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How to Start a Business From Scratch

You can choose to be your own boss or break away from the corporate world. You can be your own boss. You don’t have to feel like a cog on a machine. Instead, you can make a real difference.

You can also be specific. Create the best or first widget in the world. Because I have tried every widget on the market and all of them are lacking in one way or another.

It is possible to start a small business. To create something new. Brick by brick.

Over the years, I’ve worked with many small businesses and startups. I have seen the good, bad, and ugly. I have seen companies go public with valuations exceeding $200M and others fall under the weight of their own failures.

If you have an idea and it sparks, but your heart doesn’t skip a beat, you start to wonder: Where do I begin?

Here’s how you can start a small business that will thrive, and avoid making the same mistakes as others.

1. Find Your Why

Simon Sinek’s Ted Talk is one of the most viewed and best-selling books, Starting With Why. He talks about why it is important to understand why you are motivated to do the things you do, and why it shouldn’t be “make my mom proud” or “make a million bucks.”

It’s about understanding how you want to impact the world. It’s unique and individual to each person.

It is important to have a solid understanding of why you want a small business. You can always return to your fundamental understanding when things get difficult (and they will) and remind yourself why you want to keep moving forward. As Sinek says:

Stress is when we work hard for something that we don’t love. Passion is when we work hard for something we love.

Ask yourself: How do I start a small company that aligns with my Why

2. Create your business around your lifestyle

Benjamin Franklin: “If you fail plan, you’re planning to fail!”

Do not fantasize about opening a business, but don’t forget why you wanted it. You want to be able to pick the projects that you work on, but don’t make another job.

Every minute of your life should be counted!

Get a FREE book summary of “Four Thousand Weeks”!

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Let’s take, for instance, an entrepreneur who decides that they want to start their own pie company. The person takes the plunge and leaves her job to start her own business. She’s now making a steady income after a few months. She’s not busier than ever, however.

She works 60-80 hours a week, and she doesn’t know how much longer her business will last. Many entrepreneurs fail to plan. Decide why you want to be an entrepreneur before brainstorming business ideas .

Are you looking to spend more time with your family? Or do you want to travel the world? No matter what your motivation, it is important to be clear about why you are starting your business.

Once you have identified your purpose, build your business around it.

3. Do not wait for all the green lights to pick your business idea

Now that you are clear about why your business is being started, what should you do?

Decide the type of business that you want to start. You could open a restaurant, or sell online products and services. You can brainstorm a few niches of business you would like to explore (e.g. Health, finance, fashion.

A few years back, I was completely clueless as to which business idea to pursue. I was a complete failure when I tried blogging. My biggest mistake was spending many months designing my blog.

Building a blog is an essential part of any business. By providing value, you can deepen your relationship with customers. It can also be time-consuming and you may waste your time, just like I did.

Instead of creating a blog, you can instead create valuable content on existing platforms. This will allow you to determine whether your business idea is worth pursuing long-term and get feedback from the audience. Medium is the best platform for writing content.

If you enjoy speaking, create a Podcast. If you like being on camera, you can also create your Youtube channel. You want to create quality content as quickly as possible.

Keep track of a few ideas, then narrow it down to one to three. Then focus on creating quality content. Once you are confident in your idea, you can start to think about how to monetize it.

4. To get started, you don’t need business experience

The best thing about starting a business is the fact that your experience doesn’t matter to the market.

The market doesn’t care if you have a college degree, or if you have business experience. Many successful entrepreneurs started their businesses without a college degree.

For example, Richard Branson quit school at age 16. He is the founder of Virgin Group and worth billions. After dropping out of Harvard, Bill Gates earned his degree at Harvard 30+.

These examples are shared to demonstrate that a college education doesn’t guarantee success in business.

Start a business in a niche you are passionate about. [1] You’ll likely have some knowledge of this topic. You will eventually become an expert in the subject you choose.

5. Be a learner in the area of consumption

My experience with the most successful CEOs and founders is that they are always asking questions. They know what they know, but they are always open to learning more. These are just a few of the key ways that this can happen:

Research your market before you start your business.

Continue to research. Don’t assume you know all about widget buyers or other widget buyers.

Ask questions. Ask more questions. Listen to the answers of people who are smarter than you, or who have more experience.

Recognize that you don’t have all the answers. This is another crucial piece of running a business.

It has been so many times. A founder asks for the advice of someone who has been there before. They hire a brilliant person to join their team, an expert in finance or marketing. Then they ignore what they have to say and tell them what to do.

By not using the expertise of his team, the CEO is missing an important opportunity. He also fails to recognize that each member of the team has much to offer the CEO. It is disempowering for the team member.

6. Get your sleeves up

Although you might be the CEO, Founder, or Head Honcho of a company, when you start a small one, you will also be the receptionist and responsible for data entry.

You must be open to doing all the work involved in your business from the start. It is impossible to be too competent to do everything. You might not be able to complete the tasks. You will eventually be able hire/or delegate more of the smaller tasks.

