In 2016, approximately 25 million entrepreneurs in the United States were either starting a business or successfully running one. This number has multiplied in the past five years. Successfully launching a business offers one of the most exciting rewards. However, how do you begin or lay the foundation of this business?
While the path to success may vary from business to business, the basic components are pretty much the same. For instance, you must clearly understand your business idea, the need it satisfies, the audience it caters to, and the amount of investment it might need. Entrepreneurs must also be careful about the financial, legal, and strategic aspects of launching a business.
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Following are some tips for starting a business.
Develop the Skills You Need for Starting a Business
Every business, big or small, needs a human resource for success. The entrepreneur must possess certain skills, abilities, experience, or industry exposure to build up a business and grow it. Most business owners have to wear many hats in the early stages of launching their business. This causes them to overwork. Many business owners hire accountants, marketers, production managers, and the like to deal with this. While they might lessen the owner’s burden, they are a very expensive expense for a new business.
A more beneficial alternative is that a business owner should take courses in these functional business areas. For example, they might go for a CFA certification to look over the business’s financials and make better decisions. Passing the CFA exam is not child’s play. But you can opt for the Wiley CFA prep program to get the necessary preparation to pass it.
A Positive Mental Attitude Is the Right Mental Attitude
Having the right mindset is the most important component of an entrepreneur’s personality. While many business journals and columns in newspapers talk about overnight successes, it is rarely the truth. Those “overnight successes” are a result of years of creative thinking, hard work, and setbacks.
The people behind these successes possess a growth mindset coupled with a positive mental attitude toward their circumstances. They are consistent and willing to take one step after the other when they’re starting a business. This is because they want their businesses to grow.
Polish Your Business Idea
When you’re starting out, your business idea must be centered on what you’re good at and the amount of profit potential it has. Your idea doesn’t have to be a radical innovation. Rather, it can be an improved version of an already existing product. To identify a good business idea easily, ask yourself the following questions:
- Will you love to do this (business idea) in the distant future?
- Why would people buy this product?
- Is it providing any kind of solution for people?
Do a Market Analysis Before Starting Your Business
A common mistake most entrepreneurs make when they’re starting a business is not analyzing the market into which they are launching their product. They don’t analyze where the competition stands and what sets them apart.
A thorough market analysis, through both primary and secondary research and SWOT analysis, helps a new business identify whether the market they are targeting is saturated or not. And if it is, what is an available alternative, a value you can add?
For example, if your business is a bakery, you might specialize in delicious gluten-free cakes.
Create a Business Plan
A business plan is a roadmap for any business. It describes the business’s short- and long-term goals and objectives. When you’re starting out, and throughout your business journey, it is a guide for potential investors, financial institutions, and company management.
A good business plan should contain an executive summary, company description, market analysis, organizational structure, mission and vision, goals and objectives, products and services, marketing plan, and a thorough financial plan.
Identify the Business Structure Before You Start Your Business
Identifying how you’d like your company to be legally registered is a very important decision. Make this decision after careful contemplation before you start your business. It affects the amount of taxes you have to pay, how much risk your assets are going to bear, and what daily operations suit you. The different structures that you can choose among include:
- Sole Proprietorship: The owner and the company are considered the same person and are liable for the same taxes and other financial and legal formalities.
- LLC: A Limited Liability Company (LLC) limits the owner’s liability for the business. These companies can be owned by one or more people and must have a registered agent as a representative.
- Corporation: This structure limits the owner’s liability just like an LLC. A corporation is taxed under C Corporations (larger companies with venture capital) and S Corporations (small companies with pass-through taxation)
Register the Business You’re Starting
This is one of the most crucial steps in starting any business. It ensures that your business isn’t copied and is legally a body in itself. It provides business protection from the law. Follow the below steps to ensure that you have actively registered your business legally:
- Choose your business name
- File the relevant paperwork for the formation of your business with the state where you plan to operate
- Apply for the EIN (Employer Identification Number)
- Apply for all the relevant permits, patents, and licenses you need
- Open a bank account in the name of the business
- Apply for the insurance for your business
- Either appoint a bookkeeper, learn bookkeeping, or buy accounting software
Some ways to fund your business when you’re starting out include applying for debt or equity financing. You could also choose personal financing sources. For equity financing, look for an angel investor or venture capitalist firm willing to invest in your idea. For debt financing, apply for loans from banks and other financial institutions. Ask your friends and family for funds, or use your savings as capital for personal financing.
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Get Good at Marketing
Make sure you allocate enough budget toward marketing the business you’re starting. Employ all kinds of marketing platforms such as print media and various social media pages and websites.
Try creating your website or even a mobile application. These steps are especially essential for e-commerce businesses. Look for ways to promote your business through search engine optimization (SEO).
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While starting a business can seem like a huge mountain to surmount, the right guidance and enthusiasm can help you become a successful entrepreneur. Make sure you are passionate about the idea you want to pursue, as this adds greater depth. Moreover, see whether the idea is feasible or not. There are about 582 million entrepreneurs in the world today. Each of these entrepreneurs has struggled endlessly to be where they are today. You will have to show the same zeal if you want to succeed.
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