4 things to look into when starting a business
Photo by RF._.studio
Starting a business is a thrilling yet complex journey, marked by a series of important decisions. These choices can either lay the foundation for a successful enterprise or lead to challenging obstacles. According to the U.S Small Business Administration, about 20% of startup businesses fail during the first two years of being open, 45% during the first five years, and 65% during the first 10 years. With such daunting statistics, it’s crucial for aspiring entrepreneurs to get a clear understanding of what starting a business entails. This will help navigate the entrepreneurial landscape, avoid common pitfalls, and improve the odds of business survival. In this guide, we’ll delve into the four key aspects to consider when starting your own business.
1. Business idea validation
This involves identifying your target market, understanding their needs, and determining whether your proposed product or service meets these needs. Market research, surveys, and feedback from potential customers can be beneficial in this process. For example, the Microsoft Enterprise Agreement (EA) is a type of licensing program that enables organizations to purchase Microsoft software licenses at discounted rates. However, before launching this program, Microsoft conducted extensive market research to determine the needs and preferences of potential customers. Having access to resources that have Microsoft Enterprise Agreement (EA) explained, but also how it benefits businesses, helped Microsoft validate its business idea and successfully launch the program. A business idea that aligns with market needs is more likely to succeed compared to one that doesn’t.
2. Business plan
It should outline your business goals, strategies for achieving them, potential problems and solutions, and financial forecasts. This plan not only guides your business operations but also helps in attracting investors and securing loans. A well-written business plan should be concise, realistic, and adaptable. It should also be continuously updated as your business evolves. Without a solid business plan in place, it’s easy for entrepreneurs to lose track of their goals and make decisions that are not aligned with their long-term vision. For example, a business owner who wants to expand their small restaurant into a chain of franchise locations should have a clear plan outlining the steps and resources needed to achieve this goal. Moreover, they should regularly review and update this plan as their business grows.
3. Legal and regulatory compliance
Understanding and complying with legal and regulatory requirements is critical. This includes issues related to business registration, licenses and permits, tax obligations, and industry-specific regulations. Noncompliance can result in penalties and jeopardize your business. For instance, a food business that fails to comply with health and safety regulations can be fined or even shut down. It’s essential to consult with professionals such as lawyers, accountants, and industry experts to ensure full compliance. For example, a healthcare startup would need to consult with legal and medical experts to ensure that they are complying with all necessary regulations and guidelines. For businesses that operate in multiple locations, it’s crucial to understand and comply with regulations in each respective area. If you look at the legal structure of big corporations like Amazon or Google, you’ll find that they have an entire team dedicated to ensuring compliance with laws and regulations.
4. Funding and capital
Photo by August de Richelieu
Securing sufficient funding is a significant challenge for most startups. Evaluate your funding options carefully, which might include personal savings, loans, investors, or crowdfunding. An accurate estimate of your startup costs can help you determine the amount of capital you need to raise. It’s also important to have a financial plan in place, outlining how the funds will be used and how you intend to generate revenue. For example, a tech startup seeking venture capital funding would need a solid business plan, proof of concept, and projections for future growth to attract potential investors. On average, it takes about six months for a new business to generate enough revenue to break even. Having access to sufficient capital during this period can be crucial in keeping the business afloat. And if you’re looking to grow your business, you’ll also need access to additional funding. Therefore, it’s essential to have a sound financial plan and continuously explore funding opportunities.
By considering these four key aspects- business idea validation, business plan, legal and regulatory compliance, and funding and capital- you can set a strong foundation for your business. Remember to continuously review and adapt these aspects as your business grows and evolves. With the right mindset, thorough research, and proper planning, you can increase the chances of success for your startup. So don’t take any shortcuts when it comes to starting your business, and make sure to thoroughly consider these four key aspects before taking the leap. With the right mindset, thorough research, and proper planning, you can increase the chances of success for your startup.