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If you don’t know all the details that make your business great, it will be difficult to scale your business or grow your business when the right time comes.

7. Get in on the Weeds

I’ve worked with many, many entrepreneurs, founders and CEOs. They all have one thing in common.

They are big picture thinkers.

They have the big dreams and big ideas. Execution? Execution?

If you want to create a small business that is successful, you must get involved. Let’s take a closer look at these details:

Blue is the perfect color for your widget. Who will receive orders from outside the US and who will ship them? How will you ship your products from the US to the buyers?

The details of your business are important, but the bigger picture is more enjoyable.

When you are starting a business, dreams and big ideas will be crucial. If you don’t know how to manage the details, it will be difficult to make your dreams come true. Your business will eventually crumble like a house made of cards.

8. Create a plan that includes budget, expenses, and profit

You must have some numbers when you are in the weeds. These numbers should be real, well-researched, and well-informed.

You shouldn’t assume that you will take 50% of the market if your idea is good. Create a plan which outlines all expenses that you will incur over the next six months to one year. It is important to establish a realistic timeline for product launch, as well as estimates of how much revenue your product will generate.

If you don’t have a plan that includes numbers you will be reliant on what is happening around you rather than moving forward with intention.

Dave Ramsey is a big guru in small business and personal finances. He keeps it simple in EntreLeaders, his best-selling book. He said:

It isn’t difficult to do business. It is important to understand the basics of business or you won’t win. Do the accounting and budget, avoid debt, do not buy unnecessary things, make profits, save money, and be generous.

You must also know the answer to the most important question – when are you going to make a profit?

Assess Your Business Idea

It is important to be able and honest in evaluating your business idea. This step is usually not as difficult as the self-evaluation, as the criteria used in the assessment process are more objective than subjective.

Identify your target audience – Who will buy your product or service? It’s crucial to change your mindset in order to accomplish this step. Instead of thinking like you’re a seller, think like you’re a customer.

Can you give the following answers?

  • Is there a problem that your product or service addresses?
  • What is your product or service that solves this problem?
  • Your solution is better than those of the competitors.
  • Is it possible to spend money to solve the problem?

Also, you will want as much information as possible about your target market. You will need to have the following information about your target clientele.

  • Age
  • Localization
  • Income
  • Gender
  • Occupation
  • Education
  • Marital Status
  • Ethnicity
  • Number of children

This information will allow you to tailor your product or service to their needs. This information is useful in creating a marketing strategy.

Evaluate the Competition

You can generally divide your competitors into 3 categories.

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  • Direct competition – These are companies offering the same products or services as your company to the same market . As direct competitors, you can think of McDonald’s and Burger King.
  • Indirect Competition – These businesses offer similar products and services to yours, but they are not the same. An indirect competitor could be another company that markets the same product, but to a different market segment or clientele. Subway and McDonald’s are indirect competitors.
  • Substitute competitors – These are businesses that offer different products and services to the same customer base in the same market as you. McDonald’s is a substitute competitor.

After you’ve identified your competitors, gather the following information.

  • What are their products and services?
  • Do they plan to expand or scale down?
  • How long have they been in the business?
  • What are customers most impressed with?
  • Do you know of any competitive advantages they possess?
  • How do they price their products?
  • What is their advertising/marketing strategy?

This analysis will help you to understand your competitors’ strengths and weaknesses so that you can better compete.

If your competitors are selling a lot to companies with over 100 employees, this could be an example. Targeting smaller businesses with less than 100 employees may be an option. Your pricing and marketing strategies may need to reflect what smaller companies can afford.

Assess the financial feasibility of the business

You need to answer the following questions to be able to develop a financial feasibility analysis:

  • How much will it cost for your business to become profitable?
  • How much will your initial costs be?
  • How much ongoing expense will you incur?
  • Where is your source of start-up capital?
  • How high is the potential earning capacity of the business and how long does it take to reach that level?
  • How can you keep your business open while paying your bills until it becomes financially viable?

Once you have all this information, you can start to plan for any unexpected expenses. When it comes to estimating profitability and the time it will take to reach it, many people are too optimistic.

What size cushion is best? Nobody can tell you. You might be told to double, or even triple your estimates by others. You should at minimum add 50% to your estimates.

It can be depressing to discover that your business idea isn’t financially viable. However, it is better to do this now than to wait until the money has been spent.

9. Avoid Shiny Object Syndrome

Your plan is complete. You have done your research on the market. You’re certain that you want to make 2 inch widgets in a beautiful shade of blue. They will be sold at $1 per widget. Bob, the designer has signed up to build them. Your launch will be in June

Then…

Betsy, my neighbor, said she would love a widget in green. Is it possible to change the color from red to green? Johnny’s teacher suggested that she could use a widget measuring 3 inches. Let’s alter the size of this widget!

It is so common. It’s so common.

Do your research. Make informed decisions. Keep your course. You can always pivot later.

You won’t be able to reach your goal if you keep looking at every shiny object. That product will never be launched by June.

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