Starting a business is a big undertaking, and it includes many details that you may never have considered. It’s true that there’s no way to know whether your business will be successful or not, but there are some things you can do to prepare yourself. Before you start with the realization of your idea and actually build a company around it, you can test and improve it.
According to this FastCompany research, 75% of venture backed companies fail, due to various reasons, such as lack of focus and motivation, lack of specific business knowledge, lack of good mentorship, and taking advice from the wrong people. To give you the best chance of surviving the crucial startup period, we’ve compiled a list of tips to do before you take the plunge into your new business endeavor.
Size up the competition
Is there anyone out there that offers the same or similar products or services? How successful are they? Study your competition to learn what their customers appreciate and to learn from their mistakes. Find out what they don’t do well and which customers they don’t cater to. That’s your opportunity to grab a share of their space and provide a superior service.
Name the business
Rebrands are very painful and expensive, so choose your name carefully, because you’re going to be stuck with it. Business name is the first thing potential customers see, and it will also need to work with an available web domain. Business names have the power to influence, attract or offend, identify what you sell, and help impress investors. If you’re starting an LLC or partnership, you need to register business name as a part of the legal process. You should also do it if you’re starting a sole proprietorship, because they aren’t registered in any other way.
Define your target audience
You can never appeal to everyone, and failure is certain if you try to do so. Instead, you need to focus on your target audience, and build everything around them (from your marketing campaigns to your website). You need to understand your customers and their needs in order to provide them with a product or service they really want. Also, by consulting them, you’ll make them feel like their voice is heard, which will build loyalty and spread the word about your business.
Not having a website is a big mistake, but still, about a half of small businesses don’t have one. They either don’t have the skills to create one themselves or think that they can’t afford it. Today, there are web building tools that enable absolute beginners to create a website up-and-running in no time. Also, you can outsource a web developer through freelancing platforms if you want to have a more unique website.
A well-crafted business plan is where every aspect of your business is laid out, from your business plan to funding to marketing strategies. If you don’t have one, don’t even think about approaching potential investors, because they won’t take you seriously, and you’ll most likely get rejected. Go through a step-by-step guide to writing a business plan to put together a decent one.
People won’t hear about your business if you don’t promote it. In order to build a marketing strategy from the ground up, you need to be clear who your customers are, build web presence through social media (Google, Facebook, Twitter, Instagram), use email marketing, start a PPC campaign, utilize SEO (Search Engine Optimization), upload videos to YouTube, organize contests, give away free samples, create coupons, record podcasts, publish an e-book, or hire a marketing agency.
Funding and licensing
Startups usually operate on a limited budget. For the majority of them, having enough money to self-fund a business launch is not an option. Instead, you can tap into different funding options: friends and family, bank loans, angel investors, venture capitalists, crowdfunding, or find a business partner.
As for licensing, you should find out if you need any licenses to sell in your area by speaking to the local authority. If you want to sell food or alcohol, you need a license, otherwise you’ll be fined and ultimately closed down. Also, you should ensure that all your processes are contracted up and legal binding (from supplier to sales agreements).
Besides tenacity and faith, you also need to have an exit strategy. No matter what happens, if everything else fails, you should be able to sell most of the inventory you bought, and ensure that you’ll lose just a small portion of your money. Once you know that there’s a way out that won’t have you lose your entire investment will make it easy for you to go forward with full throttle.