Never underestimate how much money you need to start, how long it will before you turn a profit or how hard you will have to work.
May 31, 2019 11 min read
Opinions expressed by Entrepreneur contributors are their own.
Is one of your main goals for your life to start your own business? Maybe building your own business has been on your bucket list for a very long time? Don’t begin with your current employer; you’ve already heard the success rate or lack thereof for new startup businesses.
We all have the success ratio of business failure seared into our brains. According to the U.S. Small Business Administration, 30 percent of businesses fail within their first year and around half of all businesses close-up shop within five years. Only a third of businesses will make it to their tenth anniversary.
There are a number of factors why so many businesses don’t succeed. The leading cause is lack of profits and funding, meaning underestimating how much money is needed to fund a business. Does this mean that you should give up on your dream? Absolutely not. But you need the proper tools, resources and mindset before jumping feet-first into your new adventure.
Starting a business, 101.
Starting a business isn’t easy — though it seems like it’s effortless when accomplished entrepreneurs share their success stories. We hear about founders who seem to quietly buy a website and turn it into a million-dollar business. In reality, starting a business involves careful evaluation, planning and several financial and legal activities. Let’s quickly recap the steps you’ll want to take before launching your business.
Evaluate yourself: When thinking about what steps you’ll take before launching a business, consider what skills and expertise you already possess. As you examine what you’re passionate about and the lifestyle you want to live — pause ask yourself, “Why do I want to start my own business?”
Brainstorm business ideas: Begin thinking about what bothers you in the business sector and how you can fix it. Maybe you have the knowledge or expertise to improve an existing business idea. Are you aware of trends and find yourself always thinking ahead of the curve? Do you possess skills that you can apply to a new or existing industry? These questions will help you brainstorm additional business ideas.
Conduct market research: Market research will let you know if there’s an opportunity to make a decent profit in differing areas. Extensive exploration and analysis of your market will help you determine what gives your idea a competitive advantage over other similar fields and industries. If possible, give potential customers a chance to interact with your product or service so they can provide feedback to you.
Write your business plan: Your business plan is a blueprint that will guide you throughout the life of your business. In a nutshell, it should discuss the purpose of your business, who your customers are, your long-term goals and how you’ll finance your business.
Make your business official: There are clear-cut areas to have locked down for a solid business:
- Determine the structure of your business (LLC, corporation, or partnership).
- Give your business a name.
- Registering your business in your state and also federally.
- Obtain a state and federal tax ID.
- Acquire the proper permits and licenses.
- Open up a business bank account.
- Register for trademark, copyrights, or patents.
- Be sure to get legal advice where needed.
Pick a business location: Thanks to technology, it’s possible to start a business remotely right from your home. For brick-and-mortar business ideas you’ll want to think about demographics, accessibility, proximity to competitors, and the cost of rent and utilities.
Finance your business: How will you finance your business? There are numerous ways you can cover the economics of your new business including saving up the money and funding the business yourself. Many ask friends and family for help or obtain a grant or loan. Other options may be crowdfunding, trading equity, or working with Angel or Venture Capitalist investors.
Develop and improve your product or service: Seek frequent feedback from your target audience to determine what they like and what they don’t or won’t accept. Hire specialists who can help you turn your dream into a reality.
An essential ingredient for a winning business is your mindset.
Unlike becoming a doctor, electrician, mechanic or lawyer — there are no standardized tests or certification to announce that you are now prepared to become a business owner. Even an MBA is woefully underwhelming in its claim for business preparation. While there are always classes that business owners will find useful, finding the right ones may take some time.
Your university can give you the classes or courses, and the information you desire in essential areas such as accounting, marketing agency basics, finances, etc. However, the fact remains that as a business owner, you’ll need to develop the right mindset.
No matter how educated, experienced, or passionate you are — having a winning business mindset will help you. Your mindset will make a difference in how you conduct your business and make personal decisions. Mindset determines how you keep yourself up, happy, motivated and driven.
The entrepreneurial equation.
According to Carl Roth in her influential book “The Entrepreneur Equation,” here are ten mindsets that every entrepreneur should develop before starting their own business:
Assess your motivation: Yes — it is your business. But, you will have to answer to customers, partners, lenders, and investors.
Evaluate how you work with others: Even if you’re a solopreneur — you still will have to work with other people — such as accountants, lawyers, customers, and freelancers. You will want to work together seamlessly with everyone you can in your new business; strengthen your communication and people skills.
Know your responsibilities: Starting and running your own business is a 24/7 job. Know how that’s going to affect your personal life.
Sharpen your management skills: You need to know how to manage your team so that they can be more productive. Additionally, you’ll need to know how to interact and work with vendors and suppliers. Having experience in your industry could assist with this.
