Starting a business is the foremost way to become wealthy. However, 9 out of 10 businesses fail in the first five years.
Starting a business is no mean feat and it is even harder to keep it going. Therefore, you should seriously consider a few things before starting a business including:
1. The Business Idea
Every great business was once just an idea. Therefore, if you are thinking of starting a business, you should seriously consider your business idea.
The first thing you will have to consider is if it is a unique idea, otherwise it will be already done. The second thing you will have to consider about your business idea is if it works. Your business idea needs to solve a problem if it is going to work. Consider if you are passionate enough to transform your idea into an actual business.
2. Knowledge or Expertise
You will also have to consider whether you have the knowledge or expertise to convert your idea into a business. Moreover, do you have what it takes to start and run the business?
The way to answer that question is to come up with a business plan. You will have to do a lot of research and planning to come up with a viable business plan. It will tell you whether you have the knowledge to start the business. If you do have the knowledge and expertise to start a business, you can do it alone. If not, you will have to get some help to start the business.
3. Your Target Market
If you have a viable business idea and an adequate plan to get it off the ground, then it is time to consider whether there is a market for your business. The way to do this is to conduct market research. You should ask who would be best served by the solution that you are offering. For example, if you are starting a website design company in Leicester, then it should serve the residents of Leicester. However, it may still serve people in other places.
Conduct a market survey that answers questions about the market such as its size, growth potential, segments of the market, your target audience and what market share you can take.
4. Initial Costs
If there is a market for your business, then it is time to give it a go. The next consideration to make will be the startup costs of your business. Your business plan should include an accurate estimate of the capital you will need to start your business. You should not only consider the costs of starting the business but also the cost to keep it running.
There are businesses that have more startup costs than others for example a manufacturing business. Others will require less for example an online service business. The key is to have a realistic estimate.
5. Capital
Now that you know how much you need to start up your business, it is time to consider how much capital you can get. Financing your business is one of the most important parts of its life. Most people rely on personal savings to provide capital for their business. They may also borrow from friends and relatives.
You can borrow the capital from a financial institution. Getting investors to contribute capital is another financing idea. Technology has introduced other ways to get capital such as crowdfunding. The best option is to get long-term funds that will allow you time to develop your business.
6. Competition
Unless you are a state-funded monopoly, there is going to be competition for your business. You need to know who your competition is and what they are doing if you are going to survive in the industry. The competition will determine what share of the market you can enjoy. Moreover, if there are few barriers to entry into the market, you will find that you have a lot of competition.
The more unique your business is, the less competition you will have. Analyzing the competition will help you find out your competition’s strengths and weaknesses of which you can then take advantage.
7. Location
A crucial facet of starting a business is its location. Even if it is an online business, you will need a location from which to coordinate the business activities. Location is extremely important for brick-and-mortar businesses like manufacturing and retail. It will determine other factors such as utilities, taxes and transportation. It will also determine the availability of resources and labor as well as your competition.
The location of your business should be as close to your market as possible. You should ensure that you get a location that suits your budget but also allows for expansion.
8. Employees
All businesses including some sole proprietorships have employees. It is a serious consideration to make before starting any business.
You need the best employees for your business to be successful. If you are capable, you can hire the employees yourself. Otherwise, you may have to utilize various recruitment tools to get employees. As it pertains to employees, you will have to consider pay structures, human resource policies and firing processes. Finding employees you can trust with your business is the hardest part.
Moreover, you need to retain the employees you hire. You should hence consider the various incentives you will offer them to keep them.
9. Technology
Finally, you will have to carefully consider which technologies will aid your business. In the modern age, you absolutely have to use technology or your competition will surpass you.
You should invest in the best technology that makes your business run as efficiently as possible. However, you should ensure that it is well within your budget. You will have to first assess the requirements of your business and find out its technological needs. They may vary from simple office equipment to powerful computers. You will have to train your employees to use the technology. In case the tech breaks down, you should have support systems in place.
In conclusion, there is much to consider before starting a business. Starting a business is one of the most daring undertakings in life. If you can consider the nine factors above, you should have a higher chance of having a successful business.
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