9 Things to Know While Starting a Business from Scratch
Almost every individual dreams about starting his own business. Yet only 4% of the newly started businesses manage to reach the 10 year mark.
In fact over 50% of the small businesses don’t even make it to the fifth year. Most people have no idea about the various things to consider when starting a new business.
It is just a desire to be on top of things that motivates many to start businesses. They have no idea about the money that is required, the hard work that they have to put in, the knowledge and the experience that they have to gain, and the kind of patience they need to have, until their business reaches up to a certain level for them to break even or make profits.
‘Well begun is half done’
is what they say. So if you want to start your business, you have to get all the things needed to start a business.
Factors to be Considered While Starting a Business
Here is a checklist that will give you a list of factors to be consider while starting a business that can help to have a clear view:
Identify a Unique Business Idea
Every business starts with an idea – a super duper idea that actually works. If you want your business to stand out, you will need to offer something that no one else has offered till date
That said not everyone can come up with a unique business idea. There might be hundreds of businesses just like the one you are going to start. Yet you can make it better by answering the following questions:
- What do I need to do to make this better?
- What is it that I can do better than what the other guys are doing?
- Will I be able to grab some market share in this category?
You may have a great business idea; but unless it solves someone’s problem it is not going to work. So start by listening to frustrations – both of yours as well as others (your family members, your neighbors, your friends, and your associates). Once you have understood these, here is what you can do:
- See what best you can do to address these frustrations.
- Identify the skills in you that will help you offer the right solution.
- Find out if you are actually passionate about offering that solution.
And Voila! You have your business idea.
Gain Knowledge, Expertise and Sources of Your Business Idea
Once you know what business you want to start, you will have to start gaining the required knowledge and expertise to start that business.
This might take a lot of research and planning; but at the end all these efforts will ensure that you have everything in place to get your business idea off the ground.
Having a business plan can be highly advantageous at this stage. It will tell you whether your business has a place in the market and if the idea is worth or profitable enough to go ahead with.
If you have the knowledge you can construct one, all by yourself. If not, you can always hire a professional business consultant to do it for you.
Meanwhile you will have to continue with your research to keep your knowledge up-to-date.
Start Doing Market Research and Demand of Product/ Service
Once you are sure of starting your business, your next step would be to explore the market or the demand for your product or service.
Start by answering the question, who are your customers. If you are selling your product or service locally, you may have to assess the demand for it. In case you are taking up on an international level, you may have to understand the rules and regulations of dealing internationally.
A market survey should reveal all the details that you may need about the market for your product or service. Basically you are looking for:
- The current size of the market (the approximate number of potential buyers)
- Its growth potential (whether it is likely to grow in size or contract)
- The market share that you can expect to take
- The buying habits of the target audience (and how to exploit them)
- The different segments of the market
- The kind of margins that you can expect from the market
Thankfully social media has made it possible to reach out to target audience, anywhere in the world, without having to put in too much of efforts.
Start Estimating the Startup Cost to Start A New Business
Estimating your start-up costs is one of the very important things to consider when starting a new business. You will have to assess the total cost that is required to set up and run your business successfully.
If you are thinking of starting a manufacturing plant, your start-up costs could be very high. You may have to think about the cost of the land or building, setting up the plant, buying the equipment and machinery, investing in furniture and office equipment, and various other things.
In case of a retail business, you may still need to think of the cost of the store as well as the furniture required to decorate it. An office can be started with relatively lower cost since all you may have to invest would be in furniture and office equipment.
Once your business is set up, you will have to think about the working capital needed to run your business.
You will have to take into account the inventory that you need to maintain, the credit that you can extend to your customers and the supplier’s credit that you can get.
In not all cases can you expect credit to be given by the suppliers, especially if you are a new name in the market.
Identify Finance and Capital Needed to Start a New Business
No business in this world can run without money. Depending on the type of business you are starting and the initial costs that you will have to pay up for, you will know what kind of capital you would need to start your business.
Whatever steps you take, to finance your business, you will have to make sure you have the required funds to take you through the startup phase.
The financing pattern is one of the most important factors to consider before starting a business. This generally includes the capital that you can introduce from your savings as well as the funds that you can borrow.
Personal savings are what 77 percent of the small businesses rely upon while gathering their initial funds. But you can’t really go over the board if you cannot fund your entire business.
