Starting one’s own business can be very exciting, but, at times, it can be a daunting and bothersome task. Starting a business is not a cakewalk. It requires knowledge on various issues like finances, legal, marketing, sales, human resource, among others. Still, we all are inspired, but the marvelous success stories of various billion-dollar companies like WhatsApp, Facebook, Airbnb, etc. For a successful business, one must plan ahead, prepare thoroughly, and adapt to the challenging and changing times.
Here is a stepwise guide for all the budding entrepreneurs out in the market
Refining the business idea
Those thinking of starting a business will have a general idea in which market they want to enter. Before entering any industry, it is essential to understand the needs of a particular market and trends. The quick idea is to learn what the current market leaders are providing and how you can provide better. The business can thrive if you choose to provide similar products faster and cheaper or deliver something that other companies can’t.
If you don’t have enough resources, then another option is to open a franchisee of a reputed company. Since the concept and business model are already created, it is easier to establish a business. Also, one will not be required to spend costs on marketing.
Creating a business plan
Once you have refined your business idea, the next big step is to create a well-defined business plan that answers questions like the purpose of business, end goals, finance of startups, among others. A major mistake committed by new businesses is rushing with a business plan without pondering various aspects like customer base. So creating a business plan is essential. Once it is created, you must check on the ground level if it works. This leads to the next step.
Creating a plan on paper can be very different from ground level work when you are implementing your business idea. The first and foremost step after you have decided to enter a particular field is doing research. Conducting in-depth market research is essential as understanding the client’s demographics is essential, and the key to a successful business. Market research can be done by conducting surveys, researching SEO, holding groups focused on your products and public data.
Market research helps in the following:-
- Understanding the demands
- Needs of the customer
- It also aids in understanding the behavior and preferences of the competitors and industry.
After conducting market research, one can provide unique products or services, which will, in turn, help your business thrive better.
Starting any business requires some finance. So it is essential to calculate and plan the financial capital required for starting a business. Since businesses don’t generate profitable revenue from day one, it is essential to arrange money for essential daily needs. You can either choose to borrow money or can get it from another person. So, finding out the startup costs will help you create a sustainable business. Most businesses fail as they run out of money before the startup can generate profit. So the easiest way to calculate the amount of money required is by performing a break-even analysis. Break-Even Point = Fixed expenses/ (Average price – Variable expenditures)
This formula will help you find the cost of starting a business & running it successfully in the following way:-
- Determining Profitability – It is the revenue or the money required to buy products and services, i.e., cost of the product and selling price. Thus it helps in understanding the profit & loss.
- Price – For a successful business, the selling price of the product plays a major role. If the price is too high people won’t buy it. If it is too low, the business will suffer losses. Before determining the product cost, carefully calculate the cost of the product without missing transportation or other miscellaneous costs, then check on the price offered by the competitors and then decide on a selling price.
- Analyzing data – You need to calculate the minimum amount of volume required to sell to make the business profitable. Also, by analyzing data, you can check the variable costs per item and improve sales.
When starting your business, don’t overspend on unnecessary things. If you are wasting your money on fancy equipment, it is better to wait. For a startup, you don’t know when you will need money for essential items, so it is better to save for the future. Luxuries can wait until your business is well established. Also, many businesses spend money on different kinds of equipment or machinery that they don’t know how to use. Sometimes, you don’t know if it is required or not before buying any machinery check out if it is really helpful for your business.
Choosing the bank suitable for your business
While applying for a loan, choosing a bank is essential. It is better to choose a bank that intends to build a personal relationship with the businessmen rather than big-profit banks that only care for their money, even if you suffer losses. It is better to choose small banks instead of big banks that check on credit score & are very selective to loan money. Small banks also help you in building a personal relationship with them, which will help you in the future if you miss a payment due to financial crunch. Decisions for small banks are taken at branches as compared to big banks, which are taken at a higher level hence increases the time for loans.
Finally, it is essential to think of an exit plan while coming up with your business plan. Having an idea of an exit plan keeps a check on you & helps you look into the future of the business. Even after planning, some businesses are unable to generate the required profits, so it is essential to have an exit plan.
The final word
In a nutshell, if one follows all these procedures, you will be more likely to succeed in your business venture. If the foundation is strong, a very durable building can be constructed; likewise, if you follow proper planning, the business will generate profitable revenues. Here’s wishing all budding entrepreneurs good luck!