Once upon a time, the American dream meant having a steady job, getting married, and living in a beautiful house with a white picket fence and a couple kids. There was no mention whatsoever of a startup business. But times have changed. Today’s American dream is about success and riches. And the most common path to […]
Once upon a time, the American dream meant having a steady job, getting married, and living in a beautiful house with a white picket fence and a couple kids. There was no mention whatsoever of a startup business.
But times have changed.
Today’s American dream is about success and riches. And the most common path to achieve that dream is to launch your own startup business.
We all want to be the next Uber or Airbnb of the world, but the truth is that starting a business is hard work. Successful businesses take years to become that way through struggle and hard work.
That’s the bad news.
The good news, however, is that ANYONE can start a business.
Regardless of if you have a college (or even high school) degree, you can start your own startup business.
Now, there are caveats.
You can’t operate your own plastic surgery center without attending med school.
You can’t open your own law firm without first being a lawyer.
But with the exception of specializations requiring years of training, starting your own business is fair game.
Below are some principles involved in creating a business. Think of this article as a guide. And after reading this short guide, you’ll have a much better understanding of exactly what it is that you need to do in order to take your business from an idea to a thriving company.
It all starts with an idea.
And it doesn’t even have to be a complex idea.
Just look at the Snuggie. Everyone’s favorite blanket with sleeves sold more than 30 million units within 5 years of its creation. And the Snuggie wasn’t even an original idea. A college student came up with it on a cold night in his dorm room in 2001. But Snuggie had the idea to make the product more quickly, of a higher quality, and at a cheaper price than the original Slanket.
So before you can do anything else, you must have an idea. You can’t begin thinking about your marketing plan if you don’t have anything to market.
Light sabers sound like a good idea, but the technology needed to make them is still a couple years away…
That’s not to say don’t attempt to create something new. Just because something hasn’t been done before doesn’t mean it can’t be done. If you have the knowledge, resources, and idea to create something which can benefit people, you owe it not only to yourself but to your prospective customers to bring your idea to life.
What makes the product unique? Why should someone buy from you instead of a competitor?
The easiest way to figure this out is to go talk to people. Not just your family and friends. Talk to strangers on the street, or in a coffee shop, or wherever your target audience may be. The point is, you don’t have to guess. For example, if you want to build a new kind of workout program, talk to beginners at the gym. When you’re qualifying your audience, make sure you don’t lead them towards the answers you’re hoping for and want. Ask open-ended questions and really listen to what they tell you.
Instead of asking “would you buy a green car”, ask “in what colors would you buy a car?”
Instead of asking “is safety more important than appearance?” try something like “please rank the order of importance for your new vehicle: safety, appearance, performance, price.”
Most entrepreneurs are in love with their idea from the start. When validating your idea, make sure you are open to being told it won’t work. A willingness to listen there can save you a lot of time and hassle down the road. But don’t be too afraid either! Airbnb was turned down by investors for years before hitting it big. The idea of strangers paying to stay in a stranger’s home seemed unfathomable. There’s a fine line between possible and impossible, and it’s up to you to decide if your idea can succeed.
And to do that, start with an idea.
Now that you’ve got an idea, you’ll want to get an idea for how your new business would actually work. Having an idea is your starting point, but before you do anything else you should learn how your new business industry operates.
What are the legal requirements? For example, if you’re opening a bar, you need a liquor license. But if you’re opening a wine bar, you’ll need a different class of liquor license.
What does staffing look like?
How much inventory do you need on hand?
What are the industry’s best practices?
The best way to learn of all of this is to go work in your industry for someone else whose business is already thriving. Get involved. Get your hands dirty. Show up early and stay late. The more you can do and learn from working for a successful business owner, the better your chance of success running your own business.
This is the exact reason every new job has a training program.
Think of working for someone else in your new industry as your training program. Learn how to do anything and everything you can, and just remember that you’re learning it all for yourself.
Unless you are bankrolling your entire business yourself, you’ll need financing. Regardless of if you’re talking to friends, family, investors, or a bank, you’ll be expected to present a business plan. Your business plan is an outline of what your business will be, how much it will cost, and how it will grow. Without a business plan, your business will almost undoubtedly fail.
Things to consider when creating a business plan:
You can find a good example of a business plan template here.
After completing a business plan, you should feel confident and able to answer any question a bank, investor, or prospective customer may have for you. But more importantly, you will have a roadmap for the future of your business. There won’t be any guesswork. The more specific you can be in your business plan, the faster you can execute your decisions and launch your business.
Make it a point to identify exactly what you’re looking for. Instead of writing, “our car service will use a fleet of cars”, get specific and say “our car service will use a fleet of cars consisting of 5 2017 Prius Vs, 2 GMC Denalis and 1 Mercedes Benz Sprinter Van”. Then, when you’re ready to purchase your vehicles, you’ll already know what you’re buying and can secure vehicles more quickly. On the other hand, if you want until you’re ready to purchase the vehicles then you’re costing yourself time by having to pause operations while you figure out which cars you want and how many of each.
