6 Things To Consider Before Starting Your Business
Entrepreneurship requires a methodical madness. One should have the audacity, energy and a certain kind of informed insanity to pursue an idea until you spin it into an enterprise that generates sustainable profit.
Entrepreneurship requires a methodical madness. One should have the audacity, energy and a certain kind of informed insanity to pursue an idea until you spin it into an enterprise that generates sustainable profit. There may be several reasons for an individual to embark on entrepreneurship but invariably everyone toying with a business idea must consider some basics before taking the leap of faith. The following is an overview of six things you need to consider before starting your business.
1) The Idea
It is very important to subject your idea to severe scrutiny before you embark on the life-changing venture with it. The strengths, weaknesses, potential opportunity and threats for your idea have to be identified. You have to be very specific on what significant gap in the market your idea is going to fill. This will help you to size up the market and do a reality check on the idea to determine the commercial viability of the idea. Market research is the key to evaluating the feasibility of the idea. When you are convinced on the size of the market, viability of the idea, commercialization and your competitive edge then it is time to go ahead with the idea.
2) The Customer
Knowing your target market and clearly spelling out their demographics is crucial to succeed in your business. Knowing your potential customers’ age, gender, education, income, profession, social standing, hobbies etc determine several other factors of your business, such as pricing, marketing and distribution of your services or products are critical ingredients in the recipe for business success. It is also important to continuously keep tab on them as your business grows because it will eventually help you adapt to the evolving needs of your target market and save you from becoming obsolete.
3) The Competition
Knowing the competition is equally important. This will help you understand not only your weaknesses but also the strengths. While it may be a drain on resources to work on your weakness or compete with your competition head-on, it is prudent to focus and build on your strengths. It is essential to analyze the indirect competition as well. Knowing your competition well will enlighten you on the strengths and weaknesses of your business that you were not even aware of earlier and will also help you bolster the Unique Selling Proposition (USP) of your business. This may highlight areas where there is room for improvement such as product support, free upgrades, availability, pricing, payment terms, etc.
4) The Business Plan
While you may think it as essential paperwork when you are meeting potential investors and approaching banks for loans to launch your business, the business plan is essentially the blueprint of your business. Working on the business plan will give you a much clearer idea of your intended business, it is a kind of a self-evaluating and exploratory exercise which makes you methodically evaluate every aspect of your business and derive a realistic understanding of your business, available resources and potential profitability. The financial projection will help you set conservative revenue goals and also assist in controlling costs to achieve the desired profits when you get operational. Besides spelling out the mission and objective of the business, you will also be setting milestones. These milestones will provide clear targets to achieve and will also eventually help you to evaluate your business performance as you progress.
5) The Capital
This is the most daunting aspect of starting a business, but if you are resolute in your commitment and are able to demonstrate the potential of your idea then this will be an easy hurdle to tackle. Often entrepreneurs dip into their personal savings or resort to friends and family to secure the capital for their venture. Besides these conventional sources nowadays there are other sources like venture capitalists, angel investors and a host of government schemes to provide you with all the important seed capital. Always be meticulous in your paperwork when it comes to finances and keep your personal and business financial matters siloed. It is quite common for entrepreneurs to go without drawing salary from their startups in its early stage, therefore make sure you have other sources or savings to meet your personal expenses.
6) The Core Team
Always remember that business pursues a moving target and it is essential to have a core team that shares your enthusiasm, commitment and subscribes to your vision. You have to communicate your vision, and being able to identify that core team that will help you on your mission and steer the business towards the vision. The core team should be supported with enough resources to perform their mission. Maintaining transparency with the core team will help them understand the state and nature of business and enable them to share their expertise in taking the business to the next level. Apart from the core team of employees, you must also develop a network of strategic partners and advisors from diverse fields that are related to, or impact, your business. These advisors and strategic partners will be able to provide insights and foresights on various external factors such as industry trends, regulatory environment, economic cycles, financial markets, legal aspects, tax regime, consumer behaviors etc.