Entrepreneurship can often be a challenging endeavor. And no university or college-level course can adequately prepare you for it. It is common practice to learn on the job. At first, you will need to give it your all by directing your energy to the most crucial tasks to give your business the competitive edge it needs to thrive.
Some good initial steps would be to research market competitors, assess and understand your target industry's legal framework, and evaluate the risks involved to accurately allocate your finances before starting your business. Also, Don't Work Another Day has some great tips on investing and entrepreneurship that can help get your startup business off the ground. Here are some important things to know before starting your own business to ensure success:
1. Have a Formal Business Plan
Lack of a formal business plan is often one of the most devastating mistakes entrepreneurs make. A good business plan is vital in helping you identify shortcomings within your idea and serves as an essential strategy in winning investment from angel investors or other fundraising avenues.
Before undertaking your new business venture, it is prudent to draft a business plan to help identify your proposed service or product, the total costs involved, your corresponding funding needs, who your competitors and customers are, and the existent market opportunity. You should also try to anticipate the challenges your business may have to deal with in the future.
An important part of formalizing your business plan is conducting intensive field and demographics research through holding focus groups, conducting surveys, and researching SEO.
2. Knowing Your Customers and Market Is Crucial
The majority of businesses fail due to a lack of understanding of their perceived target market. Also, when you are finally ready to grow your business into different areas, don't assume that your new customers will have the same priorities and tastes – try to get to know them as well.
3. The Owner is Separate from their Business
Separate your finances from that of the business, and consider yourself a shareholder or employee in your business. Most entrepreneurs who fail don't draw the line between their personal finances from that of the business.
4. Choose the Right People to Be On Your Team
It is common knowledge that it is impossible to run a successful business alone – you will need a good team to grow. In the initial stages, you might manage to handle stuff on your own. However, as your business heads to growth, the work will pile up, and soon you will realize you need a competitive team.
You must tread with caution when it comes to onboarding the team since the wrong team could prove detrimental to your business operations. Be keen to only onboard individuals whose goals align with yours and are willing to help grow the business as they would their own.
5. Understand Your Tax Burden
As a business owner there are many payments you need to make and filing them late can lead to severe consequences. This includes paying a penalty or being convicted with a fine or imprisoned for not less than one year. So, it's crucial that you stay organized with your taxes and fees.
Find out how much payroll you'll be paying so that you can ensure you make your tax payments in time and avoid penalties. This is important since the timing of your taxes can vary depending on your payroll. Figure out any other taxes that you may be required to pay to ensure compliance.
6. Find a Good Mentor
Having someone who has made this journey before on your side can set you up for success in business. Your mentor will hold you accountable for your actions and advise you accordingly, helping you avoid and overcome the many challenges when starting a business.
That's why you should choose your mentor wisely. Ideally, it should be someone who has gone through the process and has a strong track record of business success. Make sure they believe in your idea and can give you their honest opinion.
Network with various professionals and leaders in your industry to learn how they've succeeded in their ventures. You may also consider getting a coach to advise you on the best ways to approach the business world.
7. Learn to Manage Debt Better
As a first-time entrepreneur, taking out debt for starting your business can be incredibly dangerous. That's because startups are typically risky, especially if it's an untested business model. Most debts are usually guaranteed by the business owner. So, if you take out a personal loan or homeloan to start a business, and the business fails, you will still need to pay it back, plus the interest.
Failing to pay back the loan can attract a late fee or make the lender seek legal proceedings against you. Your lender can also report you to the credit bureau for late payment, making your credit score drop. If you must take out a loan, ensure you take an amount you can manage to repay and be careful about how you use it.
8. Understand the Risk
Launching a new business comes with a host of challenges and risks. Understanding and calculating the risks associated with starting and running a business can help you plan accordingly on the best ways to overcome them. Before moving forward with your business idea, assess the different risks in your industry and prepare for them early enough. For instance, if you're looking to open an accounting firm, you may want to buy professional liability insurance to protect you when a client files a lawsuit against you.
There is no single, universally accepted approach to business. What proved to work for one may not bear the same results for another. However, it's best to avoid the rookie mistakes made by those before you. The tips outlined above can be a good foundation to help run your business smoothly and increase your chances of success. Though you may make some mistakes at the onset, having this knowledge earlier will help you prepare your business for success.