Besides having a business idea and raising capital for your venture, there are several other things you should consider before starting a business. Owning and running a start-up can be a daunting task. But in most cases, if you have a clear-cut idea of what you’re doing and how to get it done, you might find yourself overcoming some of the common challenges startups face.
In essence, a million-dollar business idea isn’t all you need to start a business. It’s just a variable in the equation. First, you must create a structure that will ensure the survival of your business in the long run.
There are several people out there with viable business ideas. Yet, they don’t have a clue on how to hit the road running. Similarly, most entrepreneurs who started up their company without considering certain factors crucial to their enterprise’s existence may go out of business sooner than later.
A 2019 survey conducted by the Small Business Administration (SBA) revealed that 20% of new businesses fail for several reasons. One of which is failing to plan well.
If you desire to own a startup and you think you’ve checked all the boxes, and now is the time to launch out, you may want to stop for a moment and recheck.
Well, not so fast just yet. Perhaps you need to check your plan against these 7 essential things you should consider before starting your business.
Read Also: 4 Habits of Successful Entrepreneurs
#1 Turn your idea into a plan
You don’t need to have all the answers at this point, but you need to draft out a plan to launch your idea into the market. A business plan answers questions on what type of business you want to do, who your target audience is and how you intend to reach them, the cost of logistics, location, and all.
You don’t need a blueprint that addresses the venture’s nitty-gritty, though you might need something of the sort as you progress. However, you cannot begin a successful business journey without a map of some sort. Without one, you’ll either get lost along the way or stop creating one eventually.
#2 Draw insights from people’s experiences
More often than not, some entrepreneurs are already blazing the trail in your preferred niche. And some of them may be ready to share insights and lessons learned on the journey.
You cannot underestimate the value of what you can learn by just asking questions about how to succeed. You may watch TEDtalks, documentaries, read books, or listen to podcasts.
The important thing is ensuring that you gather as much information about the business as possible before you start.
#3 Market survey and demand
After deciding what to do, the next thing is to determine if the market forces play in your favor. This will help you answer questions about the market’s size and where to find your customers; what are their buying habits? Where are you most likely to find them?
A market survey also points out other players in the industry that offer similar services or products. For instance, if you’re interested in starting an online grocery store, what’s the best way to reach your target customers? Unfortunately, many new businesses fail because they thought they would find a viable market, and didn’t.
#4 The cost of starting
Startup costs are another serious factor that kills businesses even before they start. This is why you should consider the cost of starting before launching your business.
Try to estimate the costs for marketing, location, logistics, packaging, branding, office utilities (if needed), and other essential must-haves before you begin.
This exercise gives you an idea of what you need to begin. Of course, you may need more funding as time goes on, but be sure that what you need to get off the ground is adequate.
Your grocery business, for instance, will require a space for storage. Other businesses have their unique needs, which entrepreneurs must consider.
This is another important factor to consider before starting your business. Do you need to employ people to help you run your day-to-day activities as you start? Or, are you better off outsourcing the help you need? Sometimes, entrepreneurs think that they need people, whereas they don’t. As much as you’d like to start with everything you need, it is also essential to save costs wherever you can.
Some businesses do not require more than one person initially, but more hands will be needed on deck as demand increases. And by then, you would be able to afford the cost of hiring extra staff.
However, if you need to hire immediately, consider outsourcing the task. Sometimes, it’s a cheaper alternative compared to paying someone full-time.
#6 Running costs
Your running cost is the operational cost of your business. It is different from startup costs. Try to consider how much you will be paying as rent per month or annually, the cost of office supplies, daily utilities like WI-FI and water. This will help you plan better before starting.
An online grocery store will need to consider how to get customers’ orders across to them. In this case, you can either outsource delivery services or create a responsive unit in your new organization to take care of that.
#7 Accounting and recordkeeping
The importance of accounting and financial analysis cannot be overemphasized. There needs to be a solid plan for this. Otherwise, you may be headed for the rocks. Accounting helps you understand the nature and volume of outflows and inflows in your business and your liquidity at a particular time.
Downplaying the importance of accounting is tantamount to not taking the venture seriously. Therefore, you MUST have a reliable and accurate accounting and financial analysis system.
We hope that you’ve seen one or two factors worth considering on this list. There are other factors such as location, marketing, compliance with government policies, and business registration that need to be considered as well.
Again, it’s advisable to do a little more research for more recent information on your chosen business before starting.