7 Things to Consider Before Starting a Business - 7 Things to Consider Before Starting a Business
7 Things to Consider Before Starting a Business
Dreaming is one thing; transforming those dreams into reality is quite another. We’ve all heard that most new businesses fail in the first 5 years, so it’s no surprise to learn that it takes more than just big ideas to succeed. There are many reasons that businesses don’t make it–running out money, bad timing and poor pricing models, to name a few. The following tips can help you beat the odds.
Aspiring entrepreneurs are often unsure about when the time is right to hang out a shingle and launch a new business. Taking the leap can be a daunting proposition that requires creativity, careful research, planning, financing and fulfilling legal requirements.
Some 44% of businesses fail after five years1, according to the Bureau of Labor Statistics (BLS), so it’s crucial to give yourself every advantage. To help your new business succeed, consider these 7 tips:
1 Conduct market research
At the outset, you’ll need to ensure you have a viable customer base. Begin by researching your potential market: Who needs what you are offering? Is there space for your product or service in the market, or is the market already saturated? Is the market national? Is it a niche? Can you define your ideal customers? These questions should be considered before starting a business.
2 Write a business plan
Having a written roadmap of your projected results and business goals is the best way to stay on track. Such a plan will help you flesh out ideas in concrete terms and identify places to change the business model where necessary.
The Business Plan: Your Blueprint for Success
A solid business plan can serve as a guiding light to drive your business toward success and keep it on track along the way. You’ll want a well-thought out plan before you launch to help:
- Explore your idea and ascertain its viability in the marketplace
- Secure funding in the early stages of your business
- Communicate the vision and direction of your business to investors, partners, potential customers and more
3 Know the numbers
It's hard to start a business without capital. Calculate how much you have, what you will need and how you will go about getting it. If you intend to seek investor funding, draft a coherent plan and practice your pitch – that’s where a well-thought out business plan can really help. Approach it with a clear idea of the anticipated costs and how they compare with your present assets.
4 Find a location
Searching out the best place for a business can be tough. Consider what the space will be used for. Do you need offices, a place to manufacture products, a distribution consolidation point or a storefront? Answering these questions will enable you to make a proper determination of whether you need a destination location, a traffic location or maybe something in-between.
5 Select a business structure
Your choices include sole proprietorship, partnership, corporation, "S" corporation or limited liability corporation (LLC). Personal liability, taxes, paperwork and regulations vary greatly among the different business legal structures. Be sure to consult your attorney and/or accountant for more information about this important decision.
Build with the right blueprint
Explore your business structure options as they each have their pluses and minuses, depending on your type of business and your personal situation. For example, a sole proprietorship may be the easiest and most convenient for you, but it doesn’t protect your personal or business assets. Conversely, an S Corporation offers more protections, but is much more complicated and subject to greater regulation. Always consult a professional.
6 Pick a name
Your company name may be the first impression the public has of your business. Choosing the right one can point you towards success. Make a list of potential names and narrow it down to those that best describe your business. Keep it brief, catchy and easy to remember. You should also consider how it will translate to a web domain name. And do the research to make sure there are no similar business names.
7 Apply for required licenses and permits
Along with a business license, you may need to get additional licenses, depending on the type of business and local laws. Many professionals, such as contractors and real estate agents, need to be licensed in the states in which they work. In addition, you may need licenses to manufacture and/or sell specific products. Research all licenses applicable in your county and your state. It's also extremely important to know the zoning laws before opening a business. Never assume these laws don't apply to you. You can get information on zoning from your local county clerk's office.
Doing your prep work ahead of time always pays off. You’ll be able to launch with confidence knowing you’ve done your due diligence. And you’ll be in a better position to beat the daunting odds. You can do it!