Everybody wants to have a successful business as a youngster or a family person. With every new day, you see an increase in inflation, and a monthly salary sometimes fails to meet the expenses. Therefore, you must have observed a rise in new startups, especially among fresh graduates. As per the reports, about 90% of startups fail to perform. And the sole reason for those failures is that they get into this without knowing how to start a business.
A startup does not turn into a business until you understand the fundamentals of running a business. Before starting anything, you should know what you are getting into and, most importantly, prepare yourself for any hurdle you may face—reading the economic situation to learn when is the right time to enter the market effectively. There are a lot of things that you need to consider while you draw a business plan. Read this article to learn how to start your own business with a step-by-step guide.
Step 1: Look For Business Idea
Coming up with the right business idea depends on how good you are at conducting market research. It’s easy to come up with a few small business ideas, but shortlisting them to the best business ideas and then finalizing the one perfect idea is not easy without analyzing the market.
Market research includes a target observation. First, you need to find the product that you can sell. It could be a service you can provide or a simple product. A product or service should be something that is easily accessible to you. Take out a few things that have a great need in the market and then shortlist them to a single product. You can go with multiple items, but targeting only one product is ideal. The next part of the market research is doing the competition analysis.
Competition analysis is the backbone of market research which later becomes the base of your business. You can never capture the market without knowing what your competitors are doing. Every line of business already has a big giant ruling it, but that does not mean someone small and new can not beat them. You can bring any big company to its knees if you have a better strategy. Many famous brands like Google, Microsoft, Apple, and Nestle, whenever they see a new emerging brand in their competition that has strong prospects, they simply buy out their whole company when it is still small.
How to Conduct a Market Research?
You locate potential clients for your product by conducting market research. Analyzing your competition can help you differentiate your company. Find a way to combine them to give your small business a competitive edge: economic trends and Customer habits combined in market research to support and enhance your business concept. Understanding your customer base from the start is essential. Market research allows you to lower risks even when your company is still only a vision in your mind.
Gather demographic information to understand better the opportunities and restrictions for attracting clients. Population statistics on wealth, family, interests, and any other information pertinent to your business could be included in this data. Below are the things that need to be answered in the market research.
Demand for Your Product
Demand is the first that needs to be covered in market research. Your business idea has no worth if there is little demand for your product. Always target the product or service with a vast consumer base.
Size of the Market
In other requirements to start a business, learning the market size is also very important. There are two market sizes, and both depend on how big you want to go with your business. It is not necessary to target the exact size of the market that your competitor is covering. You may not have the same capital as other established companies, so it is wise to target the size of the market where you see the most potential. Once you succeed there, you can expand your business.
This is also connected to the demand and market size. The location plays a vital role in your customer reach. You will not open an expensive clothing brand in a ruler area. Your shop location should be cities and, most notably, a posh area of the town where the upper class or upper middle class lives.
Nowadays, brands are able to reach even remote areas with the help of home delivery. Having an online presence is a must for any business.
Another crucial factor to observe before commencing a new business. Economic situations and trends tell you which startup ideas have the potential to succeed. You see economic indicators, income range, employment rate, and, most importantly, the government’s relief packages for a particular industry.
Market saturation arises when the number of similar products and services in the market increases. You have to target a product with the least market saturation. Whether you are planning on starting a new business or want to grow an existing one, the only way to get out of this situation is to introduce a new variation or launch a new product.
In this part, you need to figure out how much the competition charges for the same product or service and how much the consumer is ready to pay. This may sound strange because the common myth about starting a successful business is introducing the same thing at a low price. Sometimes customers pay more for the same product if you use the right pre-launch marketing strategy.
Step 2: Create a Business Plan
Here, you will learn how to create a business plan while also keeping every single factor in mind that is involved in this process. The business plan is a roadmap that includes a strategy of establishing a new business to even exit from it. This must be shocking for some people; you must understand that a business plan is incomplete without its exit strategy. This plan helps you in case of business failure due to unexpected circumstances. Therefore, you will see many brands always get themselves insured.
A business plan proves useful when it comes to convincing potential investors. The road map can be presented to financial institutions and firm management to plan the company’s future. Even if you are financing yourself, a business plan may help you develop your idea and identify any issues that could arise. Following is the step-by-step business plan guide that you can use to draw your roadmap:
The executive summary is the first thing anyone looks at; it consists of a few things, including a brief about the company and the goals it aims for in the near future. It can also include information about the team, location, and financial details for funding.
The company description or about section is where you tell what it is all about and the goal it is trying to achieve. You can tell about the product or service you are offering and why it is best among the competition. You can go further in detail by discussing the problem it is trying to address and the target market.
As explained early, market analysis is where you observe the competitors in the market and analyze them on different parameters. Analyze the target market, demand, size, trends, and other things required in this market analysis.
