A small business start-up requires the skill of a juggler - keeping many balls in the air at the same time. Often, marketing, sales, operations, finances, funding, daily management, and customer service share equal importance, at the same time. Knowing where to direct your focus, how to maintain balance, and what matters most are important for success for any new business owner. Below are a few things that every entrepreneur should know.
1. Know Your Market
Understanding the marketplace is one of the most important elements of starting your own business. That means having an accurate estimate of your operating costs, knowing your target demographic (and the characteristics of those in it), and assessing the demand for your product or service.
2. Consider Outsourcing
There are only so many hours in a day. To accomplish all you need to do, consider outsourcing business processes that can get in the way of your focus on core tasks. Bookkeeping, payroll management, financial and tax management, employee benefits management, and other back-office functions can be outsourced to capable professionals.
3. Understand Applicable Laws
Knowing about state, local, and national laws that affect your business are important. You do not need a law degree, but having an attorney who will review with you relevant labor laws, marketing regulations, and other municipal or industry-specific guidelines can save you headaches, time, and money later.
4. Be Aware of What You Do Not Know
Knowledge of your personal strengths and weaknesses is a powerful tool for the new business owner. Expertise in the technical aspects of your work, in managing people, in sales and marketing, or in general management are all important. However, most people are not adept at all aspects of running a business. Knowing your strengths and weaknesses helps you do a better job at hiring and outsourcing.
5. Build the Brand
Whether you are starting a local franchise of a well-established company or putting up your own shingle, brand awareness matters greatly. A brand is much deeper than just a logo and a catchphrase. It is also about marketing what your company does, why it matters to customers, and what separates you from the competition. While it can take a long time to develop and establish a brand, it can take mere minutes for that brand to become tarnished, so protect it.
6. Test the Ideas and Refine Them
Before you open your business doors for the first time (or launch your website, if your business is an online model), you should spend a great deal of time testing the idea of whether anyone will buy what you are thinking of selling. Focus groups, market research, and feedback is important (as long as it is not soley coming from friends and loved ones). You want candid, honest feedback on your ideas. Then, you need to use that feedback to refine, modify, and improve the idea. The work may not be glamorous, but it will help make sure that when you do start the business, it has a well-informed premise.
7. Do Not Make Something You Have Not Tested
Too often, entrepreneurs are foiled by their own conceits. They believe in their heart of hearts that the new product or service is just what people want, need, and will pay money for. The reality may be starkly different. That is why it makes sense to think about sales and marketing before you think about actual development. Will people buy it? For how much? Is the pitch the right one? Does it persuade people? Assess the market before you move to the build phase.
8. Understand Your Customers
Who are your customers? What do they want? How much do they spend? Where do they live? How old are they? What are their demographic profiles? What are they buying, if they're not buying your product or service? These are all questions that you should be able to answer confidently and clearly. Without a clear sense of your customers, how can you market to them effectively? Having a deep understanding of your target customers helps fine-tune the messages and products.
9. Do Not Delay When You Are Ready
Having the right idea, right research, and right backing means you are ready to make the plunge. Do it! Delaying can sway your confidence and allow others to enter the market and gain a foothold on profits and opportunities before you even have a chance. The business model will likely not be entirely perfect. Modifying and adapting after your business is open is not a bad thing. In fact, it is smart to assess and reassess frequently.
10. Data Is Your Friend
Today, it is easy to collect, record, and analyze data from multiple sources. Surveys, sales records, social media, products, and customers generate massive amounts of information. It is incumbent on you to be sure to use that data wisely. Data about when customers buy your goods or services, for example, can help you target when to offer sales, promotions, or up-selling opportunities. Website data can tell you which customers are accessing what content on your site and the sources, whether it be direct mail, email or social media, that are creating an interaction with your product or service.
11. Financial Data is Really Your Friend
Understanding your finances is about more than revenue and expenses. Understanding sales categories, the difference between capital and operating expenses, and your contract statuses can help you cut expenses, demonstrate financial mastery, and speak articulately with investors. There are considerable tax advantages to owning your own business and those advantages hinge greatly on some of the decisions you make early on, such as what business structure your company will have. There are also tax breaks that require special record-keeping, so having a good tax preparer is key.
12. It Will Take Some Time
Like many things, starting your own business will often take longer than you expect. It may also take longer than anticipated for you to begin to see revenue and profits. Planning for these financial time lags is important so that the doors can stay open while you build your business.
13. Confidence is Key
There will undoubtedly be setbacks when you are starting up a business, but you want to be sure to maintain confidence during the good times and the bad ones. Believe in yourself, your company, and the products and services you are providing. That confidence will rub off on employees, investors, and customers.
14. Marketing Tools Abound
Putting up a web page and securing a Twitter account for your new business are important steps, but are just the tip of the iceberg of your social media marketing strategy. You should consider using search engine optimization (SEO) tools that will help your business appear higher in search results. That means investing in content, local business listings services, having a secure and reliable e-commerce solution (if applicable), and having a strategy for your social media accounts.
15. Do Not Become Materialistic
When the cash begins to flow, it can be an alluring temptation to business owners. Be smart about how you will invest your profits, knowing that reinvestment in the business is often the move that makes the most sense. It is also about being smart about those reinvestments. Do you really need fancy new office furniture or would an additional salesperson be the better play? The decisions made today will impact the business down the road.
16. Pay Yourself the Right Salary
Do some research about what other entrepreneurs in your position pay themselves. Paying yourself too little or too much can cause problems down the road, either with investors or new potential employees. Create a foundational ideology related to executive compensation and stick to it, especially as you expand and bring in new senior leadership professionals.
17. Find a Support Network
Starting a small business can be a lonely time for some entrepreneurs. You need support and help to deal with the pressure, decision-making, and daily demands of your new venture. While small business owners often rely on family and friends as their support group, it is wise to join a group of other entrepreneurs, like your local Chamber of Commerce, and having a team of mentors and advisors to help you gain perspective and remain clear-headed when difficult situations arise.
18. Do the Due Diligence
Whether you are looking at buying a property, signing a lease, hiring a new employee, or working with an investor, you want to do your homework. Knowing the reputations of those with whom you work, the locations and buildings in question, and the partnerships you are considering should be a big part of any preliminary work done on your business or growing your business.
19. Injuries Happen. Do What You Can to Prevent Them
According to a 2018 Survey from the Bureau of Labor Statistics, 2.8 full-time office workers per 100 sustain non-fatal injuries, and over 5,100 employees sustained fatal injuries while working each year, . While workers’ compensation insurance protects you and your employees in these incidents, the loss of a key employee when a business is starting out can be difficult to overcome. Work with your insurance provider to make sure that your workplace is safe and free of hazards, and be sure to maintain sufficient coverage in case there is an accident in the workplace.
20. Find the Right Small Business Funding
You make lots of choices for your business. How you will fund it is one of the biggest decisions you will make. While there are many options available from venture funding to traditional bank loans, those processes can be lengthy and result in you giving away a portion of your company’s equity.
At Benetrends, we help entrepreneurs with a unique financing model that uses existing 401(k) or IRA accounts. The simple process Benetrends developed helps business owners establish their companies as C corporations, transfer existing retirement funds to the new entity, and use those funds for needed start-up expenses.
To learn how Benetrends can help you with your business, download Innovative Funding Strategies For Entrepreneurs today!