Are you thinking of starting your own business? Kudos to you for taking the entrepreneurial plunge! But before you quit your day job and open up shop, there are a few things you should know.
It has been found that many small businesses fail within the first year. In fact, according to Forbes, “Eight out of ten new business ventures will not make it through their first two years.”
Why is this?
There are a number of factors that play into a business’s success or failure, but there are some common mistakes that new business owners make that can be easily avoided.
With that being said, starting a business is no easy task. It takes a lot of hard work, dedication, and planning to get a new business up and running.
So, you need to ensure that you’re prepared to put in the long hours. You have to be realistic about the time commitment required to get your business off the ground.
In this blog post, we will discuss some of the most important things to keep in mind when starting a business. We’ll cover everything from planning and research to financing and marketing. By knowing what to expect, you can avoid common pitfalls and set yourself up for success!
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Why Start Your Own Business?
One of the first questions you should ask yourself before starting a business is “why?”
Why do you want to start your own business? What are your goals and objectives? Answering these questions will help you determine what type of business you should start, as well as your target market.
Are you starting a business to be your own boss? Do you want more control over your work/life balance? Or are you looking to make a difference in the world with a socially responsible or sustainable business? Once you know your motivations, it will be easier to set realistic goals and develop a plan to achieve them.
It’s also important to understand that starting a business takes a lot of hard work. It’s not all about making money and being your own boss.
You need to be prepared to put in long hours, especially in the beginning. If you’re not willing to make that commitment, then starting a business might not be the right decision for you.
What to Do Before Starting a Business?
Now that you know why you want to start a business, it’s time to start planning! This is where many new business owners make their first mistake. They dive into starting a business without taking the time to do proper research and planning.
Let’s explore some of the things you should do before starting a business:
Define your business idea
The first step is to clearly define your business idea. A business idea is more than just a product or service that you want to sell. It’s the foundation upon which your business will be built, so it’s important to take the time to develop a well-rounded concept.
Inspiration can come from anywhere, so don’t be afraid to brainstorm. Once you have a list of potential ideas, it’s time to start narrowing them down. Consider things like your passions and skills, the needs of your industry, and the feasibility of each idea.
To help you define your business idea, answer the following questions:
- What needs does your business address?
- Who is your target market?
- An executive summary
- A description of your product or service
- What are your unique selling points?
- What are your long-term goals for the business?
- Your marketing and sales strategy
- Your financial projections
- An overview
Once you have a clear understanding of your business idea, you can start developing a plan to make it a reality!
If you’re not sure what kind of business you want to start, that’s okay! There are plenty of resources available to help you narrow down your options.
For instance, the Small Business Administration (SBA) offers a free online tool called the “Business Idea Generator.” This tool asks you a series of questions about your interests, skills, and goals. Based on your answers, it generates a list of potential business ideas.
Another great resource is SCORE, a nonprofit organization that provides free mentoring and resources to small businesses. They offer an online quiz called the “Business Idea Wizard” that can help you find the right business for you.
Moreover, you can try attending a local entrepreneur meetup or sector-specific conference. You can also read industry-related articles and books, or talk to friends and family who might be able to give you some insights.
Still stuck? Try taking a personality test to help you identify which business ideas are a good match for your skills and interests.
Research your industry and target market
Now that you have a better understanding of your business idea, it’s time to do some research. This will help you determine if there’s a market for your product or service, and if so, what the demand is like.
Researching your industry will also give you insights into things like the competition, potential partners and suppliers, and any regulations you’ll need to comply with. And don’t forget to research your target market! This will help you understand their needs and how best to reach them.
There are a number of ways to conduct market research, including surveys, interviews, focus groups, and secondary research (i.e., researching online). You can also attend trade shows and events related to your industry.
When doing industry research, you must ask yourself the following questions:
- What are the current trends in the industry?
- What is the size of the market?
- Who are your target customers?
- What are their needs and wants?
- Who are your competitors, and what are they doing well/poorly?
- Are there any regulatory issues you need to be aware of?
- What is the potential for growth in the industry?
Market research involves a lot of data, so it’s important to know how to analyze it. If you’re not comfortable working with numbers, there are plenty of online tools and resources that can help. For instance, at SaaSGenius, we have reviewed a number of market research software options to help you make sense of all the data.