It’s not what you know, but who you know: Take stock of your network of professionals. Think about people who can connect you with differing business services — like lawyers, as well as investors and lenders.
Be honest about your relationship with money: Financial management can make or break your business. If you’re a careless spender, then you’ll probably have cash flow problems. Get control here first — or you’ll be spending more than you’re bringing in.
Assess your personality: Being a business owner means that you need to be flexible and prepared for the unexpected. If you get extremely stressed when things don’t go as planned — running your own business won’t gel with your personality type.
Examine your competitors: A close assessment of your competition allows you to determine what makes you different and how you stand out from other businesses. This information and analytical thought can be used to build your brand.
Test your scalability: Successful business owners do not do everything on their own. They rely on automation and delegation. If your business sinks because you’re not around — then use your skill to have a successful career. Better a successful path of achievement than remaining a failed business owner, though you may “get” to have this passage under your belt, too.
The best entrepreneurial guides and resources.
Starting and running your own business is no easy task. You work a ton of hours, have to face financial uncertainties, and you’ll be putting out numerous fires. To make matters worse, you’re probably doing all this work by yourself.
The goods news is that there is no shortage of guides and resources that can lend you a hand in starting and managing your business.
US Small Business Administration: The US SBA is a go-to resource for business owners. Here you can find most of the information you will likely need. You’ll learn how to write a business plan, structure a business, register a company, and apply for a permit.
Entrepreneur: Entrepreneur.com is a well-respected publication that shares advice on starting and growing a business. Daily publishing guarantees the popular and up-to-date articles and guides that discuss everything from marketing agency to taxes to productivity.
Funding and financing.
How to manage money: Evergreen Small Business provides advice on how small business can keep track of finances.
Legal: LegalZoom allows you to incorporate your business and is affordable.
- Rocket Lawyer lets you create legal documents and ask lawyers questions.
- Nolo has business forms, as well as guides on how to structure your business.
- Atrium is a new upcoming law startup that helps small businesses. Help with everything legal.
- YEC can help you with professional networking. EO for the more seasoned entrepreneur. Be willing to help others.
- Business Networking International (BIN) can help you get referrals by connecting you with other businesses in your community.
- SCORE is an organization that pairs businesses with volunteer mentors. This institution helps business owners develop and grow their business. There’s also online resources and online courses.
- LinkedIn Small Business requires a membership. Once joined, business owners can use LinkedIn to connect, promote, and network their business.
- Volunteer Match can locate volunteer opportunities in your community.
- Your local Chamber of Commerce or Rotary Club.
The essential tools you need to start a business.
Finally, you need to use the right tools to help you grow and maintain your business. Thanks to technology, these tools are affordable, easy-to-use and can automate some of your most redundant tasks. While not an extensive list, here are some tools you should consider. I personally use each and every one of these tools and can speak to how amazing they are!
- Expensify can easily track your expenses.
- LivePlan can help develop a solid business plan.
- WordPress is a free platform to build a customized website.
- 99Designs is a great site to find designers for your logo or website.
- Fiverr and UpWork are excellent locations to find talented freelancers.
- Aweber and MailChimp can be used to generate leads and run an email marketing agency campaign.
- Hootsuite and Buffer automates your social media efforts, like scheduling posts in advance and engaging with followers.
- Due or QuickBooks can make your accounting as painless as possible.
- TurboTax lets you do your business and personal taxes yourself.
- Trello is a project management system that lets you assign and mentor tasks.
- G Suite is the foundation of your business and it comes with Gmail and Drive.
- HubSpot is an all-in-one marketing agency platform that comes with CRM and marketing agency and sales suites.
- Google Adwords and Facebook Ads can market your business online.
- Google Analytics provides demographic and behavioral information about your audience, along with which marketing agency efforts are working.
- With Calendar, you can share your calendar with others, as well as use machine learning to receive smart scheduling suggestions.
- G2 helps with all your company reviews.
- Intercom helps you to chat and market strategically to your potential customers.
- For customer service, use Survey Monkey and FreshDesk.
- LastPass remembers and stores all of your passwords.
- Keeps in touch with clients and virtual workers via Zoom, Lifesize, Slack and Skype..
- Gusto handles your HR and payroll needs.
There are so many variables you’ll face when building your new business. Go into your business knowing that you can do everything correctly and still come out on the short end — with a failure. There are things for which you can’t possibly prepare. Even those things will keep you up nights, they’ll provide you with experience for your next go around.
Get tough; go for your new business with everything you have and don’t hesitate. You will have many wins in building your business — but nothing worth doing is effortless.