Starting a company can be challenging for even the most seasoned business professionals, with no guarantees of success. But it’s also an endeavor anyone with enough desire and motivation can assume. To help increase the likelihood that your small business will thrive, there are a number of things you should consider.
Do you have an entrepreneurial character?
Before you start a business, it’s important to assess whether you’re up for the challenge, and if entrepreneurship fits your makeup. Successful business owners have to be comfortable taking risks, making tough decisions, negotiating deals and navigating uncertainty. They also have to be willing to commit long hours, tolerate erratic work schedules and limited time off. Successful business owners understand that they must be available to address issues when they arise, not at a time of their choosing.
Knowledge of startups can give you a boost. If you’ve already launched a successful company, you’ll possess a particular familiarity with the issues that small business operators face daily.
Look for a problem that needs resolving
While there’s no magic formula for finding a winning business idea, start by looking around for annoyances or problems you’ve encountered that are begging for a solution. Emerging markets are a good place to start, since problems here are often too new to have been resolved.
If you’re someone who likes to look ahead, ask yourself ‘What’s next?’ or search for a niche market that larger players in an industry aren’t serving. Another option: Take the skills and knowledge you’ve acquired in one industry and see if you can apply them to another.
Once you’ve hit upon an idea, learn as much as you can about the industry, your customers and the competition. Government publications, trade groups, business magazines and academic institutions are all excellent sources. This kind of market research will help you perfect and differentiate your product or service, while devising marketing strategies that appeal to your target audience. It can also help spark ideas on ways to reduce your risks while identifying potential sales opportunities.
Develop a business plan
Whether you’re starting a home-based consulting business or a more ambitious venture with multiple employees, a business plan is an indispensable tool for guiding you from startup to long-term growth. The process of assembling a plan compels a potential owner to examine all the issues of their business, and can head off potential pitfalls. It’s also an essential document for securing a loan or leasing retail space.
Having a strong support system or a business mentor to consult can help you navigate the rough patches of a business startup. Choose a mentor who has experience in your industry and knows what it takes to be successful, understands potential obstacles and can offer sound guidance and advice.
Discover startup funding sources
Even the world’s best business ideas need startup funds, which can come from such sources as personal savings, direct loans, credit lines or venture capital. There are also government loan programs that will help new businesses. An increasing number of entrepreneurs are also turning to crowdfunding, which has become more prominent as a financing option in recent years.
Funding can be helpful for getting your company rolling or taking it to the next level. You should have enough money in reserve to get you through the first six months of operations, as well as cover your personal living expenses. While insufficient funding can create problems, it can also bring out the creativity in a determined owner.
Starting a business requires a strong commitment and follow-through. But the rewards are significant. That includes not only the potential financial gains but also the deep satisfaction of creating a new organization with the potential to thrive for years. Speak with a Nationwide representative to learn how the company can help you achieve your business goals. Once you have that winning idea in mind and your business is on its way to getting started, make sure you insure your small business with Nationwide.
5 mistakes to avoid when starting a business
As a business owner, avoiding common startup mistakes can help increase your odds for success. You’ll make wiser decisions about operations, hiring and finance. In addition, you’ll have a more rewarding experience, which can reflect throughout your organization. Positive, forward-thinking leadership can increase the likelihood of strong growth.
In the excitement of starting a new venture, it’s easy to lose sight of common-sense practices. Here are five business mistakes to avoid when starting a business.
It’s easy for entrepreneurs to become enamored with their business idea. But allowing that love for your product or service to turn into overconfidence can leave you unprepared for challenges ahead. It’s one reason why businesses fail and why business owners need to coolly evaluate their organizations.
Setbacks are natural, especially as you're learning the ropes of running a new business. Success may not happen right away, and you may have to invest more time than you initially planned to. You may have to delegate more than you're comfortable with. Maintain your optimism, but remember that it's important to plan responses for different situations that may arise.
Make a plan
Creating a business plan with thorough market research and analysis can give you a clearer idea of the true potential of your business.
As part of your business plan, perform a SWOT analysis. "SWOT" stands for strengths, weaknesses, opportunities and threats. A SWOT analysis can help you identify factors within the business and outside its control that may affect its future performance and ability to remain competitive. During a SWOT analysis, you'll look at:
- Strengths: internal factors that help the business do well and achieve its goals, such as staff members' unique skills, specialized knowledge and industry experience
- Weaknesses: internal factors that may put a damper on progress, such as areas that aren't profitable or where more industry experience is needed from employees
- Opportunities: external factors that the business can take advantage of to succeed, such as ways to meet clients' needs, new target audiences and the development of new products or services that could help the company further its mission
- Threats: external factors that could harm the company's performance, such as areas where competitors are successful and any current economic conditions that make doing business difficult
You'll use the information and data gathered during the SWOT analysis to create plans that utilize the company's strengths to eliminate its weaknesses.
Too little marketing
Another entrepreneur mistake is to believe the awesomeness of your product alone is enough to attract business. But while quality is important, it doesn't guarantee customers will come. You’ll need to skillfully market your product.
The early stages of a company often require that a higher percentage of your operating budget be devoted to marketing and advertising. If you take your focus off marketing before building up a solid customer base, your business may never establish a foothold.
Risking family assets
It may be tempting to clean out your savings and retirement accounts to fund a startup. But this mistake can leave your startup without capital you may need later in your venture. At the same time, it could put you and your family at serious financial risk, with long-lasting consequences.
Raising startup funds from outside investors can count as a vote of confidence in the strength of your business proposal. Consider it your first successful sale. Before lending you money, bank managers or venture capitalists will require a well-researched plan and ask incisive questions on your business. Going through this process can help you focus your vision and prepare you for many contingencies.
Underestimating your time
A new business often requires a significant amount of time from its owners to establish operations and revenue streams. That may mean working on weekends and late into the evening. Many business owners underestimate this commitment.
Also, it’s not uncommon to misjudge the lead time for opening your business and getting to a breakeven point. Hitting a snag on a crucial aspect of your startup can lead to delays. Failing to account for such scenarios may cause you to spend more startup capital than you planned, leaving you short of funds before you can get your business off the ground.
Overestimating your abilities
One reason why businesses fail is believing a valuable skill will automatically translate into business success. But being an experienced chef doesn't always translate to running a successful restaurant or catering company. Running a business requires a variety of skills. To avoid this common startup mistake, learn the skills needed for business ownership, or take on a partner or business manager who can complement your talents.
There are many methods businesses use to achieve success. Do your best to discover what works for your company's needs, and protect your business from unforeseen events with commercial insurance from Nationwide.