6 Things to Consider When Starting Your New Business
The early stages of your business can be incredibly exciting but nerve-wracking, too. Here are six things to focus on to increase the chances of getting off to a strong start.
1. Your Market Appeal
Gauging whether the public will embrace your business is a crucial consideration. Otherwise, you could have ongoing difficulty getting people to try your company and learn why it’s different from what already exists in the marketplace.
Start by creating a prototype or a test service to give your audience an idea of what you hope to achieve. Once it’s ready, survey at least 50 potential customers to see if they perceive your solution as valuable and necessary. Choose people who will likely offer criticism when warranted. You don’t want to only approach individuals who are already eagerly supportive of your business idea. Doing that won’t give you an accurate picture of marketplace sentiment.
You’ll also need to research more broadly to find out about competing businesses. How will you stand out from those established operations? How do your company’s model and target audience differ from what’s already out there?
As you learn more about your planned business’s viability, it may become apparent that the model needs tweaking. That’s OK and expected. Understanding what the audience needs and wants will make you better equipped to succeed.
2. Your Budget
Setting and sticking to your business budget is arguably not the most exciting activity, but it’s essential for your long-term stability. Virtually all companies go through downturns and slow months before things eventually pick up again. Having a budget to refer to at any time makes it easier to judge the severity of the situation before it gets out of hand, and therefore, more challenging to manage.
Make your budget cover estimates for multiple months, when possible. Start by figuring out your average revenue for one month. After that, calculate your expenses. Remember to differentiate between costs that stay the same each month and those that vary.
Now, see whether there is a major difference between the two figures for your revenue and expenses. Hopefully, you still have money left over after accounting for all the expected costs. If so, think about putting some of the extra toward an emergency fund. That’s a smart move, and it’ll bring some welcome peace of mind the next time an unexpected expense arises.
If the budget shows excessive expenses and insufficient revenue, don’t get too discouraged right away. Careful assessments will likely show that you can cut costs in ways you hadn’t considered before. For example, maybe your supplier of office goods offers a substantial discount for buying in bulk. Alternatively, perhaps one of your cloud-based subscription services costs less for people who purchase a year’s worth of service at once instead of paying month-to-month.
3. Your Premises
Your operating location could play a major role in boosting your business. For example, getting set up in a place easily accessible from the main highway or in a pedestrian-friendly area that attracts a lot of tourism could encourage people to check out your enterprise even if they did not know about it before.
Think about what you need in terms of amenities, too. Do you require a kitchen, a break room or an area to meet with clients? Creating a list of must-have features will help narrow your search and make your efforts more fruitful. Consider your immediate requirements, as well as what you would need during and after growth phases.
Realize, too, that smaller, local businesses are often more likely to thrive in historic buildings versus newer ones. That’s due to several reasons, including that they’re more affordable and that people appreciate the character and uniqueness older structures offer. You could even turn the historic factor into a selling point, such as when operating a restaurant and appealing to people who want to dine in one-of-a-kind environments.
Be sure to verify the zoning rules before settling on where to operate. Local restrictions dictate laws related to maximum noise levels, permitted signage and the allowed purposes for given buildings.
4. Your Suppliers
Great vendors can ensure your business operates reliably with the necessary resources. Getting your company set up means having a trustworthy network of supplier partners. When looking at your options, consider things like the company’s reputation, the estimated lead time and order quantity requirements.
Once you have a shortlist of prospects, put out a call for bids, which often requires filling out request for proposal forms at the respective suppliers’ websites. You’ll provide a potential supplier with all your specific needs and wait to hear if the company can meet them.
During this stage, you can also ask questions that give you an idea of overall reliability. For example, how does your potential supplier source their raw goods, and what options exist for them to cope with shortages?
It’s also worthwhile to determine if a supplier could act as a dropshipper. In that case, you do not have to keep your business goods on-site. Instead, you send orders to the dropshipper who fills them by sending the merchandise directly to the customer on your behalf. That’s a notable advantage, especially if you lack space requirements and don’t want to deal with shipping challenges.
5. Your Reach
Another vital consideration for your business is whether to solely operate a brick-and-mortar location or to also have an e-commerce presence. Your decision drastically affects your reach and profit potential.
If setting up an online business seems too tricky, don’t write off the idea just yet. Many popular site creation platforms have built-in e-commerce functionality that you can activate.
Even before launching an official e-commerce site, social media profiles can generate interest and show people what’s available. Consider an example where you knit items and post pictures and prices of the newest creations on your company’s Facebook page.
Many people love the convenience of shopping online, and you may miss out on potential customers by not offering some internet-based options. You can also think about setting up a service where people can select what they want to buy and pick it up from you later. That hybrid approach is rapidly becoming more popular. It gives customers the ease of online shopping without removing the personal touch you can provide through in-person service.
6. Your Personnel Needs
Many new entrepreneurs view their businesses like their babies. They believe they know what’s best, and it’s difficult for them to consider passing responsibility to someone else. If you’re in this situation, think about how you could distribute some of the work for the company’s good, even if that possibility seems wholly unappealing and a bit scary at first.
Delegating tasks provides numerous advantages, including giving you more time to focus on parts of your business that drive profitability. Spreading the duties can also make you feel more empowered to lead your team. Perhaps you’re getting drained and disheartened by time-consuming, easily outsourced needs, such as accounting. Letting a professional handle them could renew your motivation and boost employee morale.
Speaking of employees, ponder whether you need to hire help right away or if you should wait a while. If you decide to look for help, become familiar with state and federal employment laws for companies of your size. Moreover, determine whether you’ll hire people for full- or part-time work.
If you’re not sure, the best thing may be to hire people part time first. Otherwise, you might realize there is not enough work to keep full-time employees busy in these early stages. Once your company grows, you can approach staff members about the possibility of taking on more hours. If that is not feasible for them, look for candidates in the job market and specifically advertise the need for full-time assistance.
Set the Foundation for a Bright Future
This is not an exhaustive list of necessary business considerations. However, starting with the six mentioned here will help you lay the groundwork to give your company a promising beginning and get stronger from there.
Remember that it’s natural to encounter occasional obstacles. Those difficulties certainly don’t mean you have failed or made a mistake by starting your business.
The benefit of a well-constructed foundation is that you’ll be more able to bounce back quickly when challenges occur. Plus, working out these essentials early in your process will let you avoid many pitfalls that could otherwise cause trouble and limit your success.
Lexie is a web designer and digital nomad. She enjoys kayaking with her goldendoodle and baking new cookie recipes. Check out her design blog, Design Roast, and connect with her on Twitter @lexieludesigner.