How to Start a Business From Scratch
Anyone can become a great entrepreneur; there isn’t any specific set of individuals who are branded to become one.
You do not even essentially need a university degree, exorbitant savings, have a big dream or an experience in any business venture to start the next key accomplishment in your life.
Starting your business venture is like a frightening leap into the unknown. Being an entrepreneur requires you to be ready for the difficult tasks and huge risks that it is involved.
Nonetheless, with a strong plan and determination, you would be able to establish a great and successful business.
Therefore, for those who are prepared to take and face the risks and difficulties a business would throw at them, there are many recompenses to be enjoyed such as
- a high income,
- ability to create jobs,
- ability to contribute to the community and country at large, and
- a business to call your own.
Fully aware of the risks involved in running a business, you will need to know all the things covered in this article to launch and run either a small or a large profitable business that would be cherished by your customers.
Check out this beginner guide to help turn your big dreams into a prosperous business venture.
1. Why do you want to start a business?
What is your reason for starting a business? The question you will need to keep at the back of your head when contemplating the type of business to start.
If it is for you to make extra money, perhaps you should look for a side jostle.
If you do not like the yelling or close monitoring you receive from your boss, perhaps it is also the right time for you to quit that job and start a new thing in your career.
With a suitable reason, you will need to start asking yourself more questions that will help you discover the right type of business to start.
- What are you proficient at?
- What things get you excited?
- What problems can you solve?
- What skills do you have that can be helpful in your business?
- How much can you invest in your business, having in mind that it can fail?
- How much investment do you need?
- What sort of lifestyle do you want to live?
- Are you convincingly ready to start a business?
You will need to be honest with yourself when answering these questions, as the foundation for your business relies on it.
2. Find The Perfect Business Idea
Before starting a business, you need a killer business idea on which your whole enterprise would revolve.
If you have an amazing business idea already, you are ready and should skip to the next section.
Nonetheless, even if you think you have a tremendous business idea, you still need to do sufficient market study to make sure your target customers feel the same way.
There are many ways to start thinking of a suitable idea for your business if you have none. Some of them are:
» Ask yourself what will dominate the future.
Try to figure out which trends or technology is imminent and how it will change the way business is run by asking yourself, how can I get ahead of the curve?
» What problem can you solve?
Your business should be able to fix the problems of your customers after all the function of a business is to satisfy the customers’ needs.
» Find a new way to apply your skills.
Think about the skills you possess and how they could be applied in a new area or field.
Many businesses and trades do things one-way because that is the way they have always been done.
Taking things from a new different perspective will make a change.
» Try a different approach.
If your business idea is not completely new, you should start to think about the current offerings of other businesses and emphasis on how you can produce something better, cheaper and faster.
Likewise, you could go out to meet people and other successful entrepreneurs to ask those questions and advice concerning the ideas for your business.
Better still, you can simply research online about these ideas and settle for the one that makes the most sense to you.
3. Conduct Adequate Market Research
After you develop a strong business plan, it is time to perform some market research and see what your audience think about your business idea.
Most of the market research phase involves obtaining information on who your customers are and what they want or need; using a blend of focus groups, online surveys, online ads or contents, and phone campaigns to assess your buyers.
It is also best to research your potential rivals or competitors in the business to see whether this great idea of yours is being used in another business.
You could start with conducting interviews over the telephone or face-to-face, offering surveys or inquiry forms that ask questions such as
- What aspects do you consider when purchasing this product or service?
- What areas would you suggest for improvement?
Moreover, it is vital to apprehend industry developments, commercial data, market figures and how all these might affect your business idea.
The discoveries from your market research will reflect on your business plan.
So when making these researches, it is important to avoid the three mistakes below that most individuals make when market researching, which are:
- Utilizing only secondary research.
- Making use of online resources alone.
- Surveying only the people you know.
4. Get quality feedback.
Ensure that you see what people have to say or review your products or services after interacting with them.
This can help you find out the problems you created or forgot to fix during production.
Using the “The Lean Startup” approach, you will be able to utilize the feedback you have gotten from your customers.
It involves you following its three basic pillars, which are experimenting, pivoting, and prototyping.
By getting feedback from your customers each time that, you release a product, you will be able to constantly improve and ensure you stay relevant.
