Business and entrepreneurship are excellent ventures to spend your precious time earning money than doing a regular, nine-to-five job. However, with these promising advantages comes a challenging but worthwhile journey of building and managing it. One crucial step in opening your own business is deciding on the right legal structure, such as an LLC which can provide you with numerous benefits, including liability protection and tax advantages.
Running out of money accounted for more than 38 percent of startup business failures in 2021. Companies today are accomplished to build a product roadmap that will facilitate an efficient management system and help them succeed in future fundraising initiatives.
But don’t fret since a business worth having never comes easy. As a soon-to-be CEO, you’ve come to the right place.
Pioneering A Business: What’s In Store For Me?
Some people planning to start their business may believe that they’re just born for it. While there’s nothing wrong with lighting your own fire, it’s crucial to be realistic as much as possible when establishing your venture. What are things in store for an entrepreneur like you?
Aside from the financial rewards, independence, and control mentioned earlier, the lifestyle flexibility of owning a venture is unrivaled; a business can work for many different kinds of lifestyles. The thought of directly helping and giving service to people with your business also seems promising.
A lot of new, remarkable ideas come from business leaders. Plunging into entrepreneurship gives you a chance to instill change and innovation, which is what the world’s top entrepreneurs have accomplished.
Moreover, another salient point common in the entrepreneurship world is that you don't need the most sophisticated educational background and qualifications to become a business owner. While this isn't entirely false, having a business-related degree can be advantageous. For one, owning a degree opens more opportunities to widen one's entrepreneurial network. That's why individuals looking into a business-related career take up academic degrees such as Bachelor's Degree in Business Administration (BSBA), Master of Business Administration (MBA), and the like. You'll cover topics like data security, OIDC vs SAML, and financial management.
Meanwhile, if you have zero knowledge and experience in operating a business, don’t worry because it’s not the end of the world for you. This guide is curated to teach you how to open your business.
10 Key Steps To Open Your Own Business
Establishing your very own business requires intensive preparation and planning. To guide your business startup to seamless inception, here are ten critical steps to opening your new venture:
- Assess Your Commitment
How much are you willing to commit to your business? Perhaps this is a challenging, essential part of starting a business, but many beginners fail to answer this, let alone recognize it.
Establishing a business isn’t easy. Some people suddenly feel the rush to start a business without critical thinking, while many give up mid-journey due to lack of commitment. Before taking any essential step, assess your commitment and see if you can pledge your time, effort, and money to your business, both in the short- and long-term.
Identifying potential challenges in your entrepreneurial journey will further help you decide if you’re going to take the plunge. Keeping up with the market, maintaining a healthy workplace, and lacking vision are a few of these challenges.
- Come Up With A Business Idea
A business always starts with a feasible idea. Some entrepreneurs may already have a sound idea before building their business, while some begin from scratch. When coming up with a business idea, it’s always good to take a step back and identify what your intent and motivation are in the first place.
If you still have no zero business ideas, here are some tips to come up with a few:
- Look into the things you’re good at
- Recognize problems that you can come up with a solution
- Meditate to clear your mind
- Narrow down your niche
- Find niches that are lacking innovation
- Survey your relatives, friends, and other shoppers
- Make an existing product or service cheaper
- Define and Research Your Market
While it may be the biggest goal for entrepreneurs, you can’t attract every member of the consumer population into your business. After all, your products and services will work best for a specific group of people–your target market. To whom will your products and services cater?
Fortunately, you can find a better light for your stand by conducting market research. As aligned with your business idea, you’ll have to analyze your market regarding customer behavior, industry trends and outlook, and competitors’ strengths and weaknesses, to name a few.
Market research and analysis can be a daunting, costly task, but they can lay the groundwork for your business plan. The essential part of researching and analyzing your market isn’t collecting information but putting them into action.
- Write Your Business Plan
Now comes the detailed work where you put everything into more concrete planning. To guide your entrepreneurial journey, it’s recommended to write a detailed and well-thought business plan, which will serve as your roadmap to business success. Hence, its content should offer better purpose, clarity, and overall sense of your venture.
Moreover, you can utilize your business plan to entice prospective investors to support your business. You don’t need 50 pages to create an effective business plan. In fact, less than ten pages will do as long as you’ll effectively deliver your business’ gist. The shorter your business plan is, the easier it is to read and understand.
