It’s exciting when you’ve decided to start your own business. Statistic Brain says that 25 percent of small businesses fail in the first year and 50 percent within the first five years. A primary cause is lack of planning and following up on the details. Start your business the right way so you won’t have to soon face another exciting time – closing your business.
1. Create a Business Plan
It’s taught in business school, online workshops and weekend seminars. Business books include it as the first step and blogs tell of the downside of not having one. When starting your own business, your business plan becomes the guide by which you are successful and others learn about your business.
At a minimum your plan should include:
Executive summary – This is the Cliff Notes about your business so someone can get a quick overview of what you are trying to accomplish. Venture capitalists and bankers may close your business plan and hand it back to you if they don’t like what they see in this section.
Company description – This talks about the history of your business, how it got started, why your business exists and a summary of your goals. If you have no experience in business, this is a good section for you to have someone else write for you.
Products and Services description – In this section you need to describe the problem your are trying to solve for the consumer and how your product or service does that. A product or service that doesn’t solve a problem goes nowhere.
Market analysis – You may do this section while you are performing your market analysis (which is another step). Many businesses fail because consumers don’t want their product. This section needs to explain why the consumer wants this product or service and is willing to pay for it.
Implementation – This section says how your business will make the products and market them. Investors want to be comfortable that you can actually sell the product and not just end up with a warehouse full of something that sits on the shelves of Marv’s Discount Mart.
Financial Plan – This is the most stressful section to produce. How will you finance this business? What are your growth projections? Where did you get your startup capital? This shows investors that you are good with numbers.
2. Market Analysis
Start your own business ideas by asking “Who would want this product and why?” To really have a good answer to this, you need to do the market research. Many small businesses fail because someone had an idea that no one else thought was good. Be open to the consumer’s opinions. Be flexible and make changes in your product or service to match the demand.
This is a good time to get your social media plans going. Use the different platforms to describe you product and get feedback. Hold Google Hangout sessions to talk about your product. Create consumer groups to review your product and give you suggestions. Build a Facebook page announcing your idea and see if you can create some excitement about the product.
3. Get Help
Another good way to struggle is to try to do it all yourself. Identify what your strength and weaknesses are. Hire people to cover those areas you’re uncomfortable with. You don’t like to sell? Hire a sales manager. You’ve always hated accounting? Bring in a bookkeeper or hire a contractor. Be successful because you surround yourself with highly skilled people.
4. Forecast Your First Sale
Consult your horoscope, roll the dice, and look at endless charts and graphs until you have an idea when your first sale will happen. When you’re in the start own business mode, you also need to have a sense of how to keep it going. When will there be momentum? How long will you have to work three jobs to pay your bills and finance the business? This step helps you create a timeline so you can see progress and where you’re headed next.
5. Find the Financing
It’s time to make calls looking for financing. Small business loans, venture capital and even crowdfunding are options. Your business plan is the key to impressing investors. They want to know that the product is sound and you’re the right person to make it happen. Above all, you want to appear competent to run the business. That is a number one cause of business failure, incompetence at the helm.
6. Get Your Administrative Details in Order
The nuts and bolts of the business need to be in order so you don’t run into problems later. Are your accounting books set up correctly? Are you making your payroll tax payments regularly? Are you in compliance with any local, state or federal regulations regarding your business? Failure in any of these areas can mean a big mess to clean up later when you should be out growing your business.
7. Define Your Marketing Plans
When starting your own business ideas down the path of implementation, get your marketing team assembled to determine the right online and offline channels on which to become visible. Define any cross-marketing you’ll want to do, such as print brochures with QR codes that drive people to your social media pages. If you’ll be marketing heavily on social media, consider hiring a social media manager to coordinate all of those efforts.
8. Establish Your Sales Pipeline
Determine how you will sell your product. Without a good sales plan, the whole business grinds to a halt. If sales is not your strength, find senior people to come in and get you started. The wrong selling strategy will result in an inventory of widgets that are getting expensive to store.
9. Understand Cash Management
Your cash flow keeps the business alive. Keep some cash in reserve for unexpected expenses. Know when to invest in growth and when to fine tune your operations. When starting own business, have a plan for growth that matches the demand. Continue to improve the operations until you hit the peak demand then be ready to release new products and move into your next phase of growth.
10. Collect and Analyze the Data
Keep on top of the business performance by looking at all of the metrics regularly. Fine tune which data points to watch, then observe them for trends. You’ll learn a lot about your business and what affects sales by watching the data over a period of time.
Some people think of “starting my own business” then drop the thought once they consider how much work it takes. Create your business plan and do the market research to know that you have a good idea and can implement it. Don’t let a good idea get away from you. Small business continues to be where the innovation happens.