Planning ahead by utilizing a business plan will save you time, money, and hassle, and give your business a much better chance of success. Always start with a business plan.
A marketing plan technically belongs as part of your business plan. However, marketing plans are critical to the success of any business, and thus deserves its own section. After all, no matter how great your idea or business is, without any customers it will fail.
Your marketing plan is your blueprint to letting your future customers know you exist. Begin by exploring your own brand. What does your company represent? What is your brand? Who are you?
A great lesson taught by Chip Conley, Head of Hospitality for Airbnb, is to picture your company as a magazine or a combination of magazines. Every choice you make should then reflect your magazine. If you’re a modern men’s gym, call it a combination of Men’s Fitness magazine and Wired magazine. Your target market would then be some combination of the readership of those magazines.
Be as specific as you can and create what’s called a customer avatar. This avatar is a representation of your audience. You can have as many avatars as you like to represent as much of your target market as you like. Are you targeting men? Women? Both? How old is your avatar? Where does s/he hang out online? What about offline? What are her eating habits?
You must understand your target market as intimately as possible so that you put yourself in the best position to start a conversation with them. If you’re starting a new line of ready-made vegan meals, you wouldn’t promote your business at a butcher shop. But you might hand out samples at your local yoga studios.
After you’ve mapped out who your audience is and where to find them, you have to plan what to say and how to say it.
If your business will be a gym, don’t say “we’ve got the latest and greatest technology, Pilates and yoga daily, and a world class sauna.” These are all great, but it’s not about the customer.
“Tired of dealing with outdated equipment and technology on your fitness journey? Worried about how to exercise and when? Or do you just need to unwind from a long day and a tough workout? Our daily Pilates classes will make sure you’re never bored and always have someone guiding you before you head to the sauna to relax.” While this is just a loose example, the point is to focus on the customer’s needs rather than just what you are offering.
Once you’ve crafted your message, figure out how you plan on getting that message to your future clients. If you’ve already done your business plan, you should know your future operating costs and have a budget in place. This budget will tell you exactly how much you have available for your marketing plan. As a new business, your budget will most likely be small. Your responsibility is to allocate those funds wisely and maximize your marketing budget so as much of your target audience sees or hears your message as possible.
While you may get a great deal on a TV ad airing at 6 am, is your target market watching TV at 6 am? Even if your audience is parents with young kids who may have the TV on that early, are they watching the TV or are they hustling around the house to get their kids ready for school?
Traditional advertising and marketing channels can be expensive and ineffective. Rather than television and radio, as a new company, you should focus on social media and local marketing. Facebook has more than 1.78 billion active users, all of whom provide their information to Facebook, making it easy for you to find exactly who you’re looking for and target them with ads relatively cheaply.
When it comes to marketing, you’re only limited by your imagination. But instead of imagining it, write down your marketing plan and be as specific as possible. And when you’re ready, go out there and make it happen!
With all the research and planning out of the way, it’s time to get the money you need to pursue your dreams.
Some financing ideas include:
If you’re interested in government loans, explore the U.S. Small Business Administration loan program page.
When you secure financing, regardless of from who or where, make sure the terms are ones you can live with, and incorporate the interest rate into your budget and business plan. For government loans, any loans with maturities of more than one year, the normal fee is 3 percent of the SBA-guaranteed portion on loans of $150,000 to $700,000, and 3.5 percent on loans of more than $700,000. For private lending, that number can rise significantly higher.
While financing a business is helpful, many entrepreneurs today choose to bootstrap and not take any outside investment. While it’s difficult, it is by no means impossible. You just have to make every decision wisely and watch every penny. Bootstrapping a startup means you have no room for error and can be incredibly stressful. While loans may have interest, they also provide a business with runway and operating capital to get things done.
Whether you choose to take on investors or bootstrap your business, make sure you understand exactly what position you are putting yourself into financially.
Unless your business is digital, you’ll most likely need an office and/or store from which to offer your new product or service.
Your location should take into mind your budget and your business plan. Or more specifically, your target market which you analyzed within your business plan. By identifying how much you can spend on a location ahead of time, you will ensure that you don’t overspend on your new location, leaving funds for repairs, upgrades, and general costs such as paint and wiring.
Your new store should be right in the middle of a dense population of your target market. The easier it is for your tribe to get to you, the easier it is for your business to succeed.
Look for a good balance of rent costs and earnings potential, in an area you actually like which is filled with your target demographic.
You want employees excited to come to work, and being in a hip, cool area is great for that.
