Do you want to be an entrepreneur to obtain the freedom to live without a boss breathing down your neck? Or, do you hope to bring in extra money as soon as possible? Finding the reason you want to venture off and start a business will help you identify what kind of business you should open. Once you find your motivation, discussing the move with your family and friends is something that can help set a foundation for support. After you have narrowed down the reason for your interests in entrepreneurship and you’ve had the conversation about your transition into business with family and friends, it is time to evaluate yourself to see where you stand. Jotting down the answer to these 10 questions will help establish a foundation for your journey:
Are you a self-motivated individual?
Do you work well in a team setting, or do you prefer solo work?
What are your hobbies and interests outside of business?
Are you creative?
Are you comfortable with outsourcing?
Are you comfortable losing your entire investment?
How much capital do you need to get your startup off the ground?
Do you anticipate needing financing?
How do you see your lifestyle in 10 years?
Where do you feel you excel in the realm of business?
Using all of the information that you gathered about yourself in step 1, you have most likely narrowed down the type of business you want to start. Keeping the answers from the previous question in mind, answering these next 4 questions should lead to a solid business idea.
• Can you save people time and effort? – The most impactful inventions throughout human history have been those that work to save us time and effort. If your business can save your community time or effort, history says you have a great chance to make a difference.
• The Future? – Look around you, where do you think society is headed? This has proven to be a billion-dollar question time and time again. With that said, it is easy to get lost in the idea that the future involves heaps of technology so therefore you must be tech-savvy to leave a mark. While a background in tech can propel you past your competition, merely changing a long-running concept can be futuristic. Think Air Bnb and Uber.
• Can you transfer it? – Think back throughout your work history and your education. What skills did you learn? What areas do you excel in in your current job? Pinpointing your current skillset can open the door to apply them to a new field.
• Can you streamline it? – As a businessman or woman, focusing on making a product or service quicker, more affordable, and higher in quality is a sure bet in starting a successful business.
Every business has a competitor, and some even have partners. When entering the realm of business, thinking aggressively is a must. Identify your competitors and follows the steps below to begin your first round of market research:
• Define your objective – Set goals and be specific. This is where you will decide what you hope to discover in the conclusion of your market research. In other words, what are you looking for?
• Decide on your research design – Now that you know what you are looking for, this is where you decide how you are going to find it. If you are hoping to assess the public opinion on a competitor’s product, the method that you use to gather that data will be your research design. Will you administer a public opinion poll or collect data through forums and reviews? The choice is yours!
• Design and prepare research tools – In this step, you will build and perfect data collecting research tools. This may include building surveys or charts, or even tedious work like writing thank you cards or distributing gift cards to your research volunteers.
• Collect the Data – Stick to your research design, deploy your tools, and collect the data needed to conclude your first round of market research.
• Analyze the Data – In this stage you will comb through the data with the intent of leaving nothing behind. Dissecting and applying the data correctly will decide if your market research was successful or not.
• Reach a conclusion – After analyzing the data, apply what you found to the objectives and goals that were set in step one. Depending on your goals, your findings can help with things like identifying customers, determining market size, and much more.
There is no better time to write a business plan than immediately after completing market research. Since market research is a very analytical and data-heavy subject, keeping the same tone and writing your business plan can help keep you organized. Instead of having to digest and store a lot of the numbers you discovered in your research, you will be able to put them to use right away. Business plan outlines can vary depending on who is writing them and who is reviewing them. To get you started, here are the nine traditional sections of a business plan.
• Executive Summary: This should be a brief but powerful summary of what your company does and why you will be successful. This section should include necessary information such as location, your product or service, financial information, mission statement, and appropriate projection plans when asking for financing.
• Company Description: In this section, you will go into detail about the problems your business solves, consumer information, and businesses that you will work with. After that foundation is laid, you can explain the competitive advantages that your company has in the market.
• Market Analysis: All of the information you discovered in your market research can be laid out here in a systematic manner. This section should analyze the market that you’re in as a whole, and then go on to explain how and where your business fits in. This includes competitive analysis, the practice of analyzing the available data from your direct competitors for any trends that may be useful.
• Organization and Management: Here you will go into detail about how day to day operations will be ran in your company, and who is going to run them. This section should always be based around the legal structure of your company.
• Product or Service: Go in depth about what you sell or provide for your business. Explain how much it costs per unit, go into detail about any other associated costs like packaging, and outline plans for patents and copyrights.
• Marketing and Sales: In this section, you will go into detail about your plan to attract, convert, and retain customers. You should describe how transactions take place, your plans for marketing, and any other information associated with getting and keeping customers in the door.
• Financial Projections: For an established business this section will be full of balance sheets, income statements, and more. If you’re a new business your goal will be to communicate the financial literacy of your company, and the mathematical reason why you’re idea is profitable.
• Funding Request: If your goal is to obtain funding, a crystal clear funding request section is a necessity for your business. Be clear about how much capital you are asking for, how you plan to spend it, how that investment will impact the cash flow for your business, and provide future financial plans in great detail.
• Appendix: Your appendix will be used for any requested or supporting documents that may help legitimize your business plan. These documents could include resumes, product pictures, permits, patents, and much more.
Now that all of the preliminary steps are done and you have decided that you’ve made the right choice, it is time to register your business. Registering your business is not only a legal requirement, it plays a big role in protecting you throughout your endeavors. Run through this list, and you’re good to go.
