Have you decided to start a business? Do you know that the planning that goes into this goal is extensive?
Before you receive your first customer, there are a lot of things that you have to take care of first.
In addition to getting funding, and deciding on a name for your business, there are other things to do before starting a business.
Here are some of the things that should be on your list.
1. Study the Competition
There is no way to overstate this step.
You can’t just jump into a business and assume your product or service is the greatest one out there.
You have to research the competition thoroughly.
Visit their stores, and look at their products.
If you’re interested in opening a restaurant, create a list of restaurants located nearby, and then visit as many of them as possible.
Take a look at their prices, menus, and any additional features they may have.
Next, visit the restaurants that they appeal to.
Do these eating establishments cater to Neighborhood employees? Families? College students?
These things are important to keep in mind, regardless of the group you think will take the most advantage of your restaurant once it’s up and running.
You should also become a customer of the competition.
Visit their websites, sign up for an email newsletter, and read blogs and articles on them.
You could sign up for an email alert every time their name appears in a local news article.
You can do this through Google News.
InfoUSA and Dun & Bradstreet can also be very useful because they contain detailed information on thousands of companies, including their financials.
These services aren’t inexpensive.
If you’re considering opening a business, this is one of the best ways to learn more about your competition.
Researching your competition is one of the important things to do before starting a business.
Remember that your goal is to learn what your competition is doing so that later on, you’ll be able to do it much better.
2. Research Funding
When it comes to funding, the choices are endless, but that doesn’t mean you won’t get at least a little nervous thinking about this step.
If you’re lucky, you have enough cash on hand to start the business on your own.
If not, think about your options.
These include small business loans, a family member, an angel or venture capital investor, taking out a second mortgage, or a combination of one or more of these.
This is such an important step.
As soon as you come up with the idea to start your own business, you should immediately start thinking about how to finance that business.
Another consideration involves investing your own money versus investing someone else’s.
Private investors usually require that you give up a percentage of your business until they get their money back.
If you finance it yourself, you can keep all the money you make from the very beginning.
You can also put it back into your business so it can grow. Both have pros and cons.
However, at least in the beginning, you may need outside investors.
If you can get some of the money you need this way, this might be your smartest option.
Most importantly, perform extensive research before you approach any type of investor.
Don’t speak with investors at all until you have a comprehensive strategic plan in writing that involves any future liquidity that you are expecting out of your business.
3. Ask for Advice and Assistance
Seek advice from mentors, friends, family members, and anyone else you think has some valuable insights to contribute.
By doing this, you can get assistance on business strategies, boost your networking efforts, and even get a confidante that you can talk to on an ongoing basis.
You should also consider getting a mentor.
To identify people you can talk to, start with making a list of people.
Work with the list and narrow down your choices.
Take into consideration people who are good listeners, well-connected, and, of course, someone who has experience in business.
If you find a mentor with all of these qualities, you’ve hit the jackpot.
Next, divide your list of names into wants and needs.
Decide who on this list will work best as your mentor.
To get names put on this list, consider everyone you know, including people from the business and academic communities.
This will give you good overall access to many different people.
This can make it easier to come up with the right name in the end.
4. Study and Research Marketing Strategies to Come Up with the Right One
Marketing and promotion are crucial in any business.
Since it is always going to be an important part of your business, it is good to get a grasp on these strategies in the very beginning.
You don’t have to be a whiz at marketing, but you need to know certain basics if you want your business to move forward.
Be clear about who your customers are.
You want to market to them and not to people who are never going to buy your product.
The best way to do this is to test and interview your potential customers, especially in the beginning.
Building relationships early on make a big difference in how fast your business grows.
You can also consider several proven methods of marketing, including:
- Consider joint advertising. If you are in the same mall as another business, you might be able to find a way to advertise both businesses in the same marketing materials. This way, the advertising is more affordable. You can work together with another business whereby the two businesses support one another’s goals.
- Make the most of social media. Social media pages such as Facebook, Twitter, and even Instagram can familiarize customers with who you are and what you do. Make sure you learn all about search engine optimization (SEO) so that people will find your website a lot quicker. The important point here is to use social media on a regular basis. In today’s tech-savvy world, customers often find out first about a business through one of its social media pages.
5. Start Choosing Your Future Employees
This might seem a bit premature and even a little presumptuous, however, if you expect your business to grow, you have to constantly be on the lookout for people who might fit into your organization one day.
In-person networking is still the number one way to recruit talent, even though the Internet has made the world a little smaller.
If you meet someone who seems knowledgeable and who is interesting to talk to, that person could be your next great employee.
Always keep an eye out for those people.
Whether it is someone who services you at a gift shop, another retail store, or anywhere else, for that matter.
Start talking to the person, ask questions, including finding out where they’d like to be in five years.
These people will stick in your mind should you need them soon or even in the future.
6. Make Sure You are Completely Familiar with Your Industry
This one seems obvious, but it’s amazing how many entrepreneurs ignore or minimize this step.
