By Fernando Berrocal
For any type of entrepreneur, launching a brand-new startup is both an exhilarating and terrifying professional experience. Even if your lifelong ambition of starting a business is about to become a reality, there are key aspects to consider before you can be confident in your eventual success.
According to data from the Bureau of Labor Statistics Business Employment Dynamics (generated from the Quarterly Census of Employment and Wages program), approximately 20% of small enterprises fail during their first year of commencing operations. Around 30% fail in their second year of operations. After five years, around half of small business owners (50%) fail, and after the tenth year into business, over 70% of small business owners ultimately also miss the mark. So, what can you do to save your startup from becoming a part of these depressing statistics?
Check out the following list, which details a series of items to keep in mind while beginning your own business:
- Start with a solution: When starting a new business, focus all of your energy and concentration on what you will try to solve–rather than what you need to sell. Having a clear understanding of what difficulties your target clients are having will aid in providing them with a solution. This end solution will help you create your identity and sell your business.
- Understand the market: To analyze your organization's brand potential, you must undertake detailed market research on your sector (and your tentative consumer base.) Some things to anticipate and discover as a result of investigating are:
- An awareness of the demands and needs of the target market.
- The maximum price they are willing to pay and be able to properly promote it.
- You must be able to sell to your target market and have a notion of what sets you apart.
For this case, it's recommended that you conduct extensive research about your clients' purchasing behavior and investigate the demographics and psychographics of your target market. Also, try to learn as much as you can about your immediate competitors and what the public has to say about your competition.
- Pay attention to what people are saying: Being aware of what’s happening in the market; this is essential for starting a successful business. You'll need to conduct thorough research, and gather information from business professionals, startup advisors, and mentors. This will provide you with a wide range of opinions and perspectives that you may use in any situation.
Spread the word about your startup, and be sure to pay attention to their responses (as well as read their body language.) Encourage them to be sincere with you; being impartial about your thoughts, desires, objectives, and ambitions is a very difficult task. Experts and veteran business owners alike will be able to quickly evaluate what works–and what doesn't. The aggregate opinion of folks in your direct proximity may indicate how most customers will react. Think of this practice as essentially unrestricted market research.
- Start small: Starting a business on a small scale helps you to keep things manageable. In this way, you'll be able to learn as much as possible. You can extend and reproduce your method after you've discovered the key to success. Start by self-financing your organization (if at all feasible.) Then, try to seek money to expand once you've gained momentum in - and knowledge about - the industry.
- Keep track of expenses: Startup costs can range from almost no cost (e.g., providing advisory services, already having a few clients of your own) to a four to six-figure investment (e.g., starting a restaurant or a shop). You'll need to calculate the typical cost of running a business once you've produced your concept. Take the following items into consideration: physical location, rent, supplies, marketing, and licensing. Be aware that you will still be responsible for your living expenses. In addition, there will also be a lot of unforeseen charges, so whatever your first estimate turns out to be, make sure to leave plenty of room for error.
- Always have a back-up plan: Despite all of your sacrifices and efforts, there is a big chance that your business may collapse sooner than later (as shown in the data from the Bureau of Labor Statistics.) You should, however, have a strong back-up plan in place. This will be your saving grace if you wind up with no incoming funds and, in some cases, significant debt.
The following questions can help shape your fallback system:
- What would you do if you didn't have any money coming in?
- Could you find a job on the spot?
- What comforts would you be willing to set aside?
- How long would you be able to live off your savings if you stopped working?
- Don't quit your day job: If you're beginning a new business, remember to always start small, and grow it gradually as you move from being a business worker into an entrepreneur. Keep in mind that it will take some time before you start generating consistent income. Start working on your startup in your spare time so you continue to earn while you expand. If you quit your job before you've fully developed your business, you may go months without a paycheck. Consider the high likelihood of unanticipated delays, such as bank loans, bureaucracy, and so on.
- Focus on your skills; delegate your shortcomings: When you start a new business on your own (or with a team,) you may find yourself taking on time-consuming chores. These matters will distract your attention from your primary business. If you spend all of your time managing your accounts, answering the phone, and other minor activities, you're wasting time that might be better spent building your business and boosting your earnings. We recommend that you assess your abilities, talents, and time constraints before enlisting the help of specialists who can finish the job quicker than you. For example, you could hire service providers such as a lawyer, marketing specialist, business consultant, or executive assistant.
- Find competitive utility rates: It's critical to keep overhead expenses low while starting a new enterprise. Saving money on energy resources is an excellent place to start. Independent utility experts can assist you in lowering the cost of your utilities. Consultants and brokers will analyze utility contracts for you, making the procurement process easier for busy new business owners.
Ready to bring your startup to the next level? Apply to MassLight’s next batch. MassLight supplies capital and a dedicated tech team. We take equity in return. Have questions? Refer to our FAQ page.