We aren’t going to split hairs: getting a start-up off the ground is tough. Each year, thousands of people in the U.S. attempt to launch their new business start-up, yet the engines never even ignite. Why is starting a business so hard?
There are a few theories about why many start-ups fail. Some believe this is simply due to the fact that many entrepreneurs lack the business education required to make decisions that can lead to success. However, others simply blame a lack of planning or trying to break into an over-saturated market. No matter which school of thought you follow, it is broadly accepted that thorough planning can make the difference between success and failure.
Today, we are going to look at the formula to successful startups. How to plan properly and make the decisions necessary to create a sustainable business.
Fine Tuning Your Ideas
We know that you likely have at least one business idea floating around in your head, but there is some intricate tweaking you should do before making any major decisions.
First and foremost, research similar businesses in your market area. This can help you determine two things:
- How much competition you have
- What similar businesses are doing right
Assess your competition. What can your business bring that theirs doesn’t? How are you going to stand out?
If instead of a new business start-up you are interested in a franchise, you should focus your preliminary planning on finding a great location with a lucrative market. For example: you don’t want to franchise a beauty supply shop in a community of predominately elderly men.
Determining Budget and Other Financial Factors
This planning step is pretty straightforward – how much money do you need to get your new business start-up going? The difficulty comes with trying to estimate all the financial nuances that go into a business.
To begin, consider the basics you will need.
Location
Are you going to be operating out of a brick and mortar location? You should consider the additional costs that come with that. You might need shelves, signs, air conditioned storage units, appliances, registers, etc. Even if you are working out of your garage, there will be a basic set of equipment you will need that should be appropriately accounted for.
There are ways to save money on supplies. For example, many companies will need to equip their office with inkjet printers and printer products. You might be tempted to look up these costs from your local supply shop and move on. However, there are many companies that can offer you discounts based on setting up repeat shipment or ordering multiple supplies at once. Try to take advantage of these cost-saving benefits to help lower your overall financial need.
You also need to calculate the lease costs, utility estimates, insurance, and any other fees tied up in your selected location. You can find estimates for these amounts through multiple avenues. Average utilities can be calculated online, insurance can be estimated by a business insurance agent, and the landlord of your selected property should be able to give you numbers on everything else.
Creating a Strong Business Plan
Armed with the knowledge of your market, goals, and financial needs, you can begin crafting a strong and effective business plan. This is essentially a portfolio for your business that can help you land investors and business loans.
Your business plan will tell people what your business does, who you are selling to, why the business will be successful, and everything else they might want to know before putting their own money on the line for you. If you need more insight to buff out your business plan you can conduct market research to help you understand your customers, what they want, and how you can help them.
To build your business plan you can follow this basic outline, or go with a more intricate document that works better for you:
- Executive Summary
- Projected Market Effect
- Market Analysis
- Execution/Logistics
- Employees and Management Summary
- Financial Plan
Researching Laws and Regulations
Depending on the industry of your new business start-up, there will be plenty of laws and regulations to follow. Many, if not all, can be located through the website of your local government. The best method for keeping all these legal boxes checked is to keep a business lawyer on retainer. There are a few different types of lawyers, but who you need will depend on your business and goals.
General Business Lawyer
General business lawyers can help your new business start-up by providing advice on a wide range of business scenarios. They are great for getting answers to any questions you may have but don’t always have the niche expertise you might need for certain situations.
Employment and Labor lawyer
If your new business start-up will have employees, an employment lawyer can be a great asset. They can help you navigate laws regarding worker’s compensation, minimum wages, benefits, and employee rights.
MandA Lawyers
Mergers and acquisition lawyers might not be an immediate need for your new business start-up, but can help you with major business decisions down the line. They are great for keeping you from entering into mergers that do not benefit your business.
Tax Lawyers
Tax laws can get confusing and missing payments detrimental on your new business start-up, so having a lawyer that specializes in these laws can save you more than a few headaches.
Intellectual Property lawyer
When you begin to create products you will need to look into product design service companies. They will help take your dreams and visions and turn them into tangible, saleable products. However, before you make the leap into manufacturing your products, you want to be certain you aren’t crossing any intellectual property lines. These lawyers can keep you from wasting tens of thousands of dollars on products you cannot legally sell due to copyright infringement or other issues.
Mediation Lawyers
If you find yourself in a situation where you need to settle disagreements with employees, clients, or others you may find yourself speaking to a mediation attorneys. This is a specifically trained, unbiased individual who can help resolve arguments fairly with both parties’ best interest in mind.