For example, Semrush is a popular tool that allows you to track a website’s traffic and performance. All you have to do is put in a URL, and it will give you insights into things like the website’s traffic sources, top keywords, and organic search results. This information can be helpful in understanding your target market and what they’re looking for.
Is Semrush not the one for your business needs, want to know similar software, then check out the list from our SEO software category.
Once you’ve gathered and analyzed your market research, you should have a good understanding of your industry and target market. This information will be critical as you start to develop your business plan.
Who are my competitors?
Competitor analysis is an important part of market research. It allows you to understand what your competitors are doing well, and where they’re falling short. This information can be used to improve your own business strategies.
There are a few different ways to conduct competitor analysis.
- One is to simply search for your competitors online and see what comes up.
- You can also look at their social media accounts, blog posts, website design, and marketing materials.
- Another option is to sign up for their email newsletters or product updates. This will give you insights into their messaging and how they’re positioning themselves in the market.
- If your competitors have a physical storefront, you can also visit their location and take note of things like the layout, design, and customer service.
In addition to online research, you can also talk to people who are familiar with your industry or target market. This can include friends, family, and colleagues.
Suppose you want to start a bakery. Your research might reveal that there are already a number of bakeries in your area. This is important to know, as it will affect your marketing and pricing strategies.
You might also discover that most of the bakeries in your area are focused on weddings and special events. This could be an opportunity for you to focus on everyday baked goods, like cookies, muffins, and pies.
Moreover, you can determine whether your competitors have an online presence, and if so, how strong it is. This will help you understand how much effort you need to put into your own online marketing.
Once you’ve gathered this information, you can start to develop your own unique selling proposition. This is what will make your business stand out from the competition.
When conducting competitor analysis, be sure to ask yourself the following questions:
- Who are my competitors?
- What are they doing well?
- What are they doing poorly?
- How can I improve upon their strategies?
- At what scale they are operating?
- How are they converting their website visitors into customers? etc.
Asking these questions will help you develop a strong understanding of your competitors. Competitor analysis is a helpful way to understand the landscape of your industry or target market. It can also give you ideas for how to improve your own business strategies.
Create a business plan
After you’ve done your market research and competitor analysis, it’s time to start putting together your business plan. This document will outline your business goals, strategies, and objectives.
Your business plan should include the following sections:
- Executive Summary: A brief overview of your business.
- Company Description: A description of your company, including its history, mission statement, and core values.
- Products and Services: A description of the products or services you offer.
- Market Analysis: An analysis of your target market, including information about their needs and how you plan to reach them.
- Competitor Analysis: A description of your competitors and how you plan to compete with them.
- Marketing and Sales: A description of your marketing and sales strategies.
- Financial Projections: A financial forecast for your business.
Creating a business plan is an important step in starting a business. It will help you map out your goals and objectives, and develop a strategy for achieving them. If you’re not sure where to start, there are a number of resources available to help you create a business plan.
You can find templates and tips online, or work with a professional consultant. The most important thing is to get started and stay organized. Your business plan doesn’t have to be perfect, but it should be clear and concise.
Once you’ve created your plan, you can use it to guide your decision-making and keep your business on track. Review it regularly, and update it as needed. Doing so will help you stay focused on your long-term goals, and make sure that your day-to-day activities are aligned with them.
Determine your startup costs and funding needs
The next step is to determine your startup costs and funding needs. This will help you understand how much money you need to get started, and where you can get it from.
Start by creating a list of all the expenses you’ll need to cover, including:
- Business licenses and permits
- Office space or equipment rentals
- Salary for yourself and any employees
- Marketing and advertising
Add up all these costs to get your total startup expense. Once you know this number, you can start looking for ways to fund your business. There are a number of options available, including:
- Personal savings
- Small business loans
- Investor funding
You can also look into ways to reduce your startup costs. For example, you might be able to negotiate lower rates for office space or equipment. Or, you could work with suppliers to get discounts on inventory.
Suppose you are starting a bakery. In that case, your startup costs might include:
- The cost of ingredients
- The cost of packaging
- The cost of renting kitchen space
- The cost of hiring staff
- The cost of marketing and advertising
- The cost of setting up an online store (optional)
Your total startup costs will depend on a number of factors, including the size and scope of your business. Once you have a good understanding of your expenses, you can start looking for ways to fund your business.
