Starting your own business is the dream of every would-be entrepreneur. While it is a huge undertaking, the rewards of owning a business have proven to be worth it for millions of people all over the world. In this article, we will talk specifically about how to start your own business and how to make it successful.
We have all heard the statistics about the high failure rate of new businesses:
- Roughly 20% of small businesses fail within the first year.
- Roughly 33% of small businesses fail within two years.
- Roughly 50%of small businesses fail within five years.
- Roughly 66% of small businesses fail within 10 years.
As these numbers suggest, starting a business and having a successful business are two vastly different things. Knowing how to start your own business the right way can mean the difference between long term success and failure.
There is an old saying that people don’t plan to fail, they fail to plan. There is a lot of truth to this. Starting a business is more than just coming up with a good idea and jumping in. You need to have a plan for success, and that means you have to know how to set and achieve goals.
From the time you get that (Eureka!) moment up until you open the doors, every decision you make will impact the business. So, it is important that you carefully evaluate every aspect of your business.
1. Evaluate Yourself
The cold hard truth is that good business ideas are a dime a dozen. Realistically, the chances of your idea being so unique as to be revolutionary are slim to none.
This does not mean that you should abandon it. It just means that you will need to do more than just bring it to the market. The phrase “If you build it, they will come” works better in movies than real life.
Be Honest – Doing honest self-evaluations are notoriously difficult. Humans just are not particularly good at accurately evaluating themselves.
Here is a quick little experiment you can do with any group of 10 or more people. Ask them to hold up a hand if they know how to drive a car, virtually 100% of hands go up. Then, ask them to keep their hand up if they are better than average drivers. 90-95% of hands stay up.
So, what does this tell us?
Because it is statistically impossible that everyone is “above average”, it illustrates the phenomenon called the “Dunning-Kruger Effect,” which is a cognitive bias in which people wrongly overestimate their knowledge or ability in a specific area. This tends to occur because a lack of self-awareness prevents them from accurately assessing their own skills”.
Because of this Dunning