Starting a new business on your own is a huge leap. It can mean leaving an awful lot behind (your paycheck, medical insurance, work colleagues) and jumping into the unknown. And, when you remember that a huge number of new businesses fail within the first few years, it can be a long way down to earth.
But that doesn’t stop around half a million Americans from making the jump every single year. And many, many more want to make the jump soon. So if you’re one of the many making the leap, what can you do to make sure your business is a success? Following these 5 steps is a great start...
Step 1: Test, test, and test again
You may think you have a great idea, but does everyone else? Will everyone be willing to pay for it?
Luckily for you, there are loads of ways you can test demand. The first, and most basic, is simply by hitting the street, pitching your idea to people and gauging their reaction. Ask them outright if they would buy it. Just make sure that you are talking to your target market.
For a more in-depth look at your target market, you should be accessing industry associations and trade publications. Both can be fantastic sources of data that will be available for a price and that you can use to tailor your idea. If you already have a concept in place, then websites like UserTesting and UsabilityHub allow you to open up testing to the general public and gather feedback almost instantly. Don’t forget to look at your competitors either. Maybe you already know who they are and if you do look at what they are doing well and, more importantly, what they could improve on—this can be your edge.
Step 2: Write a business plan
If you are going after funding, whether a business loan from a bank or startup capital from a venture capital firm, a business plan is essential. Even if you are keeping things lean, creating a business plan can be a useful exercise in road mapping your business.
Make sure to include information on all of the following:
- Executive summary
- Business description
- Market report
- Product or service
- Financial forecasts
SCORE has a lot of materials for helping small businesses with planning as well as free business mentoring near you.
Step 3: Get funds in place
This step will vary drastically from startup to startup. If you are funding it with your own money, or with a loan from your parents, then this will be pretty easy. Just make sure you know what you are going to do with it.
Getting a loan from a bank is also pretty straightforward. Just make sure that your business plan is up to scratch and don’t get down if you get rejected once. Keep going. Startup loans from VC firms are a little more complicated and well above the scope of this guide. Luckily there is plenty of information online about how to secure this type of funding.
Don’t be scared to think outside the box when it comes to funding, though. Crowdsourcing is becoming an increasingly popular way of building cash reserves and has the added benefit of raising awareness and interest in your product in the process.
Step 4: Make it official
An important step is to make things official and incorporate with your state. Speak to a tax advisor or an accountant first to make sure that you are choosing the most efficient structure possible. An LLC will be perfect for most small business as it offers them certain tax breaks and gives them protection from the actions of their company.
Step 5: Build your website & promote
Today having a website and social media to compliment your business are a necessity. Without these items potential customers will question the credibility of your brand. Below are 6 reasons why you need a website.
- 30% of consumers won’t engage with a business that doesn’t have a website.
- 4 in 5 consumers use search engines to find local services.
- 63% of consumers engage with businesses through their website.
- 48% of consumers say they judge a business’s credibility by their website.
- Your website needs to answer basic questions about your business – who you are, about you, and how to contact you.
- It will help you compete with more established businesses.
Starting a business is an exciting time. Entrepreneurship comes easier for some and is extremely difficult for others. For those of you destined to start a business, get ready! You will experience wins and losses. But ultimately you get to do it on your own terms.