A traditional business plan contains these vital sections:
- Executive Summary
The executive summary provides a concise overview of your business plan, highlighting key points and goals. It should capture the reader's attention and convey the essence of your vision and objectives.
- Business Description and Structure
This section outlines what your business does, its mission, and its legal structure (e.g., sole proprietorship, LLC). Include details about your industry, target market, and unique value proposition.
- Market Analysis
A thorough market analysis demonstrates your understanding of the industry, market trends, and customer needs. Use data and insights to showcase the demand for your product or service.
- Competitive Analysis
The competitive analysis identifies your main competitors and evaluates their strengths and weaknesses. Highlight how your business stands out and plans to capture market share.
- Management and Organization Description
Introduce your leadership team, their expertise, and their roles within the business. Explain how the organizational structure supports your business goals and operations.
- Products and Services Breakdown
Provide a detailed description of the products or services you offer, emphasizing their benefits and features. Explain how they solve customer problems or meet market demands.
- Marketing Plan and Sales Strategy
Detail your approach to attracting and retaining customers through targeted marketing efforts like cold calling, email marketing, or in-person networking. Outline your sales strategy, including channels, pricing, and promotional tactics. Networking is one of the best ways to meet clients and utilize your custom NFC business card to make hundreds of new and lasting connections for future business endeavors.
- Financial Projections
Include realistic financial forecasts, such as income statements, cash flow statements, and balance sheets. Use this section to demonstrate profitability and your plan for sustainable growth.
- Evaluate Your Financial Facets
As mentioned earlier, your business idea should be profitable enough, else it wouldn’t be called a business anyway. Having a concrete financial plan significantly contributes to your long-term business success. Sadly, not many entrepreneurs delve deeper into their financial goals as they don’t consider it necessary.
Inside your financial plan, you’ll have to deal with the following aspects:
- Break-even Analysis: A break-even analysis determines how many units of your products or services should be successfully sold to cover the fixed and variable production costs.
- Sales Forecast: It’s crucial to look forward and predict your future sales since it'll aid an entrepreneur to make informed decisions. Research the right sales forecast computation for your business niche as calculations vary from industry to industry.
- Cash Flow Projection: Having the same concept as sales forecast, cash flow projection, on the other hand, lets you break down money expected to come in and out of your business. It answers the question, how much money will be left over a certain period?
- Balance Sheet: The balance sheet reflects your company’s financial state at a specific period, containing your assets, liabilities, and equity. It follows the formula: Assets = Liabilities + Equity.
- Expense Outlay: Your expense plan or outlay discusses all associated expenses in your business–regular, associated, and expected future expenses.
- Regular expenses refer to current ongoing costs, like payroll and rent.
- Associated fees cover your expected initiatives’ costs, such as opening a new branch.
- Expected future expenses aren’t immediate, but they're costs defined in the future, including tax rate increase.
- Operations Plan: Lastly, an operation plan is a detailed overview of costs according to operational needs. This is where expenses relative to growth come into play, where you’re required to spend streamlining your business processes and the like.
- Find Funding Options For Your Business
On a business’s early onsets, entrepreneurs might think investing their personal money is the best option. However, it’s not always best to put your assets on the line to grow your business. So, look for specific business financing options that offer convenience and reliability. You should also consider taking a government-backed loan, such as SBA loans from Kapitus.
Debt financing is the most common funding option that works similarly to taking out an auto or mortgage loan. Essentially, debt financing institutions will lend a significant amount as your business capital to be paid off in regular intervals.
Aside from personal assets and debt financing, here are other financing options for your venture:
- Equity financing
- Funding from family and friends
- Off-balance sheet financing
- Mezzanine capital
- Angel investors
- Crowdfunding
- Factoring
- Peer-to-peer (P2P) or marketplace lending
- Work On The Legal Facets
Law compliance is an indispensable business aspect that you should never neglect, whether you’re still a small, growing business. When starting a business, entrepreneurs should always meet their legal obligations as the minimum requirements, allowing their business to operate in the industry without legal obstacles.