Structure & Organization
In this part, you tell how the company will work and what type of organization it will be: whether it will be partnership-based or solely owned by you. You will explain the company’s hierarchy, which will also help the organization run smoothly.
Products or Services
Here, you talk about the products or services you are offering. It will explain what problem it is trying to solve and how it will assist the consumer. You can also include your offering and how you make it better than the already existing brands.
This section includes the marketing strategy that you will use to beat your competitors and promote your product or service. Marketing starts from pre-launch to growing your business to new heights. Along with the strategy, you will also tell the budget that you will be expanding on the advertisement.
Without a financial strategy, any business plan is incomplete. You should be aware of how you will fund your business and how much finance you require to run the company. Otherwise, you need to learn how to start a business without money, which is possible if you enter the right niche.
Your financial plan should include a suggested budget as well as anticipated financial statements, including an income statement, a balance sheet, and a statement of cash flows. Five years’ worth of forecasted financial statements is often sufficient. If you’re searching for outside money, you should also add your fundraising request in this area.
Prepare an Exit Strategy
An exit strategy is helpful not only when your business collapses but also when you believe there is nothing more you can do for this business. You can sell it in case you decide to retire or you want to move on to something else.
Having an exit strategy also enables you to maximize your company’s value when it comes to selling. The ideal solution for you will depend on your objectives and circumstances.
There are a few ways to exit a corporation:
- Sell the company
- Selling off the company’s assets
- Shut down the firm
Aside from these methods to exit the company, you may also transfer the business to someone else in the family. Such a situation occurs when you decide to retire and let someone else grow it further.
Step 3: Explore Options for Funding Your Business
Another important question that comes up here is how to fund your business. One of the many ways to finance your startup is by doing it yourself. This method is not practiced in all business communities since there are many funding options available from where you can benefit. Here are a few ways that can be used to fund your business:
There are two types of business loans that you can get for financial assistance. The most common one is commercial bank loans offered by every bank in your country. However, they are sometimes challenging to obtain because they require you to meet their conditions, which vary with each bank.
The government funds the second type of loan. Almost every ruling party launches a program where they support small entrepreneurs starting their startups. These are soft loans, which are easy to avail, and most of the time, you don’t have to pay interest on them.
Grants for businesses are comparable to loans but do not require repayment. Startup grants generally have strict requirements that must be met in order for the business to be considered. Look for small company grants that are particularly tailored to your needs when you’re seeking to get one.
Seeking investment is a common way of funding a new startup. Startups that need a sizable upfront investment may try to bring investors on board. Investors may contribute to a startup firm in exchange for a share and active involvement in managing the enterprise.
Not just at the start, but once a startup enters the maturity level, you may require more money to expand it as a business. Startups start with seed funding and continue with A, B, and C funding rounds to bring more investment.
Crowdfunding works a little differently from business loans. You may start an equity crowdfunding campaign to get support from many people for less money. In recent years, crowdfunding has benefited many firms, and hundreds of trustworthy platforms are available for all kinds of enterprises.
Many big technology brands introduce new products and ask the public to fund them. For this, you need to develop a great idea to convince people to invest in them.
The list tries to cover different types of available funding options. By considering your financial needs, payback terms, and risk tolerance, you may choose the best funding option for your company.
Step 4: Choose Your Business Name & Register Your Company
Your business name is its identity, and you must choose the right name. If you are in this situation and have a lot of business name ideas but are unable to shortlist one name, then this section is for you. Here you will learn how to pick a business name.
There are a few things that you need to consider while choosing a business name. The name should be easy to remember and relevant to your offering. A business name should not be the same as that of another legally existing entity in your state,
What is DBA?
There are real and made-up business names referred to as “Doing Business As” or DBA. If you conduct business under a name other than your company’s legal name, you might need to register a DBA.
Depending on the laws and regulations of the state you live in, you may be required to apply for a DBA. The DBA name is used for:
It may assist you in opening a business bank account under your company name.
A DBA as a “trade name” will help market your goods and services.
Using a DBA, one may apply for a business license.
How to Register a Business?
Registering your company with the government depends on the laws of that state. How you produce, sell, and ship your goods may be different in the region you run your business.
You may need to choose a business structure and formally register your firm. To make sure you are operating legally, check with your local government.
Step 5: Open a Business Bank Account
Opening a business bank account becomes necessary once you start receiving or spending money on your business. Using personal accounts for business transactions is not legal for tax purposes. The dedicated business bank account is easy to manage, plus it is beneficial to have a business account.
Benefits of opening a business bank account
You can open a checking account, standard savings account, Business certificate of deposit (CD) account, merchant account, or business money market account from many business bank account options. Depending on the nature of your business, you can open any bank account; also, these bank account types may vary for each bank.