Select a location based on rational thought, not just falling in love with a place because of a view or local amenities. Remember, your store is about your future customers, not about you.
Starting a business is a long, arduous process, but you give your business a better chance of success by selecting a great location.
With financing dealt with, it’s time to take action and create your business. In this step, we’re not talking about sales, but legalities.
What is the legal structure of your business? Are you a sole proprietorship, a partnership, a limited liability company (LLC), a corporation, or some other structure? You should already have this information from your business plan, and now is when you execute on it.
Fill out the appropriate paperwork to register your business, make sure you have all your permits in place, and confirm you’ve registered your business name.
What about insurance? Do you need to have bonded employees? Is there a special type of insurance particular to your business? Make sure to dot those “I’s” and cross those “T’s”.
You should be familiar with the what permits and paperwork you need to start your business from your research. However, if you’re not 100 percent clear, contact your local clerk of courts for a little guidance as to who you should speak to and exactly which permits you need to have ready.
As you near your grand opening, work on building relationships by getting involved both locally and nationally.
At home, you can volunteer your store or service to sponsor local charity events or organizations, which can not only bring a lot of positive press coverage but also give you an opportunity to meet tons of prospective customers who will remember you. Whether those prospects frequent your business or not, you being at events with them gives you the opportunity to make a positive impression on them, making it more likely they’ll at least think of you when choosing a business in your industry.
Nationally, you’ll want to join associations, networks and groups. The ability to network with industry veterans is priceless. It’s through these communities you learn trade secrets, and stay up to date on the newest and greatest industry practices. In addition to that, these groups are a great way to land new referrals from out of town industry connections who can’t service the request but can guide a new client to your business, which can help.
A good starting point is your local chamber of commerce. While there is a cost to joining, there are also benefits, including newspaper coverage and discounted services at other chamber businesses.
Staying involved costs time and money, both of which tend to be in short supply when starting a new business. But the rewards of your involvement can help elevate your startup business to success, and should not be ignored just because of cost.
If it fits into your budget, get involved.
Now that your business has financing, an office, and a plan, it’s time to get some help.
Unless you are a one-person accounting firm, you cannot do everything yourself. If you try to handle too much to save money, your customer service will suffer as customers wait around for service and start to get angry.
You have to have a plan in place not only for scheduling employees but for hiring them, as well. What traits are you looking for in an employee? What questions can you ask them in an interview to have them demonstrate those traits? Where will you find these prospective employees? Are you going through staffing agencies? Or using Craigslist or Indeed for hiring?
All are absolutely valid hiring channels. However, when starting a new business, reaching out to friends and family for help is a good place to start. You already have a built-in level of trust and a warm relationship with each other, making it more likely to be a good fit between company culture and your employees. Any employee who does not match the company culture should be let go, as s/he runs the risk of causing friction and drama within the business.
Once you know who you want to hire and where to find them, it’s time to consider how to schedule them properly. Labor will always be your highest cost, but not having help puts your business at risk of alienating customers. Initially, you’ll want to over deliver, and having extra hands to help, regardless of industry, is a great way to do that. Eventually, you’ll figure out the perfect balance of supply of employees vs demand of help needed by customers. Until then, plan on staffing heavily.
Even if you hire a handful of industry veteran superstars, you have to make sure everyone does everything the same way. This protects your business from inconsistencies which can eat into inventory and revenue.
It’s critical for a business to be consistent in everything, which is why training is so important.
If you’re opening a retail store, everything needs to be rung up exactly the same way. Clothes need to be folded and displayed exactly the same way. Customers should be greeted in exactly the same way, regardless of who is working. The point is to ensure customers have a consistently great experience, and the best way to do that is to control the user experience through training.
The best possible strategy for any business is to focus on systems and working procedures. Document everything in writing, from opening duties to closing duties to how to interact with a customer and even how to store inventory. Every employee should know what “right” looks like.
Working procedures will have saved money by ensuring consistency and allowing for proper tracking of inventory and profits.
While you no doubt will feel pressure to get help immediately and hire employees, don’t rush the process. Hire slow, fire fast, and protect your business by having a staffing plan.
Everything is ready.
Your financing is secured.
The new location is spectacular.
You’ve found the perfect team of employees.
Now, it’s time to bring in the customers.
The success of any startup business is a mix of painstaking preparation, dedication, determination and the sincere desire to fill a need. It’s all about getting that “can-do” attitude on. Business owners who want to make it shouldn’t be afraid of doing real work or mind getting their hands dirty.
Go out there and hand out those flyers. Talk to people. Let them know your business exists and is now open for business.
Your idea is now a business.
Good luck, and may the odds be ever in your favor.
We’ve prepared the 21-Point Business Startup checklist, an easy to follow, step-by-step guide to help you get a head start on your startup business venture. Remember to download your copy here.
