Hello all, today is an exciting day for myself as my 300th post falls upon my birthday. Since I was a child, I have had several business ideas floating around in my head, ranging from small apps to full-blown software applications. Whether I was interested in helping others fall asleep or finding new ways to provide environmentally-friendly goods and services, I have always been interested in creating something that can help others (and make a profit, of course). As I am finally getting near the point where I can start actually making my first baby-steps in the path of entrepreneurship, I decided to start the process by doing what I do best, research. Here is a collection of best practices, helpful suggestions, and above all, the motivation you need will need to make your mark on the world.
- The Idea (and why so many of them fail)
Here we have the single most valuable (and sometimes hardest) step in this process; an idea can be worth billions if adequately nurtured. Some helpful ideas for finding a concept for your project, side-hustle, or startup, are to locate a problem you can solve, be a solution (not a hindrance), keep it simple, count the costs, know the legal requirements, and above all, do what you love. The vast majority of startups and small businesses fail, even with their owners believing their idea is the ‘next big thing.’ Why does this happen you ask? More often than not, failures occur due to problems arising that could have been prevented beforehand, focusing primarily on building and not customers, and not adapting a business plan to the guaranteed turmoil caused by its first contact with the market.
- Business Plan
Even if you have an entirely new and sophisticated idea for a company/product, it is pretty much worthless without an equally as advanced business plan. A business plan is pretty much a written description of your company’s future, outlining what you desire to do, how you will do it, and what you can expect for results. Keep in mind, business plans should outline at least 3-5 years of your company’s growth. Be sure to add extensive details pertaining to how you will acquire funding, how long it will take pay off your loans (become profitable), how and when you will introduce new products/services, how many employees you will be hiring during each stage, and above all, what your end-goals are (branching off with different brands, selling the company in a buyout, or funding/partnering with other startups).
- Hope for the Best, Prepare for the Worst
Similar to any investment, becoming an entrepreneur is highly volatile. You should expect there to be just as much chaos and setbacks during the initial funding stages as there will be during each step of the process. While you will undoubtedly run into numerous issues, do not let these speedbumps become roadblocks; this is where the business plan comes into play. For example, say you secure funding for the initial purchase of a small office through a bank and a government-provided grant, and then find out that the government-provided grant will only go into effect on your second financially-secure year. Hopefully, you have already planned for this to happen in your business plan and communications with your bank, and have allotted some of your savings to be used, angel investors, or even crowdfunding options to make up the difference. Things that can go wrong, will. Do not be discouraged, instead, be encouraged to adapt and overcome.
- Limit Fixed Expenses
In the beginning, limiting your fixed expenses is the key to longevity. While that ocean-side office would be quite fitting to your taste, that funding could instead be used to, for example, hire an in-house accountant that can, given some time, put you in that nice office when you can actually afford it. Outsourcing non-strategic aspects of your business is another excellent method to limit expenses. We are living in an age where technology can automate many avenues of business, from intelligent e-commerce platforms to social media outreach programs. By using the latest automation and software technologies, you can reduce your in-house personnel and attract investors, both contributing to your scalable business model.
One of the most influential aspects of the success of your business will be funding. While you may have enough money saved to start the company (most won’t), you will still likely have to acquire outside funding at some point in your journey. Determining how much money to ask for is critical, as too much or too little can be risky. Many will say that attempting to raise as much money as you can is best, but forget that the money will have to be paid back at certain frequencies, amounts, and with interest (which might not coincide with your profit margins). When investors pay you, they expect to be able to see how you will spend their money, how long it will take for you to generate a profit, and how you plan on scaling, adapting, and pivoting your business models to the always changing world of economics. There are several ways you can achieve funding, ranging from bootstrapping, self-funding, credit cards, SBA (Small Business Administration) loans, angel investors, venture capital firms, and crowdfunding. Whichever method you choose, be sure you know both the risks and rewards.
- Time is Money
As you navigate through the many hurdles and challenges you will face, one thing will be apparent, your time is precious and very valuable. With only 24-hours a day, 8 of which are (hopefully) spent sleeping off your intense workload, every minute of your day needs to be scheduled appropriately to maintain the peak operating conditions of your company. It is wise to hire an assistant to help you make the most out of your time, and this can be achieved by using an intern (who would be more than willing to forgo a salary in place of experience). Every second you spend not helping your company should be minimized. Implanting the mental image of you holding a lighter to a wad of cash should be a great motivator to not take that long lunch, and instead take a stroll down the office to each employee’s desk, asking them about their thoughts of how the company is doing, what ideas they have, and above all, creating the essential business relationships that any company thrives on.
- Finding the Right People
The cornerstone of any company is the people, not the product. Early on in your business plan, you should have some idea of the type of people you wish to hire for each department, stage, and new development of your design. In my opinion, a cost-effective and guaranteed way to find fresh, intelligent help is by going to your local college. While older generations might have the experience and years that are attractive, those in college are currently soaking in all of the teachings from their professors, and merely want a chance to prove themselves. Furthermore, businesses today rely on platforms such as social media and advertising. To find an employee who is both able to expand your company’s community outreach and ready to accept a lower salary, look no further than that senior about to graduate with a degree in digital marketing; the relationship between you two will be mutually beneficial, I guarantee it. Be sure to remember that a smaller staff with higher-skilled employees is far more superior to a larger team with lower-skilled employees (quality over quantity).
