Setting up your own business could be the first step to financial freedom. It could be the end of your 9-5 office job, and the start of a new life. You can follow your passions and take command of your work day. Of course, it’s not easy, and there will be plenty of sleepless nights ahead! But, when that first sale comes through it’s all worth it. Watching your self-started business grow is one of the most fulfilling pursuits. We’ve watched our fair share of businesses (and started our own), so we know what works.
Lots of entrepreneurs like to dive straight into business. They want to get their product on the market or launch their new website. Unfortunately, this isn’t an ideal strategy. Instead, we suggest taking it slow and spending plenty of time on the planning. The more time you take to perfect the foundations, the stronger you can build the business. Without further ado, here are the eight things you need to do before you launch your first company.
1. Research your product
The biggest small business killer is rushing an inferior product to market. We understand your excitement and rush. We all want to get our ideas out there as fast as possible. However, it pays to take your time and craft your ideas. If you’ve had a fantastic idea, make time to research it. What else is on the market? Who are your major competitors? Try building a prototype and testing it in real-world situations. Run focus groups and tests. Get feedback. Work on your product or service until it truly is a unique offering.
2. Research your target market
The key to getting your startup off the ground is tapping into a niche. You need to build a deafening buzz in a small corner of the market. To do that, you need to define your target audience. This will inform everything from your company branding to your marketing to the product itself. Imagine your ideal customer. What do they look like? What are their interests and demographic information? You’re probably working with a small marketing budget, so it’s crucial that you target exactly the right people that will help your product take off.
3. Write a killer business plan
Starting a company without a business plan is like going on a road trip without a map. You’ll get lost, go broke, and end up in the middle of nowhere. You need a clear, concise set of goals, targets, and ambitions. Start with a mission statement. Why does your product exist and where do you expect to be in the future? Then, create a series of realistic targets and goals for you company in the short and long-term. Only when you know exactly where you’re going can you get started. Without a strong business plan, you won’t secure investment either.
4. Decide on a business structure
Now for the administration section. Starting a business comes with a whole host of tricky admin work. You need to register your company with the tax man and create a legal structure. It will form the backbone of your business, so seek advice from a lawyer and an accountant. There are four main types of business structure. These are sole trader, partnership, trust, and limited company. There are benefits and weaknesses with each, so choose carefully. Tax rates and liability vary within each structure.
5. Learn the law
Business law is a complex and difficult beast. There’s a reason lawyers train for up to seven years! You need to understand the basics of public and employee liability in order to protect yourself. You should also attend health and safety seminars to grasp the laws in place here. It’s worth consulting a solicitor as they’ll bring you up to speed. They’ll help you draft early agreements and contracts. They’ll guide you through the complicated web of business law and make sure you’re protected.
6. Set a startup budget
Few businesses can instantly start drawing profit and running a surplus. In all likelihood, you’ll need an injection of initial funds to get the wheels turning. There are two main startup costs to consider. Firstly, your business assets. These are all the physical things you need to get started. If you’re a plumber, it would be your van and tools, for example. Next are your business expenses. This would be rent on an office space or employee wages. Most advisors suggest accumulating costs to cover your first twelve months without profit. That should give you the start you need.
7. Raise the funds
It’s all very well setting a budget and making plans. But, without a real cash injection, you’re going nowhere. You’ve got a number of options when it comes to raising funds. First of all, you can finance the business yourself with savings. It’s important that you leave yourself a safety net here though! A safer bet is to ask your bank for a business loan. So long as you’ve crafted a killer business plan, they’ll often grant you what you’re looking for. Many self-starters borrow money from their family and friends. In this case, there may be less pressure to make a quick profit and the interest may be lower. Finally, you can seek angel investment. However, it’s often best to get the business off the ground and turning a profit before you approach them.
8. Find a business partner or team
Most of the giant companies all started with a partnership. Very few people possess all the qualities necessary to run a successful business. Instead, look for someone who compliments your skills and expertise. Bring them on board and harness their differences. If you have a strong creative mind, find someone who’s good with numbers and business! You’ll bounce ideas off each other and keep one another going in the difficult periods.
Preparing your business for launch is a long process. But, follow these steps and you’ll build the strongest possible foundation. Now you’re ready to find those first clients and sell your first product. Good luck, you’re in for a hell of a ride!