There’s a lot that’s attractive about the idea of starting your own small business. You get the chance to be your own boss and you can bring something new to the marketplace that is informed by your unique perspective. However, that’s not to say that actually getting your enterprise off the ground is necessarily a simple matter.
How you start can be vital to your success. A recent report found that 21.5% of startups in the U.S. fail within their first year and 50% within their first 5 years. Your ability to avoid being included in such statistics is not a case of getting everything right immediately — mistakes are educational — but it’s important to make the most positive first steps that you can.
So, let’s take a look at a few areas you need to place your focus as you create your new enterprise.
Take Some Time to Upskill
One of the important things to remember about starting a small business is not to simply rush into it. Yes, you can be bold and take risks, but that doesn’t mean you should be reckless. Take the time to review the challenges that you might face both as an entrepreneur in general and in the specific industry you are facing. Be honest with yourself about what skills you’ll need that you don’t currently have. It’s worth taking a little extra time to build those before diving in.
You can certainly take a formal approach to this. Many entrepreneurs recognize that they don’t have a solid understanding of how to not just start but run a business of any size. As such, choosing to take a master of business administration (MBA) degree course first can help fill in those gaps. These courses are designed to walk you through each of the elements you need to operate a functional enterprise — the administrative and legal obligations, headquartering your organization, economics — alongside shoring up the communication and leadership soft skills that are essential. Undertaking formal education also tends to build a mutual support network of peers.
However, not everybody has the time or finances to devote to a master’s program. There is still value to be found in taking short online courses or even engaging with free tutorials on YouTube. Make a list of the skills that can be helpful to your business. If you’ll be primarily operating online, consider taking a self-led course in web design or coding. If you’re not certain how to reach the most customers, do some research into digital promotion techniques like search engine optimization (SEO).
Hands down, the most important aspect of starting your enterprise is your business plan. Having a clear, detailed, and well-structured plan in place has many advantages in your early days. It can help attract investors or loan providers. You’ll gain an understanding of your goals and how to meet your definition of success. Perhaps most importantly, it can act as a practical framework to help steer the direction of your company through each stage of its development.
There are different styles of business plan, but it should include at least the following elements:
- Company Description
Write down what it is you do. This might seem simple but it is important for both you and potential investors that you provide clarity about what problems your business solves, how you solve them, who your customers are, and why the industry needs what you provide. Don’t be vague here — if you already have customers lined up, list them.
- Market Research
You can’t just assume that there is a gap in the market and customers will just flock to you. Include a detailed market analysis in your plan. One of the benefits of this is you can gain an understanding of your competition, what they’re doing, and how you can approach it differently. It also provides you with a focus when it comes to marketing your services.
- Financial Projections
Both you and potential investors will be keen to know what the likely financial future for this enterprise will be. This should include your projected cash flow, how capital will be utilized, and even how you plan to get through tough times. It can also be to both your own and financiers’ benefit if you include milestones for growth, too. At what stages do you see your income growing, and how will you adjust activities to keep profitable? Don’t be afraid to visualize this — use graphs and tables to make the information more easily digestible.
Explore Your Financing Options
Finances can be one of the more overwhelming aspects of starting a small business. As you create your business plan, you’ll really start to get a solid sense of what capital you’ll need to kick off, and what you need to get through your first months and years of operations. It can feel like a lot, but the key to handling this is to look into what funding options are open to you.
Loans are the most common way forward, thankfully there are a lot of options for you to choose from depending on your circumstances. The Small Business Administration (SBA) backs low-interest financing designed to support startups, but you need to have a strong credit rating to qualify. There are also specialty loans that are usually aimed at entrepreneurs from minority or underrepresented backgrounds — these often require a lot of paperwork, but it’s worth exploring as a vital source of funding.
Don’t overlook the potential for grants, either. If you are opening a non-profit or even a green organization you may qualify for funding at the state or federal level. Often these are aimed at encouraging innovations that are beneficial to communities or the environment in general. While this usually won’t finance your whole enterprise, it can provide a useful boost.
Starting a small business can be an exciting and daunting prospect. The key is to take it slowly and provide clarity on your intended operation both for your own benefit and that of investors. Be sure to explore your funding options fully, and you can put yourself on the right path to a positive and successful small business experience.