Here are six steps on how to receive quality feedback.
» Take time to Reflect.
It is a normal thing for you to be excited when you receive feedback whether good or bad.
So, it is important for you to first calm down and take the time to reflect carefully what you have just received to avoid making bad conclusions or decisions or worse still, misperceive the feedback as a threat.
» Appreciate the feedback.
Always say or reply to your customers or audience with a “Thank You” when you receive feedback from them whether positive or negative.
If the message was important to them, your audience will have put in a lot of thoughts and efforts into summoning the courage to give you his or her feedback.
Therefore, giving them a “thank you” will gain their respect and encourage them to continue being truthful in all the feedbacks, they will give you in the future.
With this, you will be able to receive more feedback in the future that might be important to the growth, success, and reputation of your business.
» Don’t be defensive.
An iota of truth exists in every response or feedback someone gives to you.
It does not necessarily mean that someone hates everything about your business just because they do not like a particular idea or product.
They may be trying to offer you a little solution or let you know of a minor problem that you should investigate.
» Take note of similar feedbacks.
When receiving feedback, it is advisable to notice and look out for patterns and the things similar between two or more feedback messages even if it is vaguely familiar.
After you hear or receive the same set of messages or feedbacks, perhaps it is time you take notice, seat up and work on your flaws.
Then, this leaves you with these questions, which feedback patterns have you been ignoring?
What little steps will you take today to change that pattern before it derails your business?
» Listen with interest.
It is not always the case that the customer should always listen to you; perhaps it is time you enter a conversation where the customer is in control, listening to the valuable feedback your customers have to offer.
If you are inquisitive enough, you can become involved in the conversation with your audience.
You do not have to approve with the feedback or act on it immediately.
However, if you are not curious, you will not listen to it, you will not be able to understand it, and the talent of feedback will be lost to you.
Therefore, the ability to listen and be curious is important.
» Probe further.
This is the first step to obtaining feedbacks. Try to figure out what the people like and do not like about your business or products with questions.
Questions help you to make clear what you have heard about your business and truly hear the feedback.
Then you will be able to make your business better or find the best solution to a problem.
In conclusion, positive and negative reviews, and word-of-mouth testimonials can help make a big difference in your business plan.
You do not want to run or manage a business that is considered illegal, therefore, you will need to secure all the legal aspects on time.
With this, you will be able to protect your great business idea and avoid someone suing you for an unexpected issue or messing you up in a partnership.
Some things you need to cross out before declaring your business legal include:
- Business structure (LLC, corporation or a partnership, to mention a few.)
- Business name
- A full business registration
- Federal Tax Identification Number
- State Tax Identification Number
- Necessary bank account
- Trademarks, patents or charters.
It is best to consult a lawyer for assistance when procuring these items, especially when starting newly.
There are somethings that you can handle personally but seeking the help of a lawyer will help to avoid mistakes and ensure that you have covered all grounds.
6. Write a business plan.
Whatever the business you plan to venture into, you need to bear in mind that every successful business starts with a strong business plan.
A business plan is a written description of how your business will grow from when it begins until it is well established.
Sitting down to carefully write out a business plan is one of the keenest, most important steps you take in starting your business.
At its core, writing a business plan is all about thinking hard and answering difficult questions concerning your business – questions that, when you are faced with, will force you to think about the resolve of your business, the audience you aim to satisfy, and challenges to your business that you might never have thought of.
When performed correctly, the procedure of business plan writing will help perfect your initial business idea into a much buoyant and vibrant one, proving more successful than it would have been originally.
These are a few important questions and components that should be a part of your business planning process.
» A name for your business.
When drafting your business plan, you must start by naming your business.
It is harder than it looks; you have to give your business a suitable name that would represent your business idea.
» A summary page.
This high-level summary often includes the business description, the problems the business is solving, and the solution.
It is the first section of your business plan that anyone sees.
It is also a brief look and sketch of your mission and vision declarations, plans and goals, your company and its organization, an outline of your tactic, and highlights of your financial status and needs, which are important.
» What Does Your Small Business Do?
This is usually a short description of your business. Describing the current stance of your business, and other information on all the various markets within your business, including any new products or advances that will profit or unfavorably affect your business.
» Who Is Your Small Business For?