You can take credit and debit card transactions from your clients if you have a merchant services account. To open a business account, you must first register the company with the government. Here are some of the benefits you get with a business bank account which do not come with any personal account:
Opening a separate business bank account protects you from personal liabilities. Merchant services protect your clients’ purchases and guarantee the privacy of their data.
Having a business bank account keeps your personal and professional life separate. It leaves a good impression on your clients when they make payments to the business instead of you directly. Banks also offer to manage the company’s employees’ salaries and other expenditures.
Your company can use credit card accounts to make significant expenditures and build a credit history. A business bank account offers a line of credit for businesses. This can be employed in an emergency or if your company requires new equipment.
Manage Tax Matters
With a separate business bank account, tax matters become easy to manage. And if the government introduces any program to benefit small businesses, these bank accounts are necessary to enjoy those perks.
What to look for when opening a business bank account?
Looking for a bank offering more benefits at low charges may be difficult for some people. Therefore, many new business owners do not even explore their options and simply open a business account in the bank where they already have their personal account.
Banks do not offer the same perks. One bank may give more benefits for personal accounts, while another provides better business account options. So, having different banks for your personal and company accounts is normal. Here are a few things that you look at while opening a business checking or savings account:
- Initial Promotions
- Rates of interest for checking and savings
- Rates of interest for lines of credit
- Fees for transactions
- Charges of early termination
- Charges for low account balance
Things to check when opening a merchant account:
- Discount rate
- Fees for transactions
- Charges for the Address Verification Service (AVS)
- Daily batch costs for ACH
- Minimum monthly charges
It is recommended that you check with every bank you can easily access. Because you never know what bank will give you a better offer for your particular needs.
Step 6: Build Your Team
No company can run all by itself. Whatever you decide to do, you are required to hire employees. Former professional basketball player and chairperson of the Charlotte Hornets, Michael Jordan, says, “Talent wins games, but teamwork and intelligence win championships.” According to Forbes magazine, Michael has a net worth of $1.7 billion.
Your employees are the reason your company reaches more milestones. But if your workers are not happy, your firm will eventually collapse. So, taking care of your employees is equally essential to building the team at the start. Having like-minded people on board helps your firm move toward one direction rather than everyone pulling it as per their approach.
Step 7: Create And Launch Business Website
In this era of technology, when everyone is connected to the internet through their mobile phone, an online presence is a must for the business’s growth. Almost every company owns a website that displays its products or offers online services.
Your business can only be based online; you can start your eCommerce store with many options available. Online business has increased dramatically in recent times. Many small to large brands started selling their products or services online.
How to create and launch a website?
Creating a website is not a difficult task. You don’t require a developer to launch a simple site. Here are the steps you need to follow to create and launch a new website:
- Buy a Domain: The domain’s name should preferably be similar to your brand.
- Use CMS: CMS is a Content Management System like WordPress to edit your site.
- Get Hosting: Web hosting service provides a server to store your website data.
- Choose Theme: Select a suitable theme for your site. WordPress provides some great free themes.
- Launch Site: Now, you are ready to publish the site.
How to create and launch an e-commerce store?
Some paid services like Shopify and WordPress let you create a store with minimum knowledge. All you have to do on these platforms is design your e-commerce store without code; you may drag and drop design pieces using free tools and templates. But having a developer on board is good to add some uniqueness to the site.
Step 8: Market Your Business
The last step of starting a successful business is marketing your business. Many new business owners only focus on their products and do not assign a budget to market the services. It should be understood that marketing is as important as the product itself. Even bad products perform better due to exceptional marketing.
There are some ways, from free business advertising to paid business promotion. Listed below are a few methods that can be used to market your business:
Create Social Media
Social media is currently being used by almost every single person on this planet. You should have a business page on every social media platform. Social sites like Facebook, Instagram, and Twitter allow you to reach more audiences. You can run social media marketing campaigns that have huge potential to increase your customer base.
You can share your products with your friends and ask them to share them on their social media pages. This way, you do not spend any amount and still get a good reach. But this method does not give you targeted reach to your potential customers.
Search Engine Optimization
Search engine optimization (SEO) or Social media optimization (SMO) is the organic way to reach more potential clients. This method is best for long-term results. For this, you require an SEO specialist who can optimize your website. After SEO, your website organically ranks on top when people search for similar services.
Social media optimization helps your business page perform better on a social media platform. Every social media platform requires a proper strategy drawn and executed by SEO specialists. If you learn this skill by yourself, you will not be spending a single penny on this method.
Ultimately, you need to understand that starting a successful business is not a few days work. It is a process that requires time and commitment. If you are unwilling to be patient, you should avoid investing your capital in a new company.