Starting your own business can be rewarding, exciting, and freeing, but nobody said it would be straightforward. As your own boss, the buck stops with you, and it’s all too easy to allow your business to take over your life.
Every business is different, but that doesn’t mean the fundamental steps change with every niche. Whether you’re starting a solopreneur consultancy business, a dropshipping side hustle, or a 6-person strong moving agency, there are the basic principles and pitfalls in building a sustainable business.
Here are some of the main considerations you need to think about when you’re starting a new business.
A great business needs more than just a great idea
Building a business around something that you’re passionate about is an excellent place to start. Brandon Stanton, better known as the guy behind Humans of New York, did just that when he left his career as a bond trader and started photographing people in the streets of NYC. Now he’s got two book deals and “Humans of..” has become a cultural catchphrase.
But passion alone isn’t enough. You need to verify that your business idea is more than just a crazy shower thought. Turn your idea into keywords or search queries, and run them through a keyword checker like Keywords Everywhere. Plenty of search volume means that other people are also interested in the same thing. Google Trends shows if your idea is trending upward or downward, so you can gauge long-term viability.
It’s also a good idea to get some objective feedback on your chosen industry from someone with experience in the world of small businesses. Most cities have startup hubs or business centers where you can meet an entrepreneur or mentor for free feedback and advice.
Every business needs a USP
It’s important to establish your Unique Selling Point, or USP. USP doesn’t mean that there’s nothing like your business anywhere, but rather that there’s some way that your business stands out from all the others.
In that vein, don’t get discouraged if there are already businesses in your niche. That just proves that there’s a market for your idea; now you need to make it better. Explore existing businesses to see how you could improve on their offering, whether it’s faster delivery, more personalized service, or higher quality products.
Essentially, you’re identifying the pain point your business will address. Every successful business is the solution to a problem, whether it’s finding shoes in large sizes or eliminating termites from a basement. For example, Mahesh Gupta discovered the pain point of contaminated water when his children developed jaundice after drinking unsafe drinking water while on vacation. He developed a Reverse Osmosis water purifier that grew into a business with $134.5 million in annual revenue.
Without a market, even the best business will struggle
Don’t cheap out on your market research; you need to understand your market thoroughly if you’re going to make a profit. That means exploring your current and future competition, your audience, and broader market forces that could have an effect on your business growth.
COVID-19 has changed so many things about the way we live, so a great business idea 18 months ago might not be so awesome in the post-COVID world. Equally so, there may have been a massive demand for digital escape rooms when people couldn’t go anywhere, but will they still be popular when things “normalize”?
Understanding your audience is another major brick in a successful business. Ideally, you are your own first customer, because that way you really can get into the head of your audience. Kevin Plank, for example, played football for the University of Maryland. He wanted a better sweat-wicking shirt to play in, so he designed his own. The business grew into Under Armour, with revenues of $4.5 million in 2020.
There’s no shortcut to success
As Thomas Edison quipped, success is 10% inspiration and 90% perspiration. When it comes to starting a business, that means doing the grunt work of preparing a business plan, a financial plan, and securing your working capital.
Begin by deciding on your business model: will you work as a freelancer, or employ a staff? Will you sell a service, like yoga classes; a product, like an e-commerce online yoga equipment store; or information products, like online yoga lessons? You might run a business that sells digital solutions for a recurring subscription fee, like cloud-based software or apps, or build a passive income in affiliate marketing.
Then you can move on to a business plan. It doesn’t need to be very long — many entrepreneurs recommend a single side of A4. But it does need to cover:
- The pain point you’ll solve
- What your business does
- An overview of your target audience
- SWOT analysis = Strengths, Weaknesses, Opportunities, and Threats to your business
- A rough plan for marketing your business
- A financial plan
- Financial projections for the next 12 months
The financial parts should be as detailed as possible. For each month over the next 12 months, estimate as best you can your:
- Recurring expenses, like rent or payroll
- Intermittent expenses, like fixing a leaky roof
- Sales volume by month
- Net profit or loss
Finally, think about how you’ll fund your business in its earliest days, because even the most successful of businesses take some time to turn a profit. Many people start their business as a side hustle, or save up before kicking it off. Lucy Werner, founder of The Wern communications consultancy and training hub, said “I made sure to bank at least three months’ salary, giving myself three months to fail.”
Alternatively, you could get a business loan, or crowdfund among friends and relatives.
You can’t do everything alone
There’s more to owning a business than making products or delivering a service. You have to be the bookkeeper, secretary, accountant, marketer, sales agent, customer service representative, and chief financial officer, all at the same time.
There’s no way you can do all of that without help, but many solopreneurs can’t yet afford to hire employees. One option is to use a virtual private assistant or VPA. You can decide how many hours a week or month you’ll need their help, and then delegate the most time-consuming (or boring) jobs to them.
Another way to manage alone without drowning is to acquire the right digital tools. An all-in-one small business management platform like vcita automates tasks like sending marketing emails and scheduling appointments, reconciling your bank accounts and compiling tax information, producing estimates, invoices, and receipts and chasing up late payments, and more.
Protecting your work-life balance as an entrepreneur
Becoming an entrepreneur inevitably changes your personal life. It’s important to prepare for them in advance so that you can hold on to your work-life balance.
Some tactics include:
- Scheduling breaks and sticking to them
- Delegating to employees, a VPA, or digital tools
- Time blocking, where you set aside chunks of time for checking emails, making phone calls, brainstorming business ideas, etc.
- Learning to recognize and say no to “opportunities” which suck up time without raising revenue
- Including some kind of exercise to safeguard your physical and mental health
- Drawing a hard line between your work-life and your real life, like refusing to check business emails after Xpm
- Scheduling tasks according to your personal rhythm, like addressing creative issues when you’re most focused and leaving administrative tasks for when energy is low
Some people appreciate having a business partner to spread the load, but consider it carefully. Choosing the wrong partner could cramp your decision-making style and destroy your flow.
If you can’t measure it, you can’t improve it
It’s only a business cliche because it’s true. You need business KPIs (key performance indicators) so that you can verify if you’re moving forwards, or just running on the spot. KPIs bring a measure of objectivity to quantify progress.
There are loads of potential KPIs, and the exact ones you’ll choose will depend on your business type and vertical, but some of the main ones include:
- Social media engagement for each of your channels
- Organic visitors to your business website
- Monthly, quarterly, and annual sales volume
- Monthly, quarterly, and annual revenue and expenses
- Gross profit or loss
- Inventory metrics
- Conversion rates for each stage of your marketing and sales funnel
- Market share
Set tangible financial goals for three months, six months, and one year down the line, and then revisit them and measure your progress. Many entrepreneurs recommend fixing a time frame for your business as a whole, and either closing the business or carrying out a hard rethink if you miss the target. What’s most important is to decide how much you can afford to lose.
Prepare for the long haul
It really does take 20 years to become an overnight success. Prepare to build your resilience as you invest time, money, and energy into growing your client base.
Experienced entrepreneur Lewis Howes recommends using short-term goals to motivate long term growth. He says “I set new goals every six months and always stretch my initial mark. Work backwards and figure out what you need to do each day to get to where you want to be. Set a goal that is a stretch for you and look at the steps you need to take every day to accomplish that goal.”
A successful business is within your reach
Opening your own business, no matter what you’re selling, is always going to require a lot of hard work and advance planning, but it can still be profitable and enjoyable. With this advice, you can set up a successful small business and set the stage to run it with a minimum of aggravation.
Check out the second part of our business series entitled Run.