As an entrepreneur with multiple successful ventures under my belt, I get a ton of questions from potential entrepreneurs wondering how to go from the idea phase to an actual business. If you’re looking to start a business, here’s what I’d tell you.
1. Ruminate on the Possibilities
All businesses — small or large — must start somewhere. Before there is a vision, plan, or management plan, there’s an idea. They generally come about in one of two ways. Either a) you’re pondering a solution to a pressing but unresolved problem or b) you’re evaluating your life and arrive at the realization that you’ve been running from your dream instead of running to it. Whatever the case, don’t take this seemingly trivial step for granted, as everything that follows rests on your founding premise.
After you’ve had an opportunity to reflect upon this central concept or solution thoroughly, it’s time to turn to the market and assess the strengths and weaknesses of the competition. Doing so will give you a good idea of where your product or service could fit into the market.
2. Evaluate Your Tolerance for Risk
It would be good if you could start the process by determining how comfortable you are with taking risks — if you don’t make it past this point, there’s no “pass go.” Unfortunately, that’s just not the way it works. Likewise, it would be nice if you could pretend that your entire entrepreneurial journey will be free of threats, but we know that’s not the case, right?
By its very nature, entrepreneurship is fraught with uncertainty. Just the amount of action that you must take to start your part entails risk — that doesn’t include what you will inevitably face after getting your venture off the ground.
There’s always the chance that any one of these actions could result in a problem of some sort. And while there’s a certain amount of ambiguity associated with punching a clock every day, the risks are much more predictable. So if the thought of facing the unknown causes you undue stress, it may be best to put your ideas on pause until you’ve found a way to resolve your fear of uncertainty.
3. Don’t Just Think About Your Vision, Write It Down
After you’ve settled on an idea and decided that you’re comfortable with the possibility of things going wrong, it’s time to hone in on your vision. This entails visualizing what you’d like your business to look like in the future. If you experience difficulty with this step, all you have to do is ask yourself this: “Where do I see my business in 5, 10, or 15 years?”
But remember, it’s not enough to merely know your vision. You’ve got to internalize it, which requires going a step further and writing it down. There’s just something about seeing your vision on paper that makes it more real. And if you think this is all too much, consider that when all else fails, it’s your vision that will compel you to get out of the bed at 5 o’clock in the morning to see your dreams through.
4. Do Your Homework
If finding a solution to a market-driven problem or putting your grand vision into action is sexy, then market research is probably no different than taking a hundred free throws, one right after the other. But guess what? If he hadn’t put in the work, where would Jordan be today? So it is with researching the market.
Market research dictates pricing, messaging, advertising, staffing, and so much more. Do yourself a favor and put all that you have into learning your market. When you’re done, you should have a clear understanding of who your customers are, but you should also know what they like or don’t like about your competitors. Armed with this information, you can continue the march to your empire.
In addition to market research, you’d be doing yourself a favor by doing some operational research. Familiarize yourself with industry best practices; doing so will allow you to build an efficient business.
5. Draft a Business Plan
You’ve got your idea, vision, and research in hand. Now it’s time to turn these abstract ideas into something tangible — a plan of action, also known as a business plan. Your business plan is a roadmap designed to help you arrive at your destination. And if you ever get lost, like a GPS your plan can help you get back on track.
Your business plan should address questions like the following:
- How will I reach my customers?
- How much will it take to start and run my business?
- What types of personnel should I hire?
- Who is my target audience?
- Who are my competitors?
- When will I see a profit?
While from time to time you may run into questions that you don’t have the answers to, your business plan should address the most pertinent issues.
6. Review Your Finances
Whether you’re starting your business on a shoestring budget or purchasing an existing business, there are always financial considerations associated with beginning a new venture. Identify these costs upfront and determine how you’re going to pay for these items.
For example, maybe you’ve already built a sizeable nest egg and plan to use some or all of it as collateral, or perhaps you have a colleague who’s agreed to make a financial investment in your business. Whatever the case, knowing what you’re getting yourself into from the start can make all of the difference in the world.
7. Determine How to Structure Your Business
There are several different ways to structure your business entity. In fact, you may already be aware of several. For instance, you can organize as a sole proprietorship, partnership, limited liability company, corporation, etc. However, understand that each legal structure comes with certain pros and cons.
As a point of comparison, if you want to shield yourself or your family from liability, assuming one of the various corporate structures may be in order. Alternatively, if you plan to keep things simple while “testing the waters,” exposing yourself to greater risk as a proprietorship could be a more suitable option. Of course, you won’t know until giving it serious consideration. It might also be prudent to consult your local attorney or CPA, as whichever decision you make will entail a different set of legal and financial ramifications.
8. Build a Company Website
Regardless of the type of business you plan to launch, one thing is unavoidable — you will need a website. It doesn’t matter if your customers prefer to do business in person — not having a web presence is just plain irresponsible in this day and age. So please, do yourself a huge favor and invest in a solid site.
It doesn’t have to be extravagant. In fact, if you have financial constraints you can even set one up yourself. Just visit Wix, Weebly, or any of the other site builders available and use the templates that they give you and you’ll be well on your way.
Of course, you can always upgrade when finances permit, but the important thing when it comes to establishing yourself online is to start somewhere.
9. Set Up Your Taxes and Federal Registration
By this point, you may already have a business license and articles of incorporation. However, to be recognized as an official entity, you will need to file your documents with the federal government. While it may sound complicated, it’s probably easier than you think.
Upon completing your business registration, you’ll also need to go to the IRS website and apply for an employer recognition number (EIN). Doing so will allow you to handle payroll and employee taxes. If you’re organized as a sole proprietorship, you may be able to skip this step, but this is something that your lawyer or accountant can help you determine.
10. Build Your Brand
So you’ve got yourself a business that’s capable of changing the world. But guess what? Without customers, you’re dancing in the dark. Of course, if you’ve completed the marketing section of your business plan, the next step is just a matter of executing your plan. The good news is that there’s a proven method of building and promoting your brand.
Namely, marketing your business is a matter of informing your audience as to what makes your offering unique, learning where to find your customers, and making sure that your brand is just within your audience’s vicinity so that when they have a need, they know to check with you first.
In a nutshell, that’s it. I hope that everything made sense to you. But if you have questions, I’m here to help. Drop me a line!