Anyone can start a business, BUT not everyone will succeed in their business.
Whether you can not get a job, you have finally convinced yourself of the advantages of having a business compared to having a job, or have a revolutionary idea that could change the world. Whatever the reason you have to start your own business.
Each year hundreds of companies must close, while only a few survive the first 3 years of life and a minimum amount exceeds 5 years in the market.
There is no magic formula that guarantees success in business, however, there are certain points in which experts from the business world and successful entrepreneurs coincide as keys for an enterprise to become a large profitable and sustainable company.
“From the idea of working on your own to the growing business, every step of an enterprise is full of challenges.”
Below I share 14 key steps you must follow to ensure that your business is not one of the many that fail every year. The following guide will show you step by step how to start and do it successfully.
1. How to find a business idea and the reasons to start a business
If you already have your business idea, that is, you know what business you are going to put, you can move on to the next step, but if you still do not know it, the first step to start a business is to find a business idea.
Many entrepreneurs start their business only with the idea of making money and before the first obstacle they give up. The greatest entrepreneurs in history agree that money was not their priority at the beginning, and the reasons that guided them were passion, desire to excel and ideals to change the world.
Take a sheet and identify at least 3 reasons (in addition to making money) for which venture to open a business and take the risks that entails, once you have found these reasons you will always have reasons to move forward although the business profits at the beginning not the expected ones.
How do you develop a business idea?
Some best ways to find a suitable business idea that you can use are:
The perfect business ideas do not exist. Most of the entrepreneurs stay all their lives waiting for a profitable business and without risk, and finally never undertake because they do not have “the best idea”.
- Do not get stuck trying to reinvent the wheel, look for a simple idea and start, and then you will give shape as you progress.
- Find an unmet need in consumers, and then think of a product or service that you could satisfy it with.
- Think of a product or service that others do not offer, and that due to its novelty and innovation, could create a new need in consumers.
- Identify a product or service that others already offer, but that you could add something that differentiates you from them or make it better.
- Go to company directories or sites dedicated to entrepreneurs on the Internet where you can get ideas that inspire you.
But whatever the case may be, it is advisable that you choose a business related to what you consider to be your passion in life, since only then can you have enough motivation to take it forward despite all the difficulties you may encounter in the path.
2. How do you evaluate a business idea, to know if there is a market for your business?
Before going further, it is recommended that you conduct a small and informal market research that lets you know if your idea could be successful, that is, that allows you to have a preliminary idea of the feasibility of your business.
To do this, you could visit places where products or services similar to the one you are offering are offered, and analyze if there is enough demand for them, or see how many similar businesses you think you create, and analyze how competitive they are.
You could also choose to ask your family and friends for their opinion about your idea, or make a quick estimate of the resources and knowledge you would need to put it into practice, and analyze if you have them or are able to acquire them.
3. What is a business environment?
The environment to put your business must favor it. In this sense, check how is the economic situation of your country (there is a lot of inflation, are giving credits for business, there are financial support from the government), the social situation (that is, if there are more poor, richer, which segment of the population is growing), the legal (your business is legal, there is some law that may affect it) and the market situation (there is a market for your idea, there are similar businesses).
4. What is the definition of competition in business?
Here you have to see if there is competition for your idea. It is a bad sign that it does not exist, since it can mean that there have been similar businesses that did not work and closed, or that it is not feasible.
Open the yellow section and check who your competitors are, where they are, what they offer. Go and enter your place with the eyes of a client, and see what positive and negative things you see.
5. What are trends in business?
Check if your idea can work in the next few years, or if you are setting up a business that is already in decline. This is checked through the internet. Look for suppliers, if there are association websites, if there is little competition, if you are talking about it in the newspaper. These are good signs that your business and your business idea are viable.
6. How do I name my small business?
After having concluded that your idea has the potential to succeed, you could start by taking one of the most important decisions: the name of your business.
To look for names for your business you could look at the names of the competition and pay attention to the ones you like, or go to business directories on the Internet that are the same type as yours, where you can find names that serve you inspiration.
And then, to choose the right name, you should take into account especially your personal tastes and the implications in the marketing that you may have (that generates a positive image, that communicates what your business is, that is easy to pronounce, etc. ).
7. How to increase small business profits?
After choosing your business idea and name, now follow one of the most important steps: Define the business model. This task requires all your concentration, you must take a page and answer:
- What is my product or service?
- Will I make the product or just market it?
- Who am I going to sell to?
- What medium will I use to take my product to the customer?
- What has my product that does not have that of the competition?
And any question related to how you are going to develop your business idea.
8. How to make a good business plan?
The preparation of a business plan is one of the most important steps you must take, since this will allow you to check the feasibility of your business, it will serve as a guide to start and manage it, and will allow you to demonstrate the attractiveness of your idea to thirds.
besides, it is a great business paradigm, most of the entrepreneurs develop them without even having the slightest idea of their usefulness.
Check out: Top 25 Business Startup Ideas in UAE
A business plan allows you to organize your idea and simulate its performance in the market, but BEWARE, do not waste too much time making a plan, just try to organize a good document (as short as possible) and go from plan to action without think twice.
In addition, the business plan is essential when you do not have your own capital to undertake, most sources of financing will want to know your business in detail.
