According to The Small Business Association, there are more than 28 million small businesses in the United States alone. Many people choose to start a small business because they have a unique idea to bring to the market. Or, they want something that is going to grow with them and eventually bring them financial independence. Being that so many people have great ideas and a strong drive to work for themselves, it's obvious as to why small businesses account for 99% of all United States businesses.
Unfortunately, unique ideas and ambition aren't always enough to lead someone to success with a small business. According to the U.S. Bureau of Labor Statistics, roughly 20% of small businesses fail within the first year. By a business's fifth year, roughly 50% of businesses fail. Deciding to quit your day job and embark on this exciting journey can be a major risk for some. This is why it's important to follow all the necessary steps to set a successful foundation for your business.
Here are some important steps to starting a successful small business. Take your time on each step and you'll be on your way to running a great business.
The first step is doing some research. Being educated in the world of business and understanding the ins and outs of everything involved is so important. There are multiple ways you can go about learning what you need to know.
If you already have a business idea in mind you'll want to figure out the market surrounding that idea. Ask yourself, does your potential business have the means to succeed? Some basic factors to think about are if your product or business will fulfill a demand in the market.
Validate your Idea
After conducting some market research you'll want to test your business idea with the public. If you know who your target market is you can directly survey them to receive their feedback. This will allow you to make changes to your idea before starting everything.
Another popular method for entrepreneurs is to make a small beta of your product to let consumers test it out. The benefit is your consumer gets to use a product or service for free as long as they provide you with detailed feedback.
Make a Business Plan
After you've completed all your research and have a solid business idea, you'll want to make a plan. A business plan is basically a written description of what you want to do with your business. It's going to describe everything you want to do and how you plan on doing it. Business plans don't need to be insanely detailed at first. You could create a paragraph in your "notes" app on your iPhone and have that be the start of your plan.
A business plan is going to be important if you are seeking investors to help fund the start of your project. They can also be used as the foundation of your company to attract like-minded business partners, employees, and suppliers.
There are many important parts of a business plan, so here are just a few of them:
- Business Concept
- Market Analysis
- Funding Requests
- Profit Projections
Choose a Business Name
Your business name is going to be what helps you stand out in the market. Choosing a business name can be hard because there is a pressure to be creative, but your name should encompass everything you and your brand stands for. Feel free to utilize the ideas of other founding members in the business or people you know that work in your industry. Another option might be to try out a brand name generator. Even if you don't find the perfect name that way, you might be able to get the creative juices flowing.
Get your Finances in Order
Depending on your business, you might not require a lot of upfront cash to get things going. However, it's important to have some savings because there are always unexpected costs associated with starting a business. If you are going to be utilizing investors you will want to have your business plan ready to present to them. This will be a good time to have cost projections outlined and have a clear idea of how much you're going to need to get started.
If you don't want to utilize private investors you can always look into small business loans and grants. If this is the route you decide to take, expect them to look at your business finances and credit scores. A credit score around 700 should be enough to qualify for a decent loan.
Develop your Product or Service
Once you have an idea what your budget is and if you secured a loan or investors, it's time to start the development of your product or service. This step can be in various stages of the process depending on what type of business you are trying to start. If you are opening a restaurant, you can't start making food until you've secured a location and passed health code checks. If your business is solely online, you'll want to start getting your products made now that you have funding. You should have already done research on suppliers and materials so this should be relatively simple.
Pick your Location
Picking a quality location if you have a store or physical front for your business will play into how successful you'll be. Just like how it is in real estate, location is everything. You'll need to evaluate factors such as parking spots, crime rates, accessibility, and visibility.
Nicer locations might be more expensive in terms of rent but this might be a necessary expense if you rely solely on your physical location to turn a profit. Look at available places that are aesthetically pleasing and have frequent visitors. You can also do some research on how well stores are performing in each area you look at. Don't be afraid to ask these questions if you're working with a commercial real estate agent to help find the perfect spot.
Acquire Licenses and Permits
You will need to do research on what licenses and permits are required for your business depending on what you're doing. For example, a restaurant is going to need a business license, liquor license, food-serving license, and food-handler permits. These are just a fraction of what is required to start a restaurant, so we recommend to get some business advising during this process.
Pick your Software and Programs
The software and programs you pick for your business are going to make a big difference in your business operations. Given today's digital age, you want everything to be as quick and efficient as possible. Outdated POS (point of service) systems might slow down the check out process for your customers, and they want their service quick.
You will also want to consider implementing a loyalty program. These are highly recommended because they keep your loyal customers coming back. Returning customers are profitable for your business because they require less advertising and will promote your business for free. Look into free loyalty programs because there is no reason you should be paying a ton of money for a digital loyalty program.
Train your Team
Once you've set up your business and are almost ready to launch, you'll need to get the rest of your team up to speed. A great employee training program is going to go a long way because your employees will be properly educated and be less likely to leave the company due to poor working conditions.
If you are operating entirely online and are considering hiring freelancers or independent contractors, you'll want to make sure that you have clear agreements and instructions for them to follow.
Promote your Business
Lastly, you'll want to set up social media accounts and start promoting your business. Social media is a great way to advertise your brand for free and accumulate a following of loyal customers.
All of these steps are important but don't necessarily need to be in this exact order. Every small business is unique and requires different steps at different stages. The most important thing you should do is to conduct research and don't be afraid to seek help.