Every entrepreneurial journey begins with an idea and a desire. Usually, one of those desires is to be your own boss. Another is the possibility of creating something that other people find valuable while creating financial security for yourself.
Many aspiring entrepreneurs are so motivated by these possibilities that they launch their businesses as soon as they can. While there are benefits to taking action in business, many do not take the time to fully think through what they’re getting into. In this article, we’ll look at some things you should know before starting any business.
1. Know Your Goals
Most people think there is only one goal when it comes to starting a business; making money. This assumption is usually wrong. There are so many other goals, objectives, and focuses involved in starting a business. Not only that but which goals you decide to set will often predict your level of success. Before you start a business, you should have a sense of understanding of what you want your business to achieve in the broader sense.
You also need to know that there are many different types of business goals. While financial goals are a very important part of a business, many non-financial goals cannot be ignored either. When your goals are clear and meaningful to you, it will drive your and your innovation. Be clear on your goals before you start your business so that you do not get distracted or discouraged on your journey.
Here are some questions to ask yourself that will help you better define your goals:
- What are some non-financial goals I’d like to accomplish?
- What other short-term goals do I want to accomplish?
- Where do I want my business to be in 5 years?
- What do I want to accomplish in my first year?
At some point in your business journey, you will need to face these questions. The best time to answer them is before you start.
2. Know Your Audience
One of the biggest mistakes that many entrepreneurs make when they start their businesses is the mistake of trying to reach everyone. While a broad marketing strategy is good for some larger, more established brands. As a new business or startup, narrowing your focus and knowing who your audience is crucial.
Your audience is the group of people who are most likely to buy your product or service. They can be segmented by age, gender demographic, or interests. You can find your target market by conducting market research.
It needs to be said that knowing your audience before you start your business doesn’t end once you actually launch your venture. Many entrepreneurs seek to target an audience when they start. However, after some time they find that they’re business is better suited for another audience. For example, when Twitter (rebranded recently as ‘X’)first launched, it was marketed as a micro-blogging platform. It was for people who wanted to blog but with short updates instead of longer blog posts.
However, as the platform grew, it was clear that the benefit was to get updated news and information. This became more valuable to media platforms and well-known celebrities and public figures. Twitter even began to lean into this market by calling itself a news app, not a social media network.
Knowing your audience before you launch is the starting spot and not the final destination. Be willing to pivot and reposition yourself to appeal to a more suitable audience as you continue to grow your business.
3. Understand Your Business Model
A business model defines how your business creates, delivers, and captures value. More simply, it is the strategy that is used to make money. The right business model not only contributes to profitability but also helps in attracting investors and partners. There are many types of business models out there. For example, some businesses utilize a subscription business model that allows them to create predictable revenue.
Take your time and review some of them to find which one is right. Remember that you can also change your business model later. However, this is not always easy to do. That is why you need to consider the right one before you start.
4. Understand Your Own Strengths, Skills, and Time Available
As an entrepreneur, understanding your strengths and weaknesses is vital. It allows you to leverage your abilities, identify areas where you may need assistance, and effectively manage your time. Remember, starting a business demands long hours and commitment. Do a personal SWOT analysis to assess your strengths, weaknesses, opportunities, and threats. Be honest with your analysis. If you are excellent in product development but lack marketing skills, consider hiring an expert or taking a course to improve your knowledge.
If you’re starting your business part-time, calculate how much time you have available to work on your business. Knowing this ahead of time will help you create a reasonable expectation of your expected results.
5. Know Your Numbers
Financial acumen is essential for running a successful business. Also, be familiar with key financial statements like the balance sheet, income statement, and cash flow statement. They provide valuable insights into your business’s financial health, helping you make informed decisions. It’s wise to use accounting software or hire a professional to ensure accurate record-keeping and compliance with tax obligations.
Here are some numbers to get familiar with before you start your business.