Whether your business will be a new app, online product, or a service, having a physical location of your company is a must; while this could merely be a small office (if your products are online-only), it is critical to have a hub for your operations. Typically, leasing a property can be more expensive than purchasing, however, be sure to know your company’s potential growth so you can choose a location that can be scaled with your business. When deciding where you will set up shop, remember to thoroughly research different locations (demographics, economic characteristics, and other companies in the area.) Also, contact local councils to find out about planned developments in the area, zoning rules, and rates. Finally, knowing where your competitors are/will be located can make a significant impact on your ability to succeed. Do your homework, pay attention to both current and future statistics, and be proud of the location, no matter the size.
- Customer Acquisition
Simply put, without customers, there is no business. During the creation of your business plan, you should have outlined your methods for both finding and securing customers, as well as expanding. By identifying the channels you will use, working on optimization to lower product costs, creating a strong customer service department, boosting your customer’s interaction with your company, increasing your social media presence, developing new deals, products, holiday specials, and even donating to charity/supporting a local children’s sport team, are all proven methods to not only supercharge your customer base, but develop loyal, returning customers.
In today’s day and age, every business should have a dedicated website. While the site does not need to be overly extravagant, you should have some way for a customer to look you up, contact you, or purchase your goods. Creating a website is indeed quite simple, as there are many free domains and editing programs out there. If you are not so tech-savvy, hiring an outside or internal web developer is a great way idea to initially create the website (although I would recommend you watch what they do so you can learn how to do it yourself).
- Social Media
Today, social media can be both an advantageous channel of communication/promotion, or your worst downfall. While it is recommended to at least create an account for your company on each social media platform (Facebook, Instagram, Pinterest, Twitter, etc.), it is critical to understand the complexities of using these channels. By using social media, your business, products, and services can be advertised (quite well if I may add) to a large population, opening up the possibility of gaining new customers. Be warned, however, that the wrong content, offensive material, or a general lack of style/creativity can be disastrous for your company’s image. When in doubt, opt out. Hiring someone to help manage your social accounts is a great way to produce new content continually, open up communication/customer service channels, and ensure your material is always relevant with all ages, politically correct, and above all, free of spelling mistakes (it matters).
Unless you pay someone else to do it, you need to become a marketing expert. Even the best product/service in the world will amount to nothing if nobody knows about it. Get familiar with all forms of digital marketing, such as content, affiliate, email, SEO (Search Engine Optimization), SMM (Social Media Marketing), SEM (Search Engine Marketing), and PPC (Pay-Per-Click) advertising. Additionally, some of the older methods of marketing still have its uses, such as print, radio, television, and billboard advertising. Diversifying is always a good thing. Be sure to keep track of the metrics and data from your advertising campaigns so you can understand which performs the best, your average customer age, the peak hours of website hits, and what your CPM (Cost-Per-Thousand-Impressions) is; this data will provide you with where you should spend the most money on advertising, who to advertise to, and what you can gain from it all.
- Customer Base
By now, you should have completed all the steps necessary for starting your business and obtaining customers. Through your website, advertising campaigns, and social media presence, new clients and customers should (hopefully) be streaming in, and while getting a customer to make a purchase is a significant first step, the real challenge is to keep that customer coming back to you. Having numerous skilled and friendly customer service agents is an excellent way to both increase customer satisfaction and strengthen the likelihood of returning customers. A unique method to achieve a high customer satisfaction rating is with the use of a customer service software platform, such as Zendesk. Through one online portal, your customer service agents can view orders, chat with customers across all platforms (email, website, social media, eBay, Amazon), and quickly and intelligently respond to tickets. Another great method to create returning customers is email campaigns. After a purchase is completed, you should have an automatic email sent to the customer, asking for a rating of their time spent on your website (or other platforms), and then frequently send them updates, deals, and information on new products; Mailchimp, an online marketing website, can provide you with these abilities, and more.
- Cash Flow Management
Running out of money is never a good thing (shocking I know); to help prevent this, you must understand where every dollar is both coming from and going to. Failing to understand and manage costs such as location, rent, supplies, marketing, healthcare, and advertising can quickly end everything you have worked for. I would recommend either implementing a sophisticated financial software/website, hiring an accountant, or developing an excellent relationship with your bank account’s advisor. Furthermore, be sure to always have money set-aside for disasters, lawsuits, and other potentially problematic events.
- Stay Fresh
Finally, a stagnant company is one or more steps away from a failing one. As your business plan continues, be aware of changing economics, new marketing opportunities, and develop new products and services. Never stop learning. For example, failing to find out that a local business near you is closing (and might be bought by a sanitation company to store chemicals) can be disastrous to your business (if you’re a restaurant which features outside dining). A brilliant method for staying fresh is by hiring new employees, thus bringing in new ideas and perspectives. Furthermore, depending on success, expanding and scaling is necessary to attack new markets, increase storage capacities, and add new personnel. Creating new branches of your business, either by partnering with other companies or creating new products/services that you wish to separate from your current business model, are both outstanding methods to ensure that your income is constant, reliable, and diversified.
Becoming an entrepreneur and starting your own company is no trouble-free process, nor should it be; after all, if it were simple, everyone would do it (more competition for you). So, accept the hardships you will encounter and hopefully, with the help from this post, you will be on your way to creating your startup. Hope it helps!
Categories: Random Thoughts