If you have made the decision to start a business, first I want to say “Wow, Congratulations!”
Starting a business is exciting and it can be scary too. Most businesses fail before they even get off the ground. It’s great to want to start a business and take control of your future, and the most important thing is to have someone that you trust that can help you along the way.
Most articles on starting a business focus on the legalities and superficialities of starting a business lol! They usually get into these topics:
- Choose a business name
- Choose a legal structure: proprietorship, partnership or corporate entity
- Get a business logo
- Get your domain name or URL for your business
- Setup your social media campaign for your business
- Build a website
- Design your business cards & brochures
- Get a business bank account
It is true, you do have to do all those things however there are things that should be done first. Here are the top 3 things for you to undertake before jumping into all these legalities.
#1 Thing to Do To Start A Business
Establish profitability. It’s the number one priority for starting a business to understand how this new business will be profitable.
This doesn’t mean your business will be profitable on day one. But, it’s critically important to understand how quickly your business can and is expected to become profitable. Profit and cash flow are what keeps a business alive. A business that runs on savings is not really a business.
Now it is possible that in the early days the business is investing more than its generating profit, especially for businesses that require a lot of upfront investment. However it’s important to plan ahead for exactly how much investment is required and when do you expect cash to be flowing back into your hands so that you can know that you have the investment dollars available to bridge the gap from the beginning of the investment up to when the cash flow starts paying the bills.
#2 Do Research To Prove Your Market
I cannot even count how many times I’ve worked with a founder and they identify their market by quoting the worldwide demand for a product similar to theirs. That’s called “boiling the ocean”.
As a start-up business, it’s critically important to quantify your immediate market opportunity. Who are the people that are closest to you who might want your product offer?
- Go to those people and talk to them directly.
- Ask them questions and really listen to their answer.
- Understand their problems and make sure your product offer fits into want they want as a solution.
- Get them to agree to buy your product at a certain price when it’s available.
Until you have people (not your family) that actually pay money to buy your product, there is no proof of market.
#3 Outline Your Business Plan
Your business plan can be a 2 page document that outlines what your vision is for this new business. The fundamentals of your business plan are:
- What are you selling & for how much?
- How much will it cost you to buy/create what you will sell?
- What are the costs of the people, supplies or products that need to be in place to sell your product?
- Where will you sell the product and to whom?
- How many units of the problem do you need to sell?
- To breakeven?
- To achieve your profit targets?
- Can your savings or credit float the business cash flow until the business achieves the profit targets? If not, who would you ask to be an investor?
- Define your early stage business goals:
- Goals to achieve in 6 months
- Goals to achieve in 1 year
- Goals to achieve in 2 years
It used to be that business plans automatically included 5 years of future planning, and indeed if you are looking for investors in your business this is still the case.
However, if you are going to fund or bootstrap this business yourself we can be very practical when building the first business plan.
The bottom line is to be sure your business idea can be profitable and sustainable right from the beginning with a little bit of homework and exploratory conversations.
Get a free report called “The 3 Biggest Mistakes Startups Make…and How To Overcome Them All” by visiting this start-up focused website here: MyStartupToolbox.com
To Your Success!