Starting a business can be the best thing that ever happened to you. However, like anything else in life, it can also be a disaster. Both new and established businesses fail every day for reasons ranging from mismanagement to changing market conditions. While it is impossible to accurately predict the success or failure of any individual company, there are things that you can do to maximize your chances of success. Gathered from a variety of sources, presented here are tips to starting and growing a business across a range of fields.
The Idea
Every successful business begins with a great idea. Perhaps you already know exactly what you want to do. Or maybe you have only a vague notion of the general area you would like to address. If you need inspiration, look deep within yourself. What do you love? What genuinely excites and motivates you? What do you know a lot about?
Too often, people go into business for reasons that have little or nothing to do with passion for an idea. They believe that they will get rich. They believe that they will not need to answer to anyone else. They believe that they will have more free time. While these factors and many more may play a role in your decision to start a business, they should not be your primary motivation. When times are tough, business is lean and you are on the edge of financial disaster, it is your true love for your idea and your company that will help you find the will to persevere.
A great business idea is not necessarily a brand new product or service. More often, it is a unique twist on an already existing idea. Figure out what you want to offer, and then figure out how to make it different from the competition. This process will involve market research, determining what is already available and what additional features customers feel are important. Plan to spend some time on this phase of idea development.
The Preparation
Once you have identified a saleable product or service and narrowed the focus to a practical level, it is time to begin your preparations. Many people are bursting with entrepreneurial ideas, but never make it through the preparation phase of starting a business. Here is what you can do to make it successfully through this stage.
Write a business plan – Although this can be a frustrating experience, it is an absolutely essential stage of the preparation process. If you plan to raise money, a detailed business plan is a requirement. Even if your business is self-funded, however, a well-crafted business plan will serve as a guide on which you can base current and future company decisions. Download a business plan template and work your way through the steps. Help with writing a business plan can be found online for free. If necessary, you can hire professionals to assist you with the process, although these consultants may charge a high fee.
Discuss your idea with others – Consider joining a trade group. Contact your local small business advisory council. Speak with any successful entrepreneurs that you know. Also discuss your idea with potential customers. The goal is to solicit valuable feedback that can help you refine your idea and turn it into something practical that will meet customers’ needs and expectations.
Test market – If you are debuting a product, start a very small scale test run of items that you sell at a craft market or event. Ask customers to fill out a short survey that includes such items as quality, price and customer service. Also ask for extemporaneous feedback by asking such open-ended questions as “What could we do to improve?”
The Financing
Many small businesses fail due to financial issues. It is easy to overestimate the money that will be made in sales while underestimating the cost of startup. If you have written a detailed business plan, you will have fairly accurate financial projections in place. However, it is critical to ensure that your initial funding is sufficient and reliable, or you may never reach the point of financial forecast.
Most banks are reluctant to loan money to startup enterprises with little or no collateral. Therefore, many small business owners turn to alternative sources of funding. Try to provide as much of your own funding as possible. Credit cards are a risky option, as the high interest rates can suck much-needed capital from your company’s budget, extending the time that it takes for the business to become profitable. Some entrepreneurs choose to use second mortgages and home equity lines of credit, but this should only be done if you are certain of your success. Failure to repay a loan that is tied to your home can result in losing your home if the business fails.
It is much less risky to use only money that is free and clear. Invest your own savings. Sell shares of the company to trusted friends and family. Look for an angel investor or venture capitalist that is willing to buy into your idea. Be careful, however, not to inadvertently sell off control of your company. Always have contracts reviewed by an attorney and be certain that you understand how your business and personal interests are protected.
Promotion
It does no good to open your doors for business if the public is not aware that you exist. Marketing and advertising are extremely complicated and can be cost-prohibitive for new business owners. Therefore, you must think creatively to develop your own lost-cost means of self promotion.
Never leave the house without a few business cards and perhaps a sample of your work. You never know who you will meet that could be a potential customer. There is a fine etiquette line that must be walked when self-promoting, so be careful not to turn people off by talking too much. However, you can keep your eyes and ears open and comment on your business when it is appropriate.
Also consider investing in magnetic signs for your vehicle. This is a low-cost means of getting your company’s name out to the general public. Be sure that the signs clearly state your company’s name, telephone number and website address. Also make sure that it is clear what your company actually does, especially if the business name is non-descriptive.
Build a website. In today’s internet age, shoppers expect to get at least basic information from the internet before making buying decisions. Your site need not be complicated or elaborate, but it should give basic information about your company and your product, as well as your contact information. A secure online storefront is a bit more difficult to create but can generate a new stream of revenue.
Controlling Growth
Only rarely does company growth occur in a slow, predictable manner. More likely, your company will experience fits and starts of rapid expansion interspersed with periods of slowdowns and loss of business. Prepare for fluctuations by learning to predict when they are likely to occur. Research your field to stay ahead of seasonal changes. Keep up with industry forecasts to help predict market-driven fluctuations.
Maintain a long-range plan to help contain growth during periods of extreme upswing. It is easy for a company to get out of control during a phase of expansion by expanding in directions that do not mirror the company’s actual goals and objective.
It is also important to develop a long-term strategy for dealing with downswings. It is common for inexperienced business owners to panic and go to extreme lengths to try to turn things around. Stay focused on your goals and avoid drastically cutting prices or expanding into territory that does not mirror your objectives. Consider ways to make your company more visible and add value to your product or service rather than lowering your prices.
Starting a business is extremely challenging but ultimately quite rewarding. There are never any guarantees of success or failure in a business venture. However, remaining positive, following a clear cut plan and learning to weather changes can help increase your chances of success.