Observing business laws can present the following advantages to a venture:
- Improved safety and operations
- Enhanced employee retention
- Better public relations
- Increased customer loyalty and engagement
Also, here are the legal aspects of establishing a business that you’ll encounter along the way:
- Legal Business Structure: Your legal structure primarily identifies what income tax return you’ll file with your state, as well as your personal liability, paperwork, and potential to increase profit.
- Terms and Conditions: These entities will govern your relationship with your customers. Some of the information you should include in your T&C are the risks your customers may or may not take out of your responsibility.
- Tax Implications: To legally establish your business for paying taxes, hiring employees, applying for permits and licenses, and opening a business bank account, you’ll need a federal tax identification number, which is also referred to as the Employer Identification Number (EIN).
- Intellectual Property: Your products and services deserve intellectual property rights. Thus, small businesses should also know how to strategically handle their intangible assets, like trade secrets, copyrights, patents, and trademarks.
- Set Up Efficient Systems
A business is an undertaking that mostly performs recurring tasks but provides unique experiences for every employee and customer. Setting up systems and processes plays a vital role in ensuring a smooth-sailing business. Using these systems, you can accurately and efficiently uphold your operations’ standard.
With the help of innovation management tools, businesses can tap into their creative potential, assess ideas, and put them into practice while also changing to meet consumer expectations. This leads to long-term growth and a competitive advantage. (Add under the heading of Set Up Efficient Systems After first paragraph
Essentially, systems will keep your business in order, regardless of your increasing size, potential challenges, and whatnots. If you encounter mistakes and shortcomings along the way, you can trust these systems to find holes in your business.
Some of the most important systems to set up on your business are:
- Task management system
- Invoicing system
- Accounting and bookkeeping system
- Payroll system
- Scheduling system
- Productivity and workflow system
- Hiring and recruitment system
When comparing accounting software options, many small businesses often weigh the pros and cons of Xero vs QuickBooks to determine the best fit for their financial needs. When it comes to payroll, learning how to make a paystub can give you insight into your financial situation, including your earnings, deductions, and net pay. This understanding can help you manage your finances more effectively.
- Gather Your Team
Once your business is ready for execution, you’ll now enter the stage of finding the right people to collaborate with within your workplace. Business startups initially have a few members, with one to two persons having a designated role. Your startup hiring’s major focus should be essential positions that’ll help the company establish internal and external relationships.
Moreover, the number of employees you’ll hire, their qualifications, experience level, and expected salary vary, depending on your business needs and resources.
Ideally, these are the employee positions that you should aim for:
- Chief executive officer (CEO)
- Chief operations officer (COO)
- Chief technology officer (CTO)
- Chief marketing officer (CMO)
- Chief financial officer (CFO)
- Product manager
- Sales manager
- Business development manager
- Customer service representative
Additionally, you can add more roles according to what your niche requires and use CTO as a Service. Since you’re still starting small, watch out for overloading your employees with too much work. Make sure to assign tasks that are only related to their responsibilities and provide the right compensation for your team members if you give them other tasks.
- Promote and Advertise Your Startup
Marketing and advertising are acknowledged as the most critical aspects of a business, and they’re much more critical when running a startup. Since you don’t have any significant presence in your target market yet, you should emphasize your marketing and advertising efforts.
Your business’ initial stages can be a good time to be generous since you'll be able to gain more exposure through word-of-mouth marketing. For instance, you can give away a lot of freebies to your first customers, sponsor an event related to your niche, offer purchase discounts, and more.
You may want to make a conscious effort to attend as many conferences and trade events as a business as possible. That means making sure you have everything you need to promote your company to the very best of its ability. From event POS rental devices to screen and digital signage, make sure you invest in the best promotional and advertising materials required.
Oftentimes, your first clients are your relatives, friends, and colleagues who may offer support to your business, which is an excellent place to start. Building an e-commerce store and blogging website can also increase both organic and paid traffic, enhance competitive advantage and giving value to readers and customers.
Bottom Line
The entrepreneurial landscape isn’t a game of win or lose but a game of win or learn. Your business journey will have countless ups and downs, but an important lesson is to know how to get up from mistakes and celebrate your successes. Finally, when everything isn’t working out as planned, you should also know when to call it quits.
Through the key steps discussed, we wish you a successful entrepreneurial journey full of life lessons! Entrepreneurs aren’t labeled opportunity takers for nothing, so wear that badge proudly and take on worthwhile challenges.