Who is your target audience, and how efficient can you sell your goods and services to them?
They are the outcome of careful market analysis.
A market analysis forces you to become conversant with all features of the market so that the target audience can be clear and the business can be positioned to gather its part of sales.
» Who Are Your Competitors?
Do your study to ascertain your business’s main competition. The purpose of this analysis is to help you define the strengths and flaws of the competitors within your market.
When you are starting a business, you need to know who your main competitors are and how their businesses are similar or different from yours.
With this, you will be able to create obstructions that will help prevent your competition from dominating the market.
You would also take advantage of their weaknesses in a way that would see to the rise of your enterprise.
» How do you plan to develop your product?
Will your product designs win the money of your investors? Then, create a special development budget that would see to the achievement of the business goals.
» How do you plan to run the business?
What will be the daily and continual functional routine of your business?
The operations and management plan will highpoint the logistics of your business such as:
- the various duties of the management team,
- the tasks assigned to each department in your business, and
- the cost requirements for the operations of each of the department and the business as a whole.
» What resources will you need?
Where is the money you will use to finance your business coming from? How do you plan to sustain the source?
How large is the amount needed to finance your business?
You should always have these important data at the back of your business plan, as they are essential in the proper management of your business.
You should, therefore, have in mind that your business plan is not a static document but a dynamic one as it constantly changes with time and with the progress of your business.
7. Obtain Funding for your business.
Business owners choose to finance their businesses in different ways. It is particularly difficult to start a business without money.
Although many businesses do not depend on external financial aid to function, it is a custom for most business owners to obtain their funding from business loans and other external funding.
You could try to reach out to family and friends, get a business loan, or even get help from a business investor.
Below is a list of various elementary funding alternatives that you could consider.
» Fund with your money.
This might seem like a tough act for some potential business owners.
However, providing the funds for your business personally would help you to control the fate of your business.
» Seek help from friends and family.
Your friends and family are the easiest set of individuals to approach for funds, especially if they are in support of your business project.
However, it can be difficult for one to separate business affairs from personal affairs as, you need to bear in mind that even when everyone has the best intentions, loss of profits from an unsuccessful business contract can ruin personal relationships.
Therefore, to avoid this, you will need to offer a well-reasoned and specialized quality investment proposal as you would to any other business investor, setting the exact terms of the investment in writing.
» Get a small business grant.
Business grants can be gotten from various grant programs offered by the government.
You could visit grants.gov, which is a searchable, online directory of more than one thousand federal grant programs.
I should mention that this is a long stressful procedure that would benefit your business greatly at the end.
A bunch of small funds from many individuals can add up to the right finance for your business.
Do not underrate the worth of a few $100, $50, or even $10 vouchsafed towards the fundraising of your business, as it could be that which will save your business from bankruptcy.
» Seek out local angel investors.
Local online angel investor groups or platforms such as Gust and AngelList can help you find potential investors who have an interest in your business and would be willing to put some resources into your business.
Besides, angel investors are individuals who are successful business owners themselves and have decided to invest personally into a wide variety of new businesses as a means of increasing their incomes and helping other new business owners with resources and expertise.
In exchange for the funds, resources, and expertise of these angel investors and their groups, you will have to give them individual or group parity stocks from your business, and a limited amount of decision-making power.
So, it is therefore important that before you choose an angel investor partner, you must ensure that he or she understands and agrees with the vision of your business.
» Venture capital firms.
Venture Capital investors often provide an enormous amount of money to a business that has huge potentials to become successful.
So before you consider approaching one of them, it is best to have enough progress or proof of momentum towards achieving your business goals.
» Join a startup incubator or accelerator program.
Startup incubators or accelerators are specialized corporations designed to help carry new business to a higher level.
Providing resources such as office equipment and facilities, seed funding, schmoozing opportunities, and pitch events.
» Take Payment in advance from a strategic customer.
You can make negotiations or white-label agreements with businesses or customers who badly want to purchase your goods and services.
There is a possibility that these customers or businesses would want to fund your business so that there is a continual production of their favored goods and services.
» Exchange possessions or services for startup help.
You could decide to trade in certain services or equipment for another one.
For example, you could fund printers to office occupants in exchange for a free office space for your business.
It is a smart exchange because you do not have to pay for an office space.