The most important thing is to have a clear understanding of your expenses so that you can make informed decisions about how to fund your business.
How will I market my business?
The next step is to start thinking about how you will market your business. Marketing is the process of creating awareness and demand for your products or services.
There are a number of ways to market your business, including:
- Public relations
- Content marketing
- Social media marketing
- Search engine optimization (SEO)
- Email marketing
- Referral marketing
Developing a marketing strategy is an important part of starting a business. It will help you define your target market, set objectives, and measure results. If you’re not sure where to start, there are a number of resources available to help you develop a marketing plan. You can also work with a professional consultant.
We recommend using the best marketing software during the initial phase of your business. The best marketing software will help you automate repetitive tasks, freeing up your time to focus on other aspects of your business. It will also provide you with valuable insights into your target market, and help you track and measure results.
Moreover, you can use the best SEO software to improve your website’s ranking in search engine results pages (SERPs). This will help you attract more visitors to your site, and convert them into customers.
For example, say you want to market your bakery business. You could start by creating a list of all the advertising channels you want to use, including:
- Social media (Facebook, Instagram, Twitter)
- Email marketing
- Referral marketing
- Local print and online directories
Then, you can create a schedule for when you will publish content on each channel. This will help you stay organized and make sure that your marketing efforts are consistent. Finally, don’t forget to track your results so that you can see what’s working and what isn’t. Regularly review your analytics to identify areas for improvement.
When it comes to marketing your business, the most important thing is to get started and stay organized. Your marketing plan doesn’t have to be perfect, but it should be clear and concise.
Once you’ve developed a plan, review it regularly and update it as needed. Doing so will help you stay focused on your long-term goals, and make sure that your day-to-day activities are aligned with them.
The bottom line is that marketing is essential to the success of your business. It will help you create awareness and demand for your products or services.
Choose a legal structure for your business
The next step is to choose a legal structure for your business. This is an important decision, as it will have implications for how you file taxes, manage your finances, and protect your personal assets.
There are a number of different legal structures you can choose from, including:
- Sole proprietorship
- Limited liability company (LLC)
Each type of legal structure has its own advantages and disadvantages. For example:
- Sole proprietorships are the simplest and most common type of business structure. They’re easy to set up and require minimal paperwork. However, sole proprietorships offer limited liability protection, which means that the owner is personally responsible for all debts and liabilities incurred by the business.
- Partnerships are similar to sole proprietorships but involve two or more owners. Partnerships offer some advantages over sole proprietorships, including increased capital and expertise. However, they also come with some risks, such as the potential for disagreements between partners.
- LLCs are a popular choice for small businesses because they offer limited liability protection to their owners. LLCs are also relatively easy to set up and maintain. However, there are some downsides to consider, such as the fact that LLCs can be more expensive to set up than other types of business structures.
- Corporations are the most complex type of business structure. They offer their shareholders limited liability protection and a number of other benefits. However, corporations are also subject to more regulations than other types of businesses.
The type of business structure you choose will depend on a number of factors, including the size and nature of your business, your personal risk tolerance, and your financial situation. It’s important to consult with an attorney or accountant before making a decision.
For example, let’s say you’re starting a bakery with a friend. In this case, a partnership might be the best option. But if you’re starting a bakery on your own, you might want to consider a sole proprietorship.
The bottom line is that there’s no one-size-fits-all answer when it comes to choosing a legal structure for your business. It’s important to do your research and consult with an expert before making a decision.
Another important thing to keep in mind is that your legal structure can always be changed later on down the road. So if you’re not sure which option is right for you, it’s okay to start with something simple and then revisit the question as your business grows.
Obtain the necessary licenses and permits
Depending on the type of business you’re starting, you may need to obtain a license or permit from the government. For example, businesses that sell food or alcohol usually need to obtain a license from their state or local government.
You can usually find information about the licenses and permits you need on your state or local government’s website. The U.S. Small Business Administration (SBA) also has a helpful tool that can help you determine which licenses and permits you need for your specific business.
It’s important to note that failure to obtain the necessary licenses and permits can result in hefty fines and even closure of business. So be sure to do your research and make sure you’re in compliance with all applicable laws before starting your business.