Funds can be borrowed for business, either through short-term or long-term loans. Nevertheless, you may have to keep in mind the terms and conditions of borrowing such funds including the cost of borrowing, the rate of interest, the repayment terms, and the security that is required. Approach a few banks and private lenders, get a few quotes, and compare them to identify the most beneficial type of funding.
It would be ideal to go for long-term funds only if you have to purchase any fixed assets. For working capital requirement short-term funds would be sufficient. This way you can make sure they are paid back once your business starts progressing.
Recommended: Shape Your Own Destiny
Identify Your Competitors
Unless you know who your competitors are and what they are doing, you will not be able to survive in the market for long.
If your product is a monopoly competition will not matter. Else, you will have to come up with an excellent strategy to fill in the demand and supply gap.
Gaining a market share should be on top of your mind if you are about to start a business. If there is a huge demand for your product, this shouldn’t be too difficult. If not you may have to strengthen the position of your business to gain an entry into the competitive market.
Analyzing competition includes getting to know your competitors, figuring out how they have positioned themselves, identifying their pricing and marketing strategies, and evaluating their strengths and weaknesses.
Once you have all the information it is all about conveying your unique selling point to your target audience. If you can do this well you will survive no matter how tough the competition is.
Identify Location for Your Business
One of the most important things needed to start a business is a good location.
If yours is a retail business you will have to look for a well-populated area that is easily accessible.
If it is a manufacturing unit you can choose a location that can let you save money on electricity, water, taxes, and transportation. Look for a place where manpower is easily available and raw materials can be sourced easily. You can even look for a location that can get you rebates and subsidies from the government.
If yours is a niche product or a service, you may have to look for a single location where all your competitors are. For instance, if it is a software company you want to start, you may have to look for a software belt where all other software companies have set their shops. Similarly, the ideal location for a gold vendor / jeweler would be a gold mart that has housed many such shops.
Offices can be set up in any place that is accessible and offers good facilities such as parking spaces, refreshments, transportation, and so on.
Make sure the location fits well within your budget and offers scope for expansion. An ideal location would be one that complements your business in the best possible way.
Hire the Right and Skilled Staff
Your staff members are the ones that can make or break your business.
Without efficient manpower no business can ever succeed. That said an efficient staffing strategy needs to be in place if you want to reduce your staff replacement expenses.
You can hire a recruitment agency or use various recruitment tools to fill in your positions with the right talent.
There are also a number of websites that make it easy to find the exact kind of people you are looking for. Signing up for a couple of these can make your job, both easy and cost-effective.
Apart from hiring the right staff there is also the training that you need to think of. This will ensure your staff members will be in a better position to handle their responsibilities and meet the expectations you have set for them.
Finally you will also need to think about paying their salaries and perks to keep them motivated enough at work.
Invest in Technology for Your Business
Technology is one thing you can never compromise on when it comes to starting a new business in today’s world.
Whether it is office equipment, plant and machinery, or the software required to monitor your business, you will have to make sure it helps your business to perform well in the long-run.
Here are a few steps you can follow, while choosing the right technology for your business:
- Assess the requirements of your business
- Make sure the technology you choose helps in making things run smoothly
- Consider leasing technological equipment if you want to stay up-to-date
- Always have a backup plan
- Make sure you have the required support for installing, upgrading, and troubleshooting the technology that you choose
- Invest in training so that you can make maximum use of the technology
Bonus Factor: A ‘Can-Do’ Attitude
When trying to start a new business you may see a lot of doors getting slammed in your face, a lot of people trying to shut you down, and a zillion cant’s and don’ts from all over; but with a ‘Can Do Attitude’ you can rise above all of it.
Dreaming big is not the only thing needed to start a business. You will also need to believe in that dream and work towards achieving it with an excellent business strategy.
Apart from the above factors to consider before starting a business, there is another one that seems to be very important – web presence.
In fact every business can benefit from web presence, whether it is a website, a social media page, or an online brochure.
Today there are many websites that offer all the tools and templates that you would need to create your own site within minutes.
But if you have the funds, it can be extremely beneficial to get a professional web designing company to do up your website for you. For all you know they may also have an SEO expert who can help you save a lot of money on marketing your business.