In summary, the sections that your business plan should have are:
- Business definition: the basic data of your business, the description of this as well as the product or service that you are going to offer.
- Marketing plan: the marketing strategies that you will apply once your business is launched.
- Plan of operations: the physical requirements necessary for the operation of your business, and the description of its process.
- Human resources plan: the description of your management team and the personnel requirement that your business will have.
- Financial plan: the calculation of the investment, the projection of income and expenses, and the financial evaluation of the project.
As a tip on this point, it is not necessary to develop a complex business plan of more than 200 pages that probably nobody will read, but a simple business plan that simply allows you to meet the objectives of it.
9. How to build a successful team?
Remember: “If you can meet all your goals alone, maybe they are not big enough.”
Find a team of people who are committed and passionate as you are for your project is not easy, but it is essential that you have the support and complement of a good team.
Experts recommend looking for complementary people, with ideals and thoughts different from ours. The members of your team should be positive and give you strength and encouragement when you feel like throwing everything away.
10. Options how to finance a startup business
In case the capital that you have product of your savings is not enough to cover the investment you need to start your business, the next step is the search for financing.
Avoid falling into the error of “over indebtedness”, at the beginning you will have to minimize the expenses as much as you can. In case you have to resort to the financial market in search of money, compare the different interest rates and take the lowest and the one that gives you payment facilities.
Remember that with a good business plan it will be easy to access capital from government support programs or private investors.
Some of the main sources of financing you can go to are:
- Family and friends: which could lend you money without charging interest and without putting so much pressure on you to have to pay back the money so quickly.
- Banks: the most used source when applying for a loan, but the most difficult to access in the case of new businesses, especially if you do not have a good credit history.
- Financial entities oriented to SMEs: which are more accessible than banks, but with the disadvantage of charging more interest.
- Investors: people who could finance all or part of your business, but with the disadvantage of having to pay them a portion of the profits forever.
Assuming a debt implies a great responsibility, so as a council on this point, you should take your time looking for the best financing alternative, and before requesting a loan make sure you will be able to pay it in a timely manner.
11. Legal constitution of a business
The legal constitution is a necessary step in the creation of your business, because it will allow you to be legally recognized and thus, among other advantages, qualify as a credit subject, and issue proof of payment.
At this time you should be especially careful with the legal issue, an issue that many entrepreneurs ignore.
In summary, the general steps you must take to legally establish your business are:
- Determine if you are going to constitute as a natural person or legal entity.
- Choose the type of company or society you will have (for example, EIRL, SRL, SA, etc.).
- Search and reserve the name you want for your business in public records.
- Elaborate and elevate the constitution minutes to public deed.
- Enroll public deed in public records.
- Choose the tax regime to which you will receive for the payment of taxes, and process the obtaining of your taxpayer code.
Legally establishing a business can be a tedious task, so at this point it might be advisable to go to centers or institutions that help you carry out this process at a minimum cost, and that you will surely find in your locality.
12. How to promote your business?
Promote your business in every possible way
You already have your business, it’s time for everyone to know.
Prepare all kinds of clever advertising to attract customers to your business. Flayers, banners, loudspeaker, advertising in media, etc. Everything is valid when it comes to promoting your business.
Do not forget to create your own website and accounts on social networks, the Internet is a very economical and simple way to attract customers.
13. Learn everything about your business
Knowing your customers, suppliers and competition will be fundamental to make your business competitive. You must listen to your environment, give your clients what they want, create mutually beneficial relationships with your suppliers and analyze your competitors’ strategy.
Attend business conferences and business fairs is another good training idea, in addition to books and seminars that allow you to acquire strategies to implement in your business.
14. Establish your growth strategy
Most businesses are stuck with a small portion of the market that generates enough money to subsist and maintain its owner, however, a true entrepreneur is not conformist and is always looking for ways to expand their business.
There are different ways to grow a business, but it is very important to have a defined growth strategy. Are you going to open new stores, or maybe you’ll sell franchises, make acquisitions, create alliances, etc.?
It is important that you determine these, so your growth will be sustainable and planned.
Remember that in the business world growing is not an option, or you grow or your business disappears.
Causes why people who start businesses fail
After having collected information from the SBA agency, read books on how to start a business and talked with other small business consultants and in my own experience I have found that there are many causes why people fail.
Here I mention some of them, the most general, since there are also specific causes of each type of business and even personal causes.
Among the most common causes we have:
- People have no idea that it is truly having a business
- They do not have enough experience in the business branch they start. Sometimes they start a kind of business because the uncle or the friend is doing well.
- They are advised of people who do not have knowledge and experience, or rather, they “advise badly”
- They rush to start because they let themselves be pressured by someone, like the one who is going to rent the place or who is selling the equipment or a franchise
- They do not have and do not calculate the money necessary to start and sustain the business
- They do not have money to live personally
- Do not create or have the money for an advertising budget
- They believe that with the opening of the door, people are going to snatch the products or services: they believe that with 1,000 flyers that put 300 people will arrive running
Over estimate sales and underestimate or miscalculate expenses
- They do not do a real investigation
And there are so many other causes as well…
These are some of the reasons why people should NOT start a business without consulting and preparing well.