Say you are starting a bakery in Florida. The first step is to visit the Florida Division of Corporations website to search for the word “bakery.” This will give you a list of all the licenses and permits you need in order to start your business.
The next step is to fill out an application for each license and permit. Once you’ve done that, you’ll need to submit the applications, along with any required supporting documentation, to the appropriate government office.
After your applications have been processed, you’ll be issued a license or permit. Make sure to keep your licenses and permits up-to-date, as they usually need to be renewed on a yearly basis.
Moreover, you will need certain permits if you want to serve food. For this, you will need a permit from the Division of Hotels and Restaurants. The application for this permit can be found on their website.
You should also contact your local county health department to find out what permits they require. Each county has different regulations, so it’s important to make sure you’re in compliance with all applicable laws.
And that’s it! Once you’ve obtained the necessary licenses and permits, you’ll be one step closer to starting your own business.
Find a location for your business
The next step is to find a suitable location for your business. This can be a challenge, especially if you’re starting a brick-and-mortar business.
There are a few things to keep in mind when searching for a location for your business.
- First, you need to make sure the location is zoned for the type of business you’re planning to start.
- Second, you need to consider the size of the space you’ll need. For example, if you’re starting a bakery, you’ll need enough space to accommodate both customers and kitchen staff.
- Third, you need to think about visibility and foot traffic. If your business is located in an area with high foot traffic, it will be more likely to succeed than if it’s located in a remote location.
- Finally, you need to consider the cost of the space. If you’re on a tight budget, you may need to look for a less expensive location or negotiate with the landlord for a lower rent.
Once you’ve found a suitable location for your business, the next step is to negotiate a lease with the landlord. Be sure to have an attorney look over the lease agreement before signing anything.
Please note that the location of your business can have a significant impact on its success. So be sure to do your research and choose a location that will give your business the best chance for success.
On the other hand, if you’re starting an online business, then you won’t need to worry about finding a physical location for your business. But you will need to make sure your website is hosted on a reliable server and that you have a good domain name. In that case, you need to invest in the best web hosting software that you can afford.
Once you’ve taken care of those things, you’ll be one step closer to starting your own business.
Set up accounting and bookkeeping systems
The next step is to set up accounting and bookkeeping systems for your business. This is important because it will help you track your income and expenses, which is essential for both tax purposes and financial planning.
There are a few different options available when it comes to accounting software. QuickBooks is one of the most popular options, but there are also many other good choices available, such as FreshBooks and Wave Accounting.
Once you’ve chosen an accounting software, the next step is to set up a system for tracking your income and expenses. This can be as simple or as complex as you want it to be.
At a minimum, you should track your revenue on a monthly basis so that you can see how your business is performing. Additionally, you should track your expenses so that you can see where your money is going.
For example, you might track your advertising expenses separately from your rent expenses. This will give you a better idea of which marketing efforts are working and which ones aren’t.
If you’re not sure where to start, there are many good books and online resources that can help you set up an effective accounting system for your business.
Cover the following aspects when setting up the accounting systems:
- The software you will use
- How often you will track your expenses
- What type of information you will track (e.g. advertising separately from rent)
When will I be ready to start?
This is a difficult question to answer because it depends on many factors, such as the type of business you’re starting, the amount of money you have to invest, and your level of experience.
If you’re starting a simple online business, you might be able to get started relatively quickly. But if you’re starting a brick-and-mortar business like a bakery, it will take longer to get up and running.
In general, it’s best to err on the side of caution and give yourself more time than you think you need. This way, you’ll avoid rushing into things and making mistakes that could cost you dearly in the long run.
As they say, “Rome wasn’t built in a day.” So don’t expect your business to be either.
Take the time to do things right, and you’ll be much more likely to succeed in the long run.
Starting your own business is a big undertaking, but it can be immensely rewarding. Be sure to do your research and plan carefully before you get started. And don’t forget to set up effective accounting and bookkeeping systems from the beginning.
If you take the time to do things right, you’ll be well on your way to building a successful business that will provide you with years of enjoyment.
Please note that this is not professional legal or financial advice. Before you take any steps towards starting your own business, be sure to consult with a qualified professional to get the best advice for your specific situation.
This concludes our blog post on things to know before starting your own business. Stay tuned for more helpful tips and tricks in future posts! Thanks for reading!