» Take a bank loan
Before you can seek for a bank loan or credit, you must have satisfied certain requirements from the bank to be considered qualified.
The requirements differ from bank to bank so you have to inquire about the requirements of your chosen banks, compare them, and seek from the ones that favor you and your business.
8. Build your product or service.
After starting up your business, perhaps it is time you develop your products and services.
You need to, therefore, keep in mind that you cannot single-handedly build and manufacture your products.
Therefore, when creating your products, you need to focus your resources and attention on two aspects: simplicity and quality.
i.e. trying not to reduce the quality of the products badly even though it saves you money on manufacturing costs.
It is common to outsource the product development phase of a business. So, below are a few tips to follow when seeking help in creating these products:
» Ensure the products are built to specs.
Even though you leave the development of your products to someone or a company, you must stay and supervise their activities.
This is to ensure that the plans you have envisioned for your products are duly implemented.
» Implement an internal control system.
You could reduce the chances of things going wrong by checking the work and progress of your employees.
For instance, if you hire a freelance programmer to write programs for your business, there is a possibility that no one will be able to assess their work.
However, you could decide to hire another freelance programmer who specializes in test running and confirming the efficiency of new software programs.
» Hire pros, not do-it-alls.
Sure, it might seem low budget for you to hire the services of a generalist rather than a specialist to do that job for you.
However, be informed that the level of expertise of generalists in any field cannot be the same as that of a trained professional.
Therefore, why not save your business unnecessary trouble by hiring people who are great at the exact thing you need.
» Have multiple options.
Ensure to have a backup plan or hire more than one freelancer for a job to avoid losing unforeseen delays in delivery.
If one freelancer decides to leave or fails to keep up with the terms of the contract, you can always fall back on another.
» Don’t overspend.
Effectively manage the development of your products to help relieve the expenses on your business.
Payment charges vary with the specialties of the individuals.
So, ensure that you are not paying someone that is too qualified for the job whereas you can obtain individuals with the right specialties for your job and still provide good results at a lower rate.
To be fully prepared for its challenges, it is best you to first learn from the pros about the production details for your goods or services, the processes involved and the decisions to be made when hiring an extra set of hands.
9. Build a team.
To run your business smoothly, you will need a team where different responsibilities are going to be handed off to each member.
Your team might consist of freelancers, practical assistants, specialists, and contractors.
Any determined person or business who delivers on your business’s mission is part of your main team.
These three tips will help you find the right partner, employee or freelancer for your business.
» Defines your goals clearly.
Always ensure that your partners or employees have the same ideas you have for your business from the onset, stating to them the objectives you hope to accomplish in your business alongside the duties they are expected to carry out, ensuring you all are on the same page.
» Follow standard hiring protocols.
There are various procedures to be taken into consideration when hiring the services of different individuals.
From creating job descriptions to interviews, you need this to help get a look at people’s attitudes and their level of security or uncertainty.
With this, you will be able to choose the right person with a good fit with your business.
» Establish a strong company culture.
What makes a business have a great culture? It involves more than beautiful office space.
Instead, investing in your employees and empowering them through numerous channels is the bedrock for setting up a great culture.
It also entails providing training and mentorship to your employees rather than hanging some fancy decorations across the walls of the offices.
10. Find a suitable location.
This is one of the important factors you should consider when starting up your business, especially if it isn’t an online business.
This could be a store or an office space; your selections would differ depending on the need and budget of your business.
Below are a few basic things you need to consider when choosing a location for your business.
» Mode of operation.
Ensure that your chosen site suites the mode of operation of your business.
For instance, if your business operations require a serene environment, then you should site your business at a quiet and peaceful neighborhood.
Another important consideration when choosing a site for your business. Here, you can start by taking into account who your customers are; and their closeness to the proposed location of your business.
This is a vital decision for retail store vendors who rely on the community for the purchase of their goods and services rather than other business types.
Will your business location be easily accessible on foot and easy to locate?
Moreover, even if it is accessible, will your customers be able to reach your business place on time?
You can then cross this off if the answer to the questions above is a yes.
» Parking space.
Do not give customers a motive to go somewhere else because they do not know where to park within your business premises.
Therefore, you need to make sure that your business building is easily accessible and has enough parking space for customers.
» Consider the competition.
