Disclaimer: I am going to explain the most practical way of starting a business. I will explain the pros and cons. So, don’t except things like “starting a business is so easy and funny” kind of stuff here. Nothing will be candy coated 😐 I am not going to demotivate you intentionally, but if you got demotivated while reading this post, you are not ready to start a business yet.
Starting a business can be a lifelong dream for many. But, only a few can achieve that dream. And, sometimes I have seen some amazing startup business ideas are getting failed, due to the lack of knowledge about starting a business.
You don’t need a business degree to start a business. Or, you don’t need a lot of money in your bank account to start a business. All you need is to grab the concepts and learn about the right tools to help your process.
I have invested a lot of time to create this all-in-one guide to starting a business, hoping it would provide real value for you. Check it out. 🙂
1. Are you ready to start a business?
Are you sure? First, answer this simple question. Why? Why do you want to start a business? If you just need to make some quick cash, there are some other ways to make money too.
Starting a business is not a simple process. It takes time and a lot of effort. If you can’t come up with a reason to start a business, I think you are not ready yet. When I first started an online business, my only goal was to become my own boss and to live my life as I want. I don’t know if it is a good goal or not. But, that was my goal; and that goal fueled the complete process of starting a business.
So, I believe you need to find out your motivation for starting a business too. It will keep you fueled through every ups-and-downs of this process. If you want to do this, just because one of your co-workers has started one; it won’t help you much. Come up with a strong need for starting a business.
Ask more questions about you starting a business
Keep asking more questions. You will do this only once. But, this really helps you during the later stages. Be honest with your answers. If you can invest (or loose, if anything goes wrong) only $1000, don’t mark it as $1100.
- How much time you can allocate – If you are doing a day job, you need to decide whether you can allocate enough time to take care of your business. I can’t say that you will need this much hours per day. It differs from business to business. For example, if you are planning to start an online business, you will need at least four hours a day, in the beginning.
- How much money you can invest – To brutal truth is, around 25% startups fail in the first year, 35% of the remaining fail in the second year and 44% of the remaining fail in the third year, etc. So, how much “disposable” money do you have?
- What are your skills and passions – Some people say that you should keep your emotions aside and sell what is popular. But, from my own experience, I think getting into a niche that you care about is better. It will not make you tired.
- Are you ready to become an entrepreneur? – Elon Musk once said, “Becoming an entrepreneur is like eating glass and staring into the abyss of death.” Dude, that is totally true. It won’t be easy as doing a day job. But, starting a business is truly an amazing challenge.
Related: How to become an entrepreneur?
2. What is your business idea?
If you already have a business idea, that is great. If you don’t have a business idea yet, check out these 8 ways to come up with a business idea for starting a business.
Once you have your business idea, test it against this checklist. This checklist is derived from Jeff Bezos’s 1997 interview below. There he explains how and why he came up with the idea for Amazon.
- Is it going to fix some problem? – Apparently, selling a solution is the best way to sell. If your business idea is going to fix some bugs in people’s lives, they will love it and embrace it.
- Is it future proof? – The technology changes every single day. If a better solution is around the corner, there is no point in wasting money and time for your business idea. Think of a business idea that can get you years into the future.
- Does it go parallel with your skills and passions? – If you are a vegan, there is no point of you starting a meat business. No matter how much money it can generate, you will not be able to turn the wheels of this business. Pick something that you care about. The founder’s passion reflects a lot in a business
3. Do market research
Before starting a business, you need to do rigorous market research to check the viability of your business idea. It is true that becoming an entrepreneur is all about taking risks. But, those risks should be calculated risks.
A lot of people ask me how they can find a business idea that has no competition. Then, I ask them “why?”
If you cannot find enough competition for some product, there can be only two reasons for that.
- There is no enough demand – Why should you start a business for that market?
- No one knows about this product – There is a possibility to either win or lose.
So, if you have a healthy competition for your business idea, you need to research how to stand above the competitors. You can simply do this by speaking with the customers of your competitors. If this is for an online business, the best place to talk with the customers of your competitors is the product review sections. Do online research for the product reviews and find what your competitor’s weak points are.
