Running a business can have a significant impact on your life and the lives of those around you. But before you can run a business, you must learn how to start a business.
Deciding to start your own business can seem like a daunting prospect if you’ve never done it before. Fortunately, many other entrepreneurs have, and you can benefit from the wisdom they gained from their successes and mistakes.
These 5 time-tested steps on how to start a business, be it your first or 10th, will help you with everything from finding and validating your idea to make money to determining your shipping strategy and finally launching your product or service.
“Success is not final; failure is not fatal: it is the courage to continue that counts.” – Winston Churchill
1. Find A Business Idea
Finding small business ideas is a task you can tackle consistently relying on time-tested approaches that have worked for other entrepreneurs. It doesn’t matter if you are looking to start a low investment business or prefer to bet on your idea, the best way to find a product to sell starts with asking questions:
What’s the potential opportunity size?
Entrepreneurs are often too dismissive of small markets. Yes, the size of the market should match your business ambitions, but the size of a specific niche opportunity is determined by a few other dimensions. For example, if a product category has relatively few active customers, but the price of the product is relatively high and requires buybacks, that’s an attractive opportunity that market-size-focused founders could miss out on.
That said, the costs to acquire any client are not exactly cheap these days. The best opportunities will come from product areas where you can encourage repeat purchases, either in the form of a subscription or through (eventually) upselling and cross-selling of complementary products to customers. That may come later, but keep the potential in mind as you explore the opportunities.
Business Inspiration: Daneson is a company that sells luxury toothpicks. The small size of the market will influence potential revenue, but as a specialty brand, targeting the right customers and acquiring them cheaply could result in Daneson owning the space.
Is it a trend, fad, or growing market?
The trajectory of a market matters more than its current state. If you want your business to go to the end, remember that not only is it critical to understand the demand for a category today, but also how it might evolve in the future. Does your product or niche fall into a fad, trend, stable or growing market?
- Fad. A passing fad is something that grows in popularity for a short period of time and fades just as quickly. A fad can be lucrative if your market entry and exit are perfectly timed, but this can be difficult to predict and a recipe for disaster.
- Trend. A trend is a longer-term direction that the market for a product appears to be taking. It doesn’t grow as fast as a fad, lasts longer, and generally doesn’t decline as fast.
- Stable. A stable market is one that is immune to bumps and shocks. It is not decreasing or growing, but it is maintained for long periods of time.
- Growing. A growing market is one that has experienced steady growth and shows signs of permanent or long-term market change.
What’s your competition?
What does the competitive landscape look like for your product? Are there too many or too few competitors? If there are many competing companies in your niche, it is often a sign that the market is well established; That’s good for ensuring there is demand, but it will also require you to differentiate what you offer (to some extent) to attract customer attention and build market share.
Read More: How to Do an SEO Competitor Analysis
Will there be any restrictions or regulations?
Before diving into a product category, make sure you understand the regulations or restrictions that will apply. Certain chemicals, food products and cosmetics may have restrictions not only by the country to which you are importing your products, but also by the countries to which you are shipping your product.
2. Choose A Business Name
What’s in a name? For starters, your business name is a universal facet of your marketing; appears everywhere. Word of mouth is pretty hard to win, so there’s no reason to make life harder with a boring, confusing, or irrelevant business name.
That said, the first few days to starting a business are fluid, with very little set in stone. Whatever name you come up with right now, it’s not the one you have to live on forever. Keep things simple and focused – Find a name for your company that makes what you do clear, is short and memorable, and aligns with your mission and vision statement. This is not an easy task, but it can be accomplished with a little ingenuity.
Name generators can help you come up with an initial set of ideas; the rest is up to you. If you’re starting from scratch, there are also some time-tested practices to lean on for directions. An appropriate and memorable name often has the following characteristics:
- Short and simple. A good tip here is if you’ve talked about your business idea before and people frequently ask you to repeat the name. Don’t make customers work to remember your brand. One or two words is ideal, although three or four short words can also work if they form a specific sentence. (For example, Storq, Star Cadet)
- Different. If your market research shows that everyone in your industry seems to have similar names or are based on similar elements, consider avoiding these tropes and veering in a completely different direction; many brands underestimate the marketing advantage of wild originality. You can always modify your name with your product category to combine the smart with the transparent too. (For example, Deathwish coffee, Beefcake swimsuit)
- Original. You will need to ensure that your business name is not being used by another business, especially a competitor. To do this, do a free trademark search in the countries where you will be doing business and be sure to check Google and social media sites as well. The same goes for URLs, so you should do a quick domain name search before registering anything. (If you’re still unsure, it’s best to consult independent legal counsel for advice specific to your business.)
3. Validate Your Idea
Until people pay you, all you have is a list of assumptions. Market research, surveys, and feedback from friends and family can point you in the right direction, but the calling card of real product validation is the sound of the cash register. So the first and possibly the best way to validate your product is to make some initial sales.
However, there are several ways to validate your potential idea as you develop it. Most focus on a single essential action: commitment. Let the first few customers get engaged in some way or fashion to show that, yes, people really are interested in buying this product and they are not just telling you what you want to hear.
This bias towards speed and experimentation can save you costly mistakes down the road. It’s such a simple and obvious tip that it’s too often dismissed – make sure you sell something that people want. Here are some ways to test the waters before diving.
There are other ways to validate your product ideas, but when in doubt, start selling as quickly as possible. There are downsides to moving too fast: If you rush and try to sell a product before it’s ready, all you’ll learn is that people don’t like bad products. But our experience is that most entrepreneurs wait too long to start validating their ideas.
Consider this: If you’re customer-driven, then trust your potential customers to guide you to the right product. No matter how smart you are, there is no substitute for direct, timely feedback from a paying customer.
4. Write Your Business Plan
Writing a business plan helps formalize your idea and can streamline the business-building process by getting you to sit down and think things through methodically.
And yes, plans are (often) worthless, but planning is everything. Many entrepreneurs say that they rarely look at their plan once they have launched it, but they will also tell you that it is valuable to think about and research your idea; writing a business plan is the perfect canvas for this exercise.
At the very least, you’ll quickly find out which questions you don’t have answers to. Having a firm understanding of your “known unknowns” is important because all it means is that you are not actively prioritizing finding a solution at this point; That’s far better than being unprepared or caught off guard, especially if you’re having a hard time answering these questions while looking for funding.
Note: If you’re interested in writing a business plan, but haven’t done it because of heavy paperwork, we’ve developed a sample business plan template that you’ll actually use. Thousands of people have made a copy to fit their own plan, and it’s completely free to use.
The day to day of getting your business off the ground will undoubtedly move in a much shorter time frame than the average business plan. And this is good; you need to know what you think, not what you think. But the initial draft of your plan is like charting a course to a planned destination. Along the way, things will change and the minute details of the original plan will become out of date. But if you don’t know where you are going, how will you know when you have arrived?
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The run-up to your business launch always has a certain excitement. Why?
Many entrepreneurs have told us that setting sail into the unknown is so exciting for them; In the planning stages, they have a lot of control, but once a company is in the world, it is now in completely uncharted territory. That’s not the most comforting thought, but the call to adventure is too strong to resist, so they answer the call, even when the voice in their head tells them otherwise.
That’s what we respect most about entrepreneurs: they are willing to leave a safe harbor to pursue their dreams. And while starting a business is not easy, you should not neglect a purpose that has not been fulfilled just because it is difficult to achieve.
Only out there, in the unmapped territory of your own personal growth, will you discover who you can become.