Things you should consider before starting your business
Entrepreneurship is both a rewarding and challenging endeavor. Whether you sell a product or offer software as a service or render a service to people, every day is a struggle to keep your business working and your customers happy. Unfortunately, the amplification of the stories of outliers in business has created a false narrative of entrepreneurship for many people.
Quite a number of people, especially young people in their twenties, aspire to start their businesses. However, the reality is that many of those who start their business will not be able to scale up to a point where they will attain financial freedom and work fulfillment.
According to the National Bureau of Labor Statistics, only 25% of new businesses make it to 15 years or more. About 20% of businesses do not make it to their third year. As an entrepreneur, strategic planning and data-driven decision-making can help you beat the odds.
Before you start your business, there are certain things you need to consider giving your business the best chance at survival. This blog post will explore some of these considerations.
Factors to consider before starting a business
There are many factors to take into account when starting a business to make it a success. Some of them include:
- Your motivation
Before starting a business, you need to first consider why you want to pursue this path. Entrepreneurship is not easy, and if it is not something you really want, you may get frustrated early on in the journey and quit. To save yourself the stress of investing yourself and your resources in something you cannot stay committed to, it’s important to consider all of this before starting down this challenging road. Your motivation for starting a business must be strong enough to keep you moving on difficult days.
- Your offering
Once you know why you are starting a business, you need to consider what you will sell. Choosing a product or service to sell is usually not as straightforward as it seems. Sometimes, your passion for a particular product or service is what drives your entrepreneurial ambition. While it makes sense to sell what you feel good about selling, as a business, not everything you offer needs to be of sentimental value to you. Sometimes, choosing the right product or service can be just about its potential for growth. Generate many ideas for your business based on your skill set and choose which one to run with.
- Your target customers
Before starting a business, you’ll need to figure out who you are selling to. There is no business without customers. However, sometimes the lines of who your core audience is can quickly become blurred. Many users outside your target demographic may also find your products or services useful. Still, you shouldn’t make them the focus of your business while ignoring your core audience, especially when it comes to marketing. No business can successfully cater to the needs of everyone, so identify your people. Pinpointing your target audience can be a bit technical, which is why you might need to hire a business analyst. A professional with a masters in business analytics from an institution such as Aston University can also help you identify your target audience.
- Your structure
There are different types of businesses. How do you want to operate as a business? Are you operating as a sole proprietor, or would you like to have business partners? Is the goal to list your business as a limited liability company? These are all questions you need to answer at the outset, as this will help you structure your business to support structural changes as you grow.
Marketing is how you introduce your business to your audience. Your marketing efforts directly impact sales and profit. You’ll need to have a solid marketing and branding strategy in place at the launch of your business, which can then be adapted as needed. This strategy should complement the type of business you run. For example, if your business is seeking to attract high-end customers, your marketing must build an aura of exclusivity around your offerings.
- Timing and competition
Many startups fail because they enter the market either too early or too late. Entering a market too early means that consumers are not ready for your product and will not pay for it. Decades ago, a business like Uber failed because no one wanted to get into a car with a stranger; with the improvement in GPS technology, services that rely on GPS could launch and be profitable. Is there infrastructure to support your business? You also need to consider who your major competitors are depending on the market you are trying to penetrate.
It is easy to ignore important calculations and financial considerations in all the excitement of starting a business. You must have enough capital or at least the potential to build a minimum viable product (MVP) that will help you get the investment you need to run your business. You also need to decide if you want to give up any part of your company for funding. Do you want to bootstrap, or do you want to get investors?
- Company culture and employees
Starting small, you might not have to worry about hiring immediately. However, you should still decide your company culture and employee policies. What kind of business do you want to be? What opportunities are available for your employees within the business? These considerations will shape the kinds of talent you attract and retain.
The location used to be everything in business, but not anymore. While some businesses are still location-specific, a physical premises is no longer a barrier to starting a business. You’ll need to consider if your business can function optimally online or if you need a physical space in a specific location to penetrate your market.
Careful and strategic consideration of the factors discussed above will no doubt help you prepare for starting your business. The most important thing is to get started. Do not procrastinate or allow fear of the unknown to hold you back. Remember, even if your business fails, you will have learned valuable lessons that will help you in your next venture.