If this is a new product, go through the statistics about shoulder niches and find out your opportunities. Pick your target audience and seek for feedbacks about your products.
Important! When you do market research, do not rely only on online sources. Speak with actual people for their thoughts and views. Also, don’t limit your survey to the people only you know. This will not give you a proper representation of the market.
4. Starting a business with a lean startup strategy
Lean startup is an experimenting and adjusting approach to starting a business. There are three main components of a lean startup strategy.
I found that this is a very effective way of starting a business or any other “uncertain” projects. The lean startup helps you to survive by adjusting to the environment. It is nature’s way of growing.
Prototyping is like beta testing for your idea. Create something tangible (or virtual mockup) and seek feedback before launching.
When you are getting the feedbacks,
- Don’t get emotional – Analyze the feedbacks with the brain, not the heart. Be a tin man. If someone says your idea is stupid, don’t start hating that person. Analyze why.
- Appreciate the comments – Apart from showing good manners by saying thank you, this encourages people to give you more honest secondary feedbacks.
- Identify the patters – While analyzing the feedbacks for your business idea, try to define the patterns. These patterns are more important than individual feedbacks. Patterns reflect the overall idea.
- Develop conversations – Asking questions about the comments is an excellent way to get better explanations. Try to get the deeper reason for the entire plus and minus points.
5. Create a business plan
Once you have done with the market research and feedbacks, take a pen and paper and start drafting a business plan. Yes, actually write your business plan. Yes, I mean on a paper.
Writing your business plan helps you to gather and organize all the swirling ideas, data, and concepts in your head, to a readable format. Remember, here we are planning to start a business, not to make cereal. So, there is nothing wrong with investing a bit of your time and do this right.
Important! First, make yourself a coffee, before you start writing your business plan. I am going to get myself a coffee too.
Also, you can use this business plan to pitch your idea to the investors or to the bank (if you are seeking an investor or a bank loan). So, write it professionally. Find a good business plan template and start laying the foundation for your business.
Essential components of a business plan
Here is a list of crucial elements that you must include in your business plan.
- The front page – Add the business name and the name(s) of the founder(s).
- Executive summary – This is your business pitch. Make it appealing to anyone who reads that. Talk about the problem that you are going to solve, and how effectively that your solution is going to improve the things.
- Detailed description – Here you can go in detail about your product or service. Go with specifications and all the technical stuff about what you are going to sell.
- Market research – Here you can describe the marketing opportunities, statistics, and results from your surveys. Also, include your competitor’s weak points and how your solution can take advantage of them.
- Marketing plan – Explain how you are going to sell your product or service. There are many different marketing channels that you can use for your business. Also, there are various marketing strategies that you can use to sell your products. Learn the basics of marketing and define your marketing plan.
- Operational plan – Define how you are going to source or manufacture what you sell. Break down your budget to different segments to get a clear idea.
- Financing – Include how you are planning to source the funds for your business. Add the projects and your expectations of the profits.
Related: How to get the YES from an investor
6. Register your business
Registering your business is not a must at this stage. But, before you seek out for investors, having your business registered can help you to,
- Prove that you are serious about starting a business
- Protect you from someone stealing your fantastic idea
Business registration process differs from one country to another. If you are a US citizen, SMA (small business administration) gives you the A-Z information about registering your business. Likewise, based on your where you conduct your business; find out more information about the business registration process, from your local authorities.
There are different business structures available,
- A sole proprietorship is the most common way of registering a small-business. It gives the full control to the business owner, and it is easy to apply for. But, on the other hand, the business owner is personally liable for all financial obligations of the business.
- A partnership is somewhat similar to the previous one but involves two or more people who agree to share the profits or losses of the business.
- A corporation is considered a separate legal entity. It is considered as an individual legal personal. So, business liabilities become the obligations of the organization. Incorporating a business is costly. Also, the taxation for an incorporated business is higher than the other structures.
Also, there are hybrid forms of business structures. Find out more about your possibilities from the local authorities. If you are uncomfortable with handling the legal stuff, maybe you can hire a small-business counselor to help you out. Most of these processes are just straightforward.
7. Finding money for starting a business
There are different ways to fund your business idea. Your decision should depend on your resources and business plan. Here I have added a list of different possible options to fund your startup business.
