and Walt Disney Animation Studios, Ed Catmull, says in his book (Creativity, Inc.), “Getting the right people and the right chemistry is more important than getting the right idea.”
After all, it’s the right people who come up with the right ideas. Whether you’re hiring freelancers or permanent employees, you need to build a profile of your ideal employees.
Consequently, you can build the right culture and grow your business.
7. Consider financing options for your business
Having a fantastic business idea is good. But without adequate funding, even the best ideas will struggle or fail altogether.
You can start your business with your money. However, in the long run, you’ll need external funding. That’s why evaluating your financing options is vital before you start your business.
Some questions you need to answer include:
- What financing options are available?
- How do businesses similar to yours find funding opportunities?
- Which venture capital firms invest in your type of business?
- What bank loan options are available?
- Are there available government aids or grants?
Funding may look like dirty work as it’s different to your normal business operations. But it’s necessary if you want your business to survive and thrive.
You can join a community such as Startup Grind, which is one of the largest communities for start-up founders and investors. Here, you can connect with other founders and ask how they got their businesses funded.
Another option available to aspiring entrepreneurs is Y Combinator. This company provides seed funds for many businesses twice a year. All you have to do is pitch your business ideas to them and you’ll get funded if it’s exciting enough.
8. Put an accounting system in place
When starting a new business, you need to manage money effectively to ensure survival. As a result, you need to create an accounting system that will give an accurate view of your business cashflow.
To achieve this, it’s vital to hire an accountant to set up your books and all the necessary entries. Alternatively, you can use a piece of accounting software that will guide you through the process.
Starting a business can seem like a daunting task – but with the amount of resources we have available at our fingertips (i.e. the Internet!) and the huge global reach you can have online, the possibilities are amazing.
To give your business the best chances of success, follow these 8 steps when starting your business in 2020.