No matter what you do and how much you earn, you must’ve thought of starting a business at some point in your life. Everyone has ideas, some of which can be pretty decent and worth the time and investment.
However, starting a business can be an intimidating task. It requires dedication, hard work, and sleepless nights. But above all, it needs planning and correct decisions. Here’s a step-by-step plan to launching your own company and making it a success.
Create a business plan
Quite predictable, you need to have a plan. Having an idea is one thing, but having a well-devised business plan is another story. In fact, entrepreneurs with a business plan tend to grow their business 64% faster than the ones who don’t have a plan in place. Startups with a plan are 30% more likely to secure a loan and receive investment capital.
So, how do you make a business plan? In a nutshell, a business plan is the written description of the future of your company. You outline your plans, what you want to do, and how you propose to do it. More detailed business plans cover the first 3 to 5 years of your business strategy. If you want to attract investors, venture capitalists, partners, or stakeholders, creating a business plan should be the first thing on your list.
You might have heard some people say that you don’t require any money to start a business. But let’s talk reality, there’s no way you’ll get yourself off the ground. Moreover, there’s no magic number when it comes to starting a business.
If you’re starting a construction company, you’ll require more capital compared to if you start an eCommerce business. For instance, a small startup with no equipment, overhead, and employee salaries, starting a business, may only cost $10,000. Others might cost millions.
Now, it’s critical to understand the source from where this funding is likely to come. Let’s take a look at some of the most common funding sources. These include:
- Credit and personal savings
- Friends and family
- Venture capital
- Angel investors
As you can see, most of the money comes out of the founders’ pockets. The cost of doing business can be more than some people might think. Therefore, your business plan should contain a financial plan, which includes:
- Balance sheet
- Sales forecast
- Cash-flow statement
- Profit and loss statement
And more than 80% of businesses fail due to cash-flow problems. These financial statements would help you determine the amount of funding you’ll need to get started. In some cases, you might end up discovering that the amount is higher than you initially anticipated.
Let’s take an app, for example. The mobile app market is a multi-billion-dollar industry, and making a mobile app can be a lucrative business idea for an aspiring entrepreneur. But even if you start a small app with basic functionality, it’s likely to cost you more than $50,000. And that’s just the development cost. Other expenses related to marketing, customer acquisition, maintenance will further add to the overall spending. So, you might discover that your startup, which you thought requires $30-50k, actually needs $100k to get off the ground.
But what if you don’t have a hundred thousand dollars? Don’t worry – your dream is still alive. There are plenty of options to secure funding for your business, but make sure you don’t end up paying hefty interest rates.
Small business loans make 22% of all business loans in the world. Banks are less likely to invest in a small business with no income or assets. So, instead of relying on banks, look for other investors. As discussed before, these can be your friends, family, venture capitalists, or angel investors. But be sure to proceed carefully and not give away significant equity of your company without even getting started.
The type or industry of your business also plays a significant role in securing funding. Here are the top companies in terms of funding obtained.
- Software and hardware – 51%
- Pharma and biotech – 11%
- Healthcare services and devices – 11%
- Commercial services – 5%
- Consumer goods and recreation – 2%
Hence, it may be easy to find venture capitalists if you’re in the software or hardware industry but difficult if you’re in consumer goods.
Get the right people
You can’t change the world on your own. You’ll need some help when starting your company. But the key is to get started with the right people. Thankfully, you don’t need a big team to get started. In fact, most startups start with a team of 2-10 people. Surely, you’ll need a manager and some staff to run a company. For instance, if you’re starting a small restaurant, you’ll need kitchen staff, managers, and servers.
Firstly, register your business name. Once you register your business, you’ll need to get a federal tax ID number from the IRS. This process can be cumbersome and often includes financial and legal activities. Unless you’re an expert in law and finance, you’ll need to have the following people;
- Financial advisor
Will your company be a sole proprietorship or partnership? And what about insurance? Several factors come into play when you launch a business. Once you’ve got the legal and finances converted, you can start hiring people for your company.
Build a physical and online presence
Regardless of the type and industry of your business, you’ll need a physical and web address. When it comes to physical locations, such as offices, shops, or manufacturing units, you’ll need to either by or lease a property. In general, leasing property for your business can be more expensive than buying. However, it is not possible for all startup owners to invest a significant portion of their capital in real estate. So, be sure to strategize your business plan accordingly.
You also need a website for your business. The world is going digital, and not creating an online presence for your business means you’ll lose on potential customers. The relevance of online presence increases if your target customers are searching for your services online.
A website can also be a secondary source of income. If you’re in the retail or consumer goods industry, you can sell online. If not, you can put ads on your site or promote other businesses to generate some extra money. But don’t make a website just for the sake of making it. Make sure it’s functional and gives your users a remarkable experience.
Start acquiring customers
Once you’ve built a foundation, it’s time to do business. Here’s where your sales and marketing team would come into play. If you can’t afford to hire marketers initially, become a marketing expert yourself. And it’s not that hard. All you need to do is learn a few digital marketing techniques, like:
- Content marketing
- Search engine optimization (SEO)
- Social media marketing (SMM)
- Email marketing
If offline marketing is more relevant to your business, traditional marketing methods might be more advantageous. These include:
- Radio advertisements
- Print advertising
If you’ve followed these steps correctly, you’ll start acquiring customers soon. Now, you need to make sure the customers stay with your brand. For new companies, acquiring loyal customers is a significant hurdle. So, activate your sales and customer service teams to ensure your customers stick with your brand.
Prepare for anything
You might do everything right, but still, there’s no guarantee your startup will succeed. More than 80% of startups fail every year and the ones that succeed face lots of ups and downs during their journey. So, even if your business is up and running, prepare for a zig-zag graph and not linear growth.
Launching a startup company can be life-changing. But it’s critical to understand that it’s not easy, and requires a lot of planning, paired with hard work and endurance. But while it’s not easy, you can succeed if you play the game the right way.