- Startup Cost
- Break-even point
- Cash flow projections
- Marketing budget
6. Understand Success is More than Passion
One of the most misunderstood aspects of entrepreneurship is passion. It has become overused in a lot of ways in entrepreneurship and the business world in general.
Passion is a powerful motivator in entrepreneurship, but it’s not the sole determinant of success. The road to building a successful business is paved with challenges, and passion alone might not always suffice.
You need resilience to weather the storms, discipline to stay on course, a willingness to learn, and the humility to seek help when needed. Additionally, understanding that success doesn’t come overnight is crucial. Be patient, persistent, and prepared to face and overcome obstacles.
Passion will help you get through some of those storms and challenges. However, it will be your focus, habits, and disciplines that will carry you through the finish line of your goals. Many entrepreneurs that start a business just because they are passionate, usually leave that business when their passion is replaced by stress, worry, and feelings of being overwhelmed.
It is important to have passion for your business. But do not only rely on it. Learn the skills, increase your knowledge base, develop habits, and build mental toughness. Having all of these will allow you to keep your passion for the business you started.
7. Know the Odds of Success
Starting a business is a risk, and understanding the odds can provide a realistic perspective. According to the U.S. Bureau of Labor Statistics, approximately 20% of small businesses fail within the first year. And about 50% survive past the fifth year. These figures shouldn’t discourage you but rather inspire you to work harder and smarter. Research common reasons businesses fail, such as insufficient capital, poor management, or lack of market need, and plan to avoid these pitfalls.
8. Understand that You’ll Need Help
No entrepreneur can build a successful business alone. You will need a team – people who share your vision and bring diverse skills to the table. This doesn’t necessarily mean hiring full-time employees right away. It could be working with freelancers, mentors, advisors, or forming strategic partnerships. Remember, your team doesn’t only execute tasks; they contribute to your business’s culture and overall success.
Having a team doesn’t necessarily mean hiring full-time employees. Many times it means hiring a contract employee from a site like Upwork or Fiverr to consistently handle jobs and tasks for you so you can focus on more important parts of your business.
Before you start your business, think about the parts of your business where you’ll need some help. Decide what jobs are going to be the most difficult or time-consuming for you. Then, explore options to hire someone to do those things for you.
9. Know How to Motivate Yourself
Every entrepreneur, at some point, has to deal with a lack of motivation. The lack could be due to the lack of progress. It can sometimes also come due to the mundane activities like paperwork, fulfillment, or production that are involved with running a business.
However, motivation is the fuel that drives entrepreneurship. There will be highs and lows, and keeping your motivation levels high during the lows is crucial. You’ll need to learn to motivate yourself while you’re on your entrepreneurship journey. But, it is a good idea to begin to find ways to do that before you launch.
Establish personal rewards, and figure out how you’re going to take breaks when needed. Think of some ways you plan to celebrate small wins. Brainstorm ideas of ways you plan to keep your larger goal in sight. Surround yourself with supportive people, be they family, friends, or fellow entrepreneurs. Join local business groups or online forums where you can share experiences and gain encouragement.
All of these will help you start motivated and driven through the good and hard times.
10. Know Your Backup Plan
Even with all the planning and preparation, things can go wrong. Hence, having a backup plan is essential. This could be a financial cushion to sustain your business during tough times or alternate strategies if your initial plan doesn’t yield the expected results. A backup plan is not admitting defeat; it’s a safety net that allows you to take calculated risks, knowing that you have contingencies in place.
There have been plenty of entrepreneurs who launched their businesses and realized that they choose the wrong business for themselves. Others may have realized that entrepreneurship was something that wasn’t for them. Yet others came to understand that they wanted to run a successful business but the timing was wrong.
Whatever the case may be, know what you plan to do if you decide to step away from your business temporarily or permanently.
Understanding these ten aspects can equip you with the tools necessary to navigate the complexities of entrepreneurship. Starting a business can be one of the most rewarding experiences, providing not just financial returns but also the satisfaction of bringing your unique vision to life. Knowing these things can help make that vision a reality in a shorter amount of time.