Registering Your Business
Registering your business isn’t as complicated as you may think. In fact, in many cases, the process can be entirely online and for minimal fees.
To begin, decide the functional structure of your company. Options include sole proprietorship, C-corp, partnership, and LLC. Determining which structure you fall within can get a bit tricky, so don’t be afraid to reach out to a professional in business corporate law for advice. However, if you have no partners or shareholding investors, chances are your new business start-up is considered a sole proprietorship.
Registering Your Name
If you are a sole proprietorship you may need to register your name as a DBA or “doing business as” name. LLCs and other structures often register names with the state and the federal government to differentiate among sections or entities within a major business structure. No matter why you need to register business names, you can do so online through your state government’s website. These sites also let you search your business name to check for availability.
Register with IRS
You must register with the IRS to obtain an EIN or employer identification number. This is the identifying number for your business much like a social security number identifies an individual. You must have one to pay your taxes and qualify for business tax benefits.
Apply for Licenses/ Permits
Some businesses require specific commendations to remain open. This could be a liquor license for a bar or a sales permit for a clothing shop. Contact your local government for information on the specific licenses your business requires.
Creating a Powerful Team
your new business start-up is only as strong as the team you build to operate it. You can find employees through a staffing agency or you can post openings and choose employees through personal interviews and vetting procedures. The benefit of a staffing agency is the employees are trained in locating qualified personnel and save you hours of preliminary interviews. However, you may prefer a more hands-on approach.
The most important factor in staff is that you can trust them, they trust you, and you are all fully invested in the success of the business.
Protecting Your Business With Modern Tech
Small businesses are highly susceptible to attacks both cyber and in real life. Many criminals find small businesses to be easy targets because they assume they aren’t using high tech security. To keep your new business start-up safe, it is important to implement as many safeguards as you can.
Your location should be installed with security cameras from reputable companies. Off-brand cameras can often be hacked or remotely disabled. You can also consider installing an alarm system or a full security setup from a company that will monitor your property for you.
On the cyber front, you should maintain safety features that protect you and your clients. SSL encryption is vital for any information passed between you and your customers. This keeps prying eyes off their personal details and financial info. Additionally, passwords and security features for your hardware should be consistently updated and monitored. The easiest way to do this is through IT hardware inventory management software which gives you a concise look at your hardware and lets you make security changes easily.
Contract-Based Staffing
There are certain jobs you will need to be performed that are on a sporadic basis. You could hire a full-time employee, but if they aren’t being constantly utilized, you are throwing away money on their salary.
Many small businesses find success through using contract employees for these positions. One example of a contract employee that can benefit your business is a consulting engineer. You can gain incredible insight on your company or products structure and functionality without the high cost of hiring an engineer as a full-time employee. This can make a difference of hundreds of thousands of dollars over the life of your business.
Vetting Your Vendors
Hiring vendors can be a stressful part of business ownership. While it might feel costly to contract with vendors for certain aspects of your business, you may find yourself saving money over time.
One example is delivery services. You can consider the route of a cargo van rental or purchase to move items yourself, but you also have to account for paying an employee to drive the van, the insurance involved having a courier on staff, and being solely responsible for the cost of goods in the van. If you use a delivery service they often cover the insurance for the driver, vehicle, and products being delivered. This alone can save you money even if you are paying a monthly fee to the vendor.
The most important aspect of deciding on vendors is reaching out to their other clients to determine how honest they are, how well they communicate, and if they have a history of hiking prices. A little research now can save you a lot of stress down the road.
Focusing on Marketing
Marketing is important for the growth of your new business start-up. Many businesses use pay-per-click (PPC) advertising because it is one of the most cost-effective ways to market. This involves setting a budget for your advertising campaign that you cannot surpass. Then, the advertising platform will charge from your budget every time someone clicks your ad. When your budget is maxed out, they remove your advertisement.
This is great for start-up businesses because you can budget as much or as little as you’d like and often these ads can be built without professional help through companies like Google, Instagram, and Facebook.
Set Yourself Up For Growth
Sustainability as a business is dependent almost exclusively on flexibility and growing with your market. As times change the demand for your specific product or service may begin to dwindle. You can take these changes as a sign of the end and give up, or you can use your ingenuity to evolve.
Consistent market analysis and maintaining your personal education in your industry are vital for keeping up with current demands. After all, you have committed into getting your start-up launched, it is worth the effort to keep the dream alive.
It might be difficult, but those who succeed in creating their own business all have one thing in common – they never give up.