Sometimes having your competitors located near your business place could help motivate you to do better, whereas at other times it is a bad idea.
Therefore, you need to carry out market research to help decide on whether having your competitors around is healthy for your business.
» Proximity to other businesses and services.
Your business cannot produce everything at the same time. As such, you will need the services of other businesses at some point.
Hence, have a look at the businesses nearby and assess if they be beneficial to the growth and development of your business.
» Important history of the location.
Have other businesses failed in this proposed location? Does the site reflect the right image for your business?
Spending some time to find the right answers to these questions will help you avoid following the same error has previous business owners.
» Rules of the neighborhood.
The rules that exist within the area of your business can be of benefit or loss to you.
For instance, ordinances that prevent individuals from establishing whiskey stores in a neighborhood can be of benefit to other business types such as schools or daycare centers but will be of disadvantage to those who plan to start such a business.
» The building’s capacity.
Investigate the infrastructure the building has to offer, from the space to the comfort offered.
Therefore, if you are looking to move your business into an old building, perhaps you should first consider checking if the building will be to house the high-tech equipment that comes with your business.
To help with the assessment of the building properly, you could hire an engineer to check out the state of the building.
» Rent, utilities, and other costs.
Here is one of the biggest expenses that eat into the budget of most businesses, unless if the property is yours.
Therefore, ensure you check the rent to be paid on the building, as well as the utilities, whether they have been included in the tenancy or not.
Then make sure you will be able to afford the fees at the moment and in the future to avoid unforeseen embarrassments.
Once you can understand what you are to look for when finding a suitable location, then it is time for you to go out and acquire a working space that fits both your taste and requirement.
Here are four bonus tips that could help with this.
» Take it slow, if necessary.
Strike tenancy deals with your property owner that suits the required timeframe for your business, whether it is a long term or short-term one.
Do not get trapped in long-term rentals that do not suit your business.
» Consider your options.
There are different places where you could use for business; it could be a co-working space, sublease and more. Consequently, you need to be open to all these options.
» Cover all grounds.
Save time, energy and make your results accurate by checking for the picture-perfect place on online resources or sites.
» Be in charge.
Strike your deals, do not let others do that for you or swindle you into deals that you find uncomfortable for you and your business; after all, you are the one with the options.
11. Start making sales.
After starting up your business, finding a suitable location for your business, and have developed some products, maybe it is time you consider getting some sales.
No matter which business you are running or the amounts of funds you have, at some point in your business’ life, it is going to depend on its generated revenue and sales.
There are varieties of tactics or methods you can employ to ensure that you make sales in your business, however, there are four principles that you still need to comply to when making these sales.
» Pay Attention.
Always listen to what your customers have to say so that you can find out what they need and how best to satisfy them.
This is the first and most important principle you should employ when relating with customers at your business place.
» Try to convince, but don’t be brash.
Always try to ask for a commitment from the customer or if he or she wants to still make the sale.
However, you need to avoid making your customers feel like you are forcing them into a purchase.
» It is normal to get a “no”.
Be prepared to hear a “no” from your customers, as you cannot expect everyone to like or purchase your products.
Once you are given a “no”, do not waste time arguing with the customers about their decisions. Time is a vital resource for your business that you do not want to waste.
» Give it your best.
Make it your priority and that of your business’ to create enough revenues and see to it you’re your business becomes a profitable venture.
From here, how exactly do you make those sales?
You can start from ascertaining your target audience and customers who are interested in your products; growing your customer base and discovering more people who want to fit into your business through advertisements.
With this, you will be able to figure out the right sales strategy that best suits your business and has the potential to give you maximum profits.
12. Grow your business.
After establishing your business, maybe you should consider expanding and growing your business through a myriad of ways.
You could purchase another business, target new markets or expand to new locations.
However, these will not matter if your development plan does not contain two crucial traits.
» First, it must have a provision to market your business; making use of social media channels, influencers, and campaigns effectively.
» Then once you have those new customers, you have to plan towards sustaining them. For this to happen, you have to build a relationship with them, making them feel happy about your offerings and business etiquette.
By applying these two crucial strategies, you will regularly be winning over new customers in the marketplace.
Keep studying the general market, hiring good professionals and making amazing products and you will be on your way to building the business kingdom you always fantasized of.