Entrepreneurs who have a great business idea that they want to turn into a brand-new business can sometimes get a little ahead of themselves and rush ahead without really thinking things through. This is especially the case when it comes to the administration and practical aspects of launching a small business from the ground up.
If you are considering launching a startup business, there are five steps that you need to consider before you begin.
Firstly, you need to create a business plan which will help you define the objectives and strategies of the business. This is one of the fundamental processes that you should not skip, even if it sounds tempting.
In some cases, such as when you are looking to raise funding for your start-up business, you will need a business plan as investors will want to see it. Sometimes a bank will also need to see your business plan before they give you a business bank account, so it is a step that you need to think about and consider.
Aside from the potential need to have a business plan ready for any investors or financial organizations to look at, it is worth carrying out this kind of assessment for your start-up business regardless.
Often, taking the time to research the marketplace, find out who your competitors are, and more importantly who your customer base is going to be, is vitally important to the success of any business. If you launch a business without known who your target audience is, then there is a chance that you won't make money, just lose it.
This kind of market research is important to help you understand things such as price-points, how competitive the industry is and how crowded the space is in terms of competing businesses.
For some business owners, it is when they actually sit down to write a proper business plan, they find out if their business model will actually work.
For example, while there are plenty of good ideas for a business out there, many of them require a lot of funding to get off the ground and be competitive. Sometimes it is not possible to start small and build up, as the competition is just too great. Therefore, for these kinds of businesses adequate capital and cash flow will be needed.
Ultimately, it costs a lot of money to launch a business so to become a successful business the management team or owner needs to be able to balance the books and ensure that business expenses do not mount up to a point that the operational cash flow is a problem.
Branding can play a big part in the success of your business, especially if it is more targeted at the general consumer rather than B2B.
Generally speaking, the name needs to be relatively unique, often so in relation to your industry that you will be working in, so some time and research needs to be carried out to ensure that you are not accidentally branding yourself, the same, or similar to someone else.
This is important for both official reasons and for marketing. When you come up with a name for your business you should check with the relevant authorities that it is unique and available.
At this point it is a good idea to check whether the domain name for your business is also available as if it is already taken this could prove to be a problem. Same goes for social media accounts.
As soon as possible you should register your web domains, in the market that you are looking to operate in. You should think long term and ask yourself questions about your type of business that you will operate. Are you planning on launching in other countries, or are going to just stick with just one location? Sometimes it is a good idea to get the .com version of the domain as well, as although this is meant for commercial enterprises in the United States it has become ubiquitous with the internet and many businesses based outside of the US operate a .com domain name.
Once you come up with a business name and checked that it is available you should also register it on all the social media channels that are out there. You won't have to pay for this, and even if you don't use the accounts immediately, they might come in useful at a later date if you start to carry out more digital marketing.
When first starting out just focus on covering the basics in terms of web site and marketing. There is no need to invest heavily in expensive graphic design, web development or even copywriting when first starting out as these elements just increase your startup costs. Generally speaking, unless your business will rely heavily on these kinds of requirements, then you can wait until your business grows and your online presence in the search engines starts to generate income.
If you run a purely online business, then sometimes you need to consider your design and development as a part of your initial launch. Ultimately, the rule of thumb is to try to cut any unnecessary expenses and instead focus on the core essentials to get your startup idea up and running as quickly and effectively as possible. Often small business owners get carried away and spend a lot of money on things that they do not strictly need, causing problems with cash flow and other unexpected business expenses. It's good to be frugal when first starting out.
If you need to launch a basic web site, you can find free design templates and even free systems such as WordPress to build a site upon. It is possible to build a small site very cheaply with the free tools and services that are available. If your business starts to be successful, you can always invest more and upgrade at a later date.
when it comes to marketing the same rules apply. Look for ways to advertise your business without breaking the bank. There are a lot of different marketing techniques available, from PPC, SEO, content marketing to affiliate marketing along with many other types of marketing and advertising. If you need to do some marketing instead of relying of word-of-mouth then spend time looking at what your competitors are doing and focus on one or two aspects that you think you can carry out cost effectively, which will give you fast results.
Some businesses prefer to outsource their marketing efforts to an agency, since these companies have a lot of know how on how to effectively market a business, but these can be costly, so it’s worth shopping around or even consider doing the basics in-house.
The next step is to open a business bank account, there are many different accounts available, and you should research your needs thoroughly. Consider whether you need a simple deposit account or if you need something more sophisticated, such as if you want to trade via ecommerce online. Your lender will be able to advise you how to go about opening an account with them. It's worth shopping around as there are different deals available at any given time. Some banks even forgo charges or costs for a period of time, and this can be beneficial for some businesses.
At this point you should have already decided what sort of company structure your business is going to take. There are a variety of different types of business structures you can adopt and if you have a long-term vision for your business, it is often better to set up your business to accommodate this, rather than having to change the structure or type at a later date.
It is important to inform the relevant tax authorities if required. Simple steps such as this often get overlooked when you have so much other planning and work to do when launching your start-up business, but by not carrying out all the legal requirements then you may be opening yourself up for unnecessary financial penalties.
Businesses will also need to keep adequate records and file their accounts at set intervals. Taxes and fees will also need to be paid. This can be a full-time job for someone so it’s good to either hire someone for your team, get a virtual assistant who is experienced in this area, or just outsource to an accountancy firm.
While you may be able to do basic bookkeeping yourself (although not necessarily recommended), you may also need to hire someone internally, or instead hire an external accountant for some of the more complex accounting practices and records that you need to keep. Often a professional accountancy firm can also ensure that your business has been set up correctly, with the right authorities and that everything is in order.
If you've written a comprehensive business plan you should be well aware how much money you will need to launch your business. If you need money to develop your idea, or for things such as real estate or staff to help run your business, then you should have an idea of how much this is going to cost you.
Some individuals manage to start a business with next to no money or by funding it on their credit card, however these kinds of success stories are rare. Many entrepreneurs aren't in the position to finance their own business so have to look to outside source of finance to launch their idea.
You may be able to raise capital from the bank with a small business loan, but often banks aren't that keen on handing out business finance to a brand-new company, so often this avenue is closed for general entrepreneurship. Sometimes you will find that a venture capital firm will invest in your idea, but often these kinds of companies prefer to invest in companies that have proven themselves to be successful and are looking to grow or take their business idea to the next level.
Another option is to get investment from friends and family, and this can work well, just as long as everyone understands the risk. However, if your business is unsuccessful, it could sour relations to those who are close to you, so this is something many people choose to avoid because of this risk. As an entrepreneur launching a new business you need to be pragmatic about the potential risks involved. Many new businesses fail, even those that seem like they are good ideas on paper. Business is about understanding the risks involved and balancing the risk with the potential reward.
Crowdfunding is also an option for many a small business. This can work well, but often it can be difficult generating enough interest in an idea, or it can be hard to generate enough money to fund your business since crowdfunding relies on a lot of people to typically invest small amounts in return of some kind of reward or product.
Yet another option is to look for an outside investor such as a business angel. This kind of partnership can be beneficial since it can offer other a financial injection into your business along with the potential for finding a mentor.
Financing your project should be considered early on in the planning stage as if you do not manage to secure finance your project may be over before you begin.
If you need to find an investor for your business, then the Angel Investment Network is there to help. Entrepreneurs can sign up to our global network to find a high-net-worth individual to invest in your business idea. Entrepreneurs from all around the world can leverage the Angel Investment Network since we have a global network. Investors can also search for business ideas that they might want to invest in, either focusing locally where they are based or overseas.
Join the Angel Investment Network today to take your business idea, or start-up to the next level.