Entrepreneurial ambition is an essential ingredient for small business success, but there’s a lot of ground to cover, turning your drive for self-employment into a thriving commercial venture. Fortunately, many effective entrepreneurs have gone before you, breaking ground and blazing trails you can follow on your personal path to business success.
While there is no universal recipe for coming out on top, the stew of small business success blends similar ingredients, across diverse industries and business types. Retailers, service providers, and online entrepreneurs may go about their daily trade in unique ways, but they face similar business challenges. From effectively servicing customers to staying profitable in competitive markets, the same things keep them up at night. Among their shared experiences, the process of starting a business also follows common steps for businesses of all kinds.
Though all of the recommendations may not apply to every business plan, a recent Entrepreneur article outlined a series of steps to take when starting a business. The resourceful list of business-building stages serves as a guide and reference for anyone interested in self-employment.
Assess Your Strengths and Weaknesses
Not everyone is cut out for business ownership, so honest self-evaluation is a good first step for would-be entrepreneurs. Truthful self-assessment answers some of the difficult questions about becoming an owner, furnishing clues about your potential as an effective small business entrepreneur.
- Are you capable of running a business, or do you need further training and education?
- Does small business ownership fit your lifestyle?
- Are you financial prepared to lose your investment?
- What is your true passion?
- Does your skill set lend itself to small business success?
- Why do you want to start a business?
Answers to these and other questions can help you evaluate self-employment opportunities and make informed career decisions.
Brainstorm Business Ideas
Having a great business idea is what draws many entrepreneurs to begin exploring self-employment. If you’re already focused on a concept, fine-tuning may be all that’s needed, but if you haven’t yet settled on a direction for your venture, Entrepreneur recommends a few ways to come up with business ideas.
- Look Ahead – Advancing technology and evolving social trends are only two of the influences shaping commercial markets. If you can anticipate what’s coming next and position your business to benefit from upcoming trends, you’ll join the ranks of effective business visionaries.
- Solve a Problem – Fixing an existing problem is a great way to attract attention from consumers.
- Apply Yourself in a New Environment – Thinking outside the box leads to business breakthroughs, so don’t be afraid to step outside your comfort zone. Your skills and experience may provide marketable answers in areas other than your primary field, allowing you to excel in ways you didn’t think possible.
- Better, Cheaper, Faster – If you aim to compete with mainstream products, you’ll have to return to basic economic principles, supplying goods better, cheaper, or faster than the existing supply chain.
Before launching a business, it’s important to identify other providers doing similar work in the surrounding area. The more information you can uncover about rivals and competitors, the better prepared you are to face off in commercial markets. For authentic information, ask potential customers where they presently do business and what they expect from vendors. Their answers may point to a niche needing your attention, generating a business idea with a built-in buying base, ready for you to solve their issues, for a price.
If you’re stepping into uncharted territory, without similar competitors operating locally, there may be a reason behind the void. To avoid launching a non-starter, take extra care researching local market conditions, before investing in your business.
Until people have a chance to interact with your products and/or services, it’s hard knowing how your business ideas will be received in the marketplace. To avoid surprises, illicit direct feedback about your wares and adopt The Lean Startup approach for ongoing management. With feedback from a wider group than your in-house team, it may be possible to identify problems before going to market, and with a Lean approach in place, each product you put forth can be evaluated and improved, ahead of subsequent releases.
Cover Legal Bases
The legal and administrative requirements governing each business are unique, so you need to check local, state, and federal policies that apply to commercial ventures like yours. A few things to think about as you set up your business include these common commercial concerns:
- Business Structure – Do you plan to incorporate, act as a sole proprietor, or operate a business partnership?
- Banking – Determine the most efficient ways to process payments and conduct banking business, then establish the necessary accounts.
- Licensing and Permits – Check regulatory requirements and estimate licensing costs; get approved and pay fees.
- Name and Register Your Business
- Open Tax Accounts
Formalize Your Plan
Business planning goes through a series of stages – from conception through launch, followed by continuing adjustments, over time. An important early stage includes writing a formal business plan for your venture. The document’s format isn’t critical, but a comprehensive business plan should touch on the following areas:
- Legal and “doing business as” names
- Description of the business
- Executive summary encapsulating key objectives and ways they’ll be met
- Market strategies
- Competitive analysis
- Operations management
Fund Your Business
You should have financing ideas in mind before reaching this point in your business development, but this is the stage at which you make firm decisions about where the money will come from. Will you fund the startup with personal resources? Or are crowdfunding and venture capital investors better sources of financing for your startup? Is assistance available from government programs or agencies offering business grants? Answering these and other finance questions ensures your commercial enterprise launches without an impossible debt load dragging you down.
Assemble Your Team and Choose a Location
Location and people-power are key elements of business success, so you don’t want to sell the effort short in either of these crucial categories. Depending upon the nature of your business; foot traffic, logistics concerns, and cost per square foot are things you may have to contemplate when vetting prospective locations.
As you put together your team, hiring competent specialists helps fill positions with staffers skilled at their work functions. Though it’s tempting to hire well-rounded candidates, capable in multiple areas, specialists can often step in with immediate productivity – which is exactly what a fledging business needs to get off the ground.
Start Recording Sales
It’s not official for entrepreneurs until money changes hands, so making sales is an important milestone for any new business. There’s nowhere to go but up, once your first sale is in the ledger; growth is a fundamental focus during the early days. And despite the many metrics evaluating entrepreneurial effectiveness, consistently generating revenue is the one universal hallmark of small business success.
There’s more to effective small business ownership than developing concepts and bringing goods and services to market. A great idea and some good luck are a big help, but you’ll also have to navigate a series of startup steps, in order to convert your clever concept into a cash cow. Whether you have one foot in the water, launching a business, or you’re still in the preliminary planning stages, this list of steps serves as a valuable resource and guide.