This is one of the most important things to do before starting a business.
You should consider even looking at the best industry to fit your talents and your style, rather than developing an idea then going in search of an industry.
Once you decide on a specialty area, search for counselors and speak to veterans in that industry.
In most countries, there are government-sponsored organizations that give out free advice to would-be entrepreneurs.
Many of them specialize in people who have never before been in business for themselves.
Search your local library, the Internet, various industry associations, and even college business schools for information and contacts.
This not only enables you to get a lot of the information you need to move forward, it also means you can get the information for free in most instances.
7. Prepare to Plan For Success
This may sound silly, but many entrepreneurs don’t plan for success.
Ideas always sound good when you’re sharing them with family members at the dinner table.
If your business starts booming, your growth can get out of control.
This is why you need a solid plan before that growth occurs.
Plan how you’re going to handle future booms once your product starts flying off the shelves because that could happen sooner than you think.
If you think you’ll need more employees, a bigger production line, or more marketing, make sure you plan for this.
This can make a big difference in your business in the future.
You also have to take into consideration your financial resources.
You should always have as much capital as possible set aside, especially if you are the sole proprietor.
Once again, here is the money consideration.
For this reason, it is crucial to plan to put back some of the money you make into your business, it is also crucial to identify what you want to take out as profit,
When it comes to both growth and extra capital, you should always have a plan.
If you have to revise that plan now and again, don’t worry, because this is the best way to ensure you are ready for what lies ahead.
8. Name Your Business
This sounds like an easy step, but in most cases, it is a stressful process.
Your business name should be one that embodies both your distinguishing characteristics and your core values.
It should also be a name that lasts.
Determine whether you want the name to fit in with the others or stand out.
The latter may sound obvious, because who doesn’t want their business to stand out from the rest?
Some businesses, however, want a more conservative and traditional-sounding name, and that works as well.
Most businesses do choose a name that stands out, at least a little because, in the long run, this is the best approach for most of them.
Choosing a business name is one of the important things to do before starting a business.
9. Test the Market, Even If It is a Small-Scale Version You of The One You Wish to See in the Future
Testing your idea before running with it is one of the important things to do before starting a business.
This will save you pain in the future.
Do a test run of your idea before you go full blast.
You can also conduct surveys, focus groups, and even polls, which allows valuable insight into how people feel about your idea.
Online survey tools can be found on many websites.
This can be an inexpensive and very valuable tool for you in the beginning.
With all of these tools, your goal is to get to know your customers as well as possible.
- What do they like?
- What do they dislike?
- Do they purchase on impulse or only with deliberation beforehand?
- What makes them want to tune out?
In some cases, they may like your product but don’t want to buy it for one reason or another.
Most commonly because the price isn’t right.
If you use social media, you can hone in on certain groups that might eventually become your focus group.
Research chat rooms and communities on social media sites.
- What are people talking about in these groups?
- Are your industry’s challenges addressed in trade publication articles or not?
- What do prospective customers write about?
- What do they wish to know?
If you know the answers to these questions, it can help you refine your business idea.
10. Decide If You Want a Sole Proprietorship or a Limited Company
One of the things to do before starting a business is to decide the type of business structure you will use.
This can be a big decision, and there are pros and cons to each.
The decision impacts everything from how much taxes you’re going to pay to how much liability you are responsible for should something go wrong and someone decide to sue you.
There are numerous websites and library articles that can help you decide which of these is right for you.
11. Decide How You are Going to Pay Yourself
Figuring out how you will pay yourself is one of the things to do before starting a business.
This is one of the first decisions you should make, long before the first customer walks through the door.
Many entrepreneurs wish to put everything they make right back into the business, which sounds like a great idea on the surface.
However, keep in mind you still have to pay for food and rent, so putting everything back into the business is simply not feasible in most cases.
It is certainly smart to cut back on the luxuries.
You also have to leave yourself with enough to live on, and you should always include this amount in your outgoings.
This is a better way to do business, at least in the beginning.
Many new entrepreneurs choose one of the following three ways to pay themselves in the beginning.
- Pay yourself a salary based on your experience. Consider both your age and your level of experience, because the last thing you want to do is pay yourself basic minimum wage if you don’t have to. Use others in the same age and experience group as a guide to determine what that amount should be. If you can afford it, pay yourself what you’re worth.
- Pay yourself a commission-based amount. For new startups, this is a smart rule to follow. This way, the better your business performs, the more money you can make. Of course, it also works the other way around – if your business doesn’t prosper, neither will you. However, this is a great way to get your business to eventually stand on its own, and it also provides incentives for you to work a little harder towards success.
- Pay yourself a market-based wage. If you can determine the going rate for someone in your position, and this should be easy with a little research, this is a great way to get paid.
There are a number of things to do before starting a business.
It can be a major undertaking.
Following the steps above will give you an edge and increase your chances of success.
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