Pick a business structure (S Corp, Partnership, LLC, Non-Profit, and more).
Pick a business name.
Register with the secretary of state.
Get your EIN.
Get your Tax ID.
Apply for any permits that you may need.
Apply for any licenses that you may need.
Get a lawyer for trademarks, patents, and copyrighting.
Now that your business is a legal structure, it is time to get to work. Product and service development should be done meticulously and may include outsourcing. You will cover everything from manufacturing to distribution. Here are a few things to focus on when developing products or services:
• Find a good manufacturer: Sustaining a business takes balance. If you are searching for the cheapest materials possible to comprise your product or service, the quality will show. However, overspending can stop a business before it starts. The key here is to find a manufacturer that works with your budget but also leaves your with a good enough product to make your customers happy.
• Spread your wings: Outsourcing can be stressful, but it can be detrimental if your single 1099 falls out. We suggest also having a backup contractor to fill in in the face of an emergency. Keeping your options open can save a project for failing.
• Don’t let go: Even when outsourcing, maintaining complete control of your product or service is essential. Be sure to keep a watch over quality every step of the way.
Outsourcing is excellent, but dividing everyday responsibilities up throughout a management team will really free up some time. Different startups need different personnel. Due to this, there is no clear-cut standard when building a team. With that said, there are two general rules to follow:
• Communicate company standards immediately: Finding a way to communicate the standards and expectations of your company to your employees as early as possible can help shape your work culture. Employees do not like to be bossed around, but they do appreciate solid direction from a good leader.
• Abide by the law: Hiring an employee comes with plenty of legal ramifications. We suggest sitting down with a lawyer and discussing your new responsibilities, and any options that may aid you as an employer.
Prime locations come with a prime price tag, but, what makes a prime location prime? Below is a list of the top 10 things to consider when choosing a location for your business:
Style of Operation: Your locations look, and feel should match the trajectory of your company.
Demographics: If you want to know where to set up your business, find out where your customers are. Setting up shop next to a place where your target market frequents can be a great business strategy.
Foot Traffic: The more people that walk by it, the more people that will come in.
Accessibility and parking: Do your customers have ample parking? If they do, do they know how to get to your building? Ease of access can be the difference between a business thriving and failing.
Competition: Do what the numbers tell you to do. If the market is saturated, move. If you have a tremendous competitive advantage, squeezing your competitions customer base may be a good strategy.
Proximity to other businesses and services: The business next door may just bring in an entirely new customer base for you. Have you ever wondered why you see the same corporations positioned next to each other all over America?
Image and History of the site: Look into how previous businesses have faired in the location. It may be vacant for a reason.
Ordinances: Ordinances can control where you set up and when you can conduct business. Make sure you do your research and abide by the rules of your county.
The Buildings Infrastructure: If your building is old it may not have the equipment needed to support tech-heavy businesses. Make sure your building has what you need built in it. Renovations get expensive, fast.
Business comes down to one thing and one thing only; sales. This is the time to put all of your hard work together, open your doors, and convert a few sales. In hopes of making day 1 a bit easier, here are 10 pricing strategies you can follow to increases your chances of converting a sale.
Similarity Can Cost You Sales: A customer is much more likely to walk away from a purchase if two items are priced at the same price point. In a recent study, 54% of customers chose not to purchase gum when two packs were at the same price point. In the same survey, 77% of customers went on to buy gum when the two price points were different.
Utilize Price Anchoring: The concept of price anchoring is relatively simple; shock your customer with the pricing of item one, and the pricing of item two looks much more appealing. “What’s the best way to sell a $2,000 watch? Right next to a $10,000 watch.”
The Secrets of Weber’s Law: Learn more on how Weber’s Law applies to business here.
Reduce Pain Points in the Sales Process: Learn more here.
Try Out an Old Classic: We see it all the time, and yes it works. End your prices with the number 9 and research from the journal Quantitative Marketing Economics says sales will increase.
Emphasize Time Spent vs Saved: Studies show that customers value time. If you market your product as something that will be used when they spend time doing something they like, chances are your product will be purchased and well received.
Never Compare Prices Without A Reason: Comparing prices without context has been proven to have an ill effect on customers. After all, if you spend all day bragging about your low prices, it is only natural if quality comes into question. Only advertise price when the context is right (a sale, etc)
Utilize The Power Of Context: Studies show customers are comfortable paying different prices for the same item depending on the overall setting. For example, an $8 hot dog is acceptable at a baseball game. However, $8 for that same hot dog at a ran down corner store is too much. The context changed, therefore the perception of the price went with it.
Test Different Levels of Pricing: Total price, pricing options, payment options, test the waters until you find a formula that suits your customers.
Keep Prices Stupidly Simple: Studies show that doing something as simple as removing a comma from $1,000 to make it $1000 has a drastic effect on price perception. Keeping the formatting of your pricing simple will benefit you in the long run.
Once you’ve built a solid foundation, managed to drive sales, and you have a supportive customer base, it may be time to grow. The question is how? Fortunately, the answer to that question is subjective. When scaling your business the most important thing to do is make sure that you’re prepared for what is to come. Make sure your infrastructure can support a spike in business. Along with that, make sure you have enough to pay employees overtime, order more inventory, and handle any surprises that come along the way.
Applying these 10 steps to opening a business will save you time, money, and a vast number of headaches. If starting a business seems more exciting now than it did before you read this, you are cut out to be an entrepreneur!