written by: Jason Lewis
Tips for Starting Your Own Business
The decision to start your own business is a life-changing decision, but as with anything new, it may be a little difficult to determine where exactly to start. There is no set route for starting a business, but with a few tips, it will make things a little bit easier and clearer.
Do Your Research
After you’ve identified the product or service around which your new business will be centered, it’s time to do a little bit of research to discover how much potential your business idea has. According to The Balance, in order for a startup to be successful, it needs to solve a problem, fulfill a need, or offer something the market wants. When conducting research, Forbes says you should include various types such as interviews, surveys, questionnaires, and focus groups. Keep in mind that when you conduct research, not all of the feedback you receive will be what you want to hear. You might feel attached to your business idea and reluctant to make changes, but the point of conducting research is so that you can see what the market demand is like and adjust accordingly. When you begin the research process, consider basic questions such as:
- Is there a need for my product/service?
- Are there other companies offering similar products/services?
- What is my competition?
- How will I fit into the market?
If you need a place to start, consider using the U.S. Small Business Administration (SBA) tool called SizeUp. The tool enables you to input your business industry and city and provides a map of your competition. The map highlights areas of high and low competition, and provides you with competitors’ prices and performance. SizeUp can also point you to the areas with the highest annual revenue for your target industry, allowing you to adjust the results based on your target audience.
Consider the Costs
Starting a business takes more than just coming up with a great idea. Your new business will be dead in the water if you haven’t carefully considered the ins and outs of getting it off the ground. Spend time reading through as many resources on starting a small business as you can. Cost is one of the biggest considerations. You will need funds to take your business from paper to profit. Every business is different and will have its own unique funding needs at various stages of development. For this reason, there isn’t a universal method for estimating startup costs. According to the SBA, some businesses require a small startup budget, while others will necessitate a large investment in inventory or equipment, and possibly the purchase of a building to house the production.
To determine how much seed money you will need to start, estimate the cost of running the business for the first few months. Keep in mind that some expenses will be one-time only, such as the fee for incorporating your business or the purchase of a building sign, while others will be ongoing such as utilities, inventory, and insurance. As you identify costs, determine whether they are essential or optional. A realistic startup budget should include only essential costs, or those that are necessary to get your business started. According to Inc.com, it is helpful to place essential costs into two categories: fixed and variable expenses. Fixed expenses remain the same regardless or production level or sales, such as rent, utilities, insurance, and loan payments. Variable costs depend on changes in activity level or volume such as raw materials, sales commissions, inventory, packaging, and shipping costs.
Consider using a worksheet to list out all startup costs, but keep in mind that you may run across unexpected expenses. If you can’t come up with startup funds on your own, look into other options such as family, friends, loans, or grants. Research your options and go with what works best for your situation.