- Funding your business with your own savings – Getting funds from your savings is comparatively easier and let you have the full control of the whole process. But, on the downside, it will take a long time to find funds for starting a business.
- Getting a loan from close friends and family – If you have good friends and a family with money, maybe you can reach out to them and ask for a personal level loan. If it makes sense, perhaps you can find a partner too.
- Try crowdfunding – Crowdfunding platforms like Kickstarter and Indiegogo let you have crowdfunding campaigns for your startup idea. Visit their sites, and you will be amazed to see how much people back these projects.
- Get a federal grant – Now federal grants facilitate electronic grants, making the process easy and simpler.
- Join a startup incubator program – Most of the countries have startup incubator programs to mentor and facilitate startups. Joining these programs can help you to network with investors.
- Get a small-business loan from a bank – Go to your bank and discuss with them about your possibilities. In most of the countries, they usually support entrepreneurs. Check the qualifications required to get a bank loan. You can also find lenders from US small business administration.
8. Develop the product or service
Depending on whether you are going to sell a product or a service, you may have to handle this process in different ways. Also, if you are planning to re-sell products, this part may not apply to you. Even, most of you might be thinking of outsourcing your product development. For example, you may need to hire an engineer or a freelancer to develop a prototype. Also, you may be thinking of teaming up with a manufacturer.
So, it is hard to generalize everything at this stage. However, I will give you some essential tips that you must consider while going through the product development stage.
- Cheap Vs. Quality – As we have discussed in the planning stages, you need to define your products to make them appealing to your target audience. If your target audience is looking for a quality product, don’t be afraid to invest more and create something amazing.
- Keep the control – I did freelancing product design in the early stages of my engineering carrier, and I have seen a lot of people do not get this right. The product developer is not the one who came up with your business idea. He/she is not the one who did market researches. It is your thing. So, while you are getting good feedback from the product developer, you need to get what you have envisioned.
- Be a part of the product development – If something went wrong, and if your product developer left you alone, you need to know how to recover the process. So, always be a part of the product development process. That is why I told, you must pick something that you are passionate about. So, you can be a part of the process.
- Hire a specialist – When you pick a product developer, select someone who is specialized in that segment. The talented son of a friend, of your friend, might not be a good way to get started. Search for professional, who can bring in value to your business idea
9. Building up your first business team
Sometimes you will not need to build a team right from the beginning. But, if your business idea needs more hands on the deck to launch, then you will need to build the right team from the start.
Don’t be afraid to be picky. If you have watched the Jobs movie (Steve Jobs biography movie), you will see that he was even firing people from his garage. Your team can make you a winner or a loser. So, don’t be afraid of picking the right team.
When you select your team, clearly state your business plan and give them KPIs, and evaluate they are on the right track. Create a nurturing organizational culture. Appreciate your team for their achievements. Having a reliable team is always better for any business.
10. Establish your business
Finally, we came to the final step of starting a business. Establishing your business is where you make your first public appearance. So, make it count.
Pick the right location for starting the business. And, launch with something that can go viral. It is always better to have a jump start for your business. This will keep you motivated from the beginning. You can try a guerrilla marketing strategy to create something viral to boost your brand. For example, check out this example of how Payless got a brand boost from a social experiment.
Don’t be afraid to hear “No” at the beginning. Not every business can make money from day one. There will be some dry time in the beginning. You will feel uncomfortable with the uncertainty. This is common. Focus more and give more weight on marketing during the first days of starting a business.
Starting a business – The final verdict
In overall, starting a business is not a fun ride. But, it is a real and fantastic challenge. Sometimes you may fail, and sometimes you may win. Remember, becoming an entrepreneur is taking calculated financial risks. At the end of the day, starting a business is a “risk.” It is an investment, which can make your profits for the years to come.
I lost three times during my first tries to starting a business. Every time I lost, I learned hundreds of ways to not starting a business. So, my final sayings about starting a business are,
- Give your priority to the marketing,
- Follow your business plan,
- Don’t be emotional and
- Follow your brain.
If you find this article useful, give it a share and comment your thought below. I heartedly wish you success for your journey to starting a business.