If you’re an aspiring entrepreneur, your dream is probably to set up and start a business that will stand the test of time. Fortunately, starting a business today isn’t as complicated as it used to be. This is evident in the statistics, which suggest that about 50 million new businesses are created every year- that’s about 137,000 businesses per day.
As encouraging as that may sound for an aspiring business owner, there’s also some not-so-good news. About 20% of these new businesses fail within the first two years. As if that’s not bad enough, about 45% of new businesses fold up within the first five years, over 50% fail within their first 10 years, and only about 25% of new businesses make it past 15 years.
While several factors are responsible for a business failing, you want to give yourself a great shot at success by starting on the right foot. So, are you thinking about starting a business anytime soon? Do you want to prevent the chances of your business becoming just another failed statistic? Then you might want to consider these crucial factors before you start your business.
Important Factors To Consider Before Starting A Business
1. A marketable business idea
Of course, you need a solid business idea to launch your business on. Although every business starts with an idea, not every idea is marketable. If you want your business to stand out and thrive, you need a unique idea that attracts people enough to want to spend their money and time on it.
There is a general idea that aspiring business owners need to develop ideas or offer a product or service that no one else has to succeed. However, this is only a misconception. Several thriving businesses offer similar products and services. The most important thing is to find ways to make yours unique and stand out.
If you already have a specific business field you’re passionate about, you can simply purchase an already existing business for sale from reputable companies such as BusinessForSale.com- the world’s largest marketplace.
Read also: How to write a business plan step by step
2. Your target customer
As mentioned previously, your business should be marketable, offering a service or product your target customers need and be ready to pay for. To make that possible, you need to consider your target customers. You can have some of the best business ideas, products, and services, but if you don’t have customers ready to pay for them, your business is pretty much already on its way downhill.
If you already have a business idea, take the time to study who your ideal customer is. What problem have you observed with your target customer? How can your business idea solve that problem? What extra benefits do you offer that’ll make your ideal customer choose your business over your competitors? How will your business resonate with your target consumers? Answering questions like these will help you know if your target customer is ready to pay for your product or service.
3. Funding and budget
Many successful business owners say that money should not be a stumbling block to your ability to set up a successful business. But you can’t ignore the fact that funding and budget play an essential role.
You need to take the time to identify the sources through which you’ll get funding for your business and how you would financially manage your business in its early years. Most businesses fail even during the first year of operating. That means you need to find a sustainable source of revenue to keep your business afloat until the profits begin to seep through. According to experts, most businesses do not make any profit in their first year of operating. In most cases, a business needs about 18 to 24 months to reach a sustainable level of profitability. Starting a business with no funding source means that you’re likely to fold up within your first year.
Preparing a budget is also crucial for creating a successful business. You need to know how much you can expect to spend each month to run your business against how much funding you already have. Through creating a budget, you would also identify how much funding you need and which finding options would be convenient for your startup.
4. Consider your knowledge and expertise
A significant factor in starting a successful business has to do with your level of expertise and knowledge. For example, if you want to start a spa or grooming company, knowing how such a business is run would be beneficial, the various services needed, the skills required, and the general prices. This is particularly important if you plan to handle the day-to-day operations of your business.
Research and planning are vital, even if you already have enough expertise. Take the time to read all you can about the various aspects of starting that business, the obstacles you can expect, the requirements you need to meet (in terms of certifications or qualifications), and so on.
5. Your location
Even with most businesses taking their operations online, no one can discount the importance of location when starting a business. Location is everything, especially when you need your potential customers to access your business premises physically. Ensure that you identify the best location for your business – one that will help drive in the traffic you need.
Besides that, you want a location that’ll make it easier for you to run your business. Consider factors such as the ease of starting a business in that location, availability of amenities, crime rate, access, the laws, etc.
6. Consider your competitors
An effective way of ensuring your business succeeds is by analyzing your competitors. You intend to create a unique brand that stands out from the competition, and you can’t achieve that if you have no idea what your competition is doing right and wrong. Good knowledge about their strategies will help you develop a more effective strategy of your own. Understanding what they’re doing wrong will also help you avoid making the same mistakes they made.
7. Financial Management
Before starting a business, you must have a clear financial plan outlining how you will manage your finances or hire someone to do so. Financial management requires the use of a professional accountant who understands the importance of balancing inputs and outputs. It is all too easy to believe that the money in the business is sufficient, only to end up using it for the wrong purpose. To avoid this, create a detailed financial plan that details how much money will be allocated to each session. To begin, you should hire a low-cost accountant to assist you with the initial stages of your business.
8. Online Presence
Everything nowadays is done online, from the beginning to the growth of a business. You should plan ahead of time to create a business website or blog, as well as a Twitter, Facebook, and Instagram account, among other things. These are the primary areas where people learn about your company. You could also use these channels to chat with and speak with your clients directly. A company’s website serves as its public face. Clients can view what you have to offer all at once on your website and leave questions or comments.
Read also: How To Improve Brand Awareness?
9. Education, Experience, and Skills
Starting a business with no experience, skills, or even knowledge in that field can be extremely dangerous. Wearing designer clothes does not imply that you understand how to run a business. Before starting a business, make sure you have prior experience or the necessary knowledge to do so. If you are new to that industry, don’t be in a hurry just because you have an idea. Take a course on that specific business, arm yourself with the necessary knowledge, and you’re ready to go. Alternatively, you could look for a mentor who has experience in that field to help you navigate it.
10. Hiring of staff
If the business will be a small one requiring only your services, that’s fine. However, if you need the expertise of others, you must plan how, when, and how much you will pay them. Employees should be as few as possible at first, with a reasonable remuneration. Having a plan forces you to organize your budget, resources, and the environment in which they will be working. Learn how to choose the right employee for your business and ensure that they are the right fit for the job before hiring anyone. You don’t want to hire someone who will ruin the company.
When trying to start a business, you may encounter many doors slammed in your face, many people attempting to shut you down, and a zillion can’t and don’ts from all over; but with a ‘Can Do Attitude,’ you can rise above all of it.
To start a business, it is not enough to have big dreams. You must also believe in your dream and work hard to make it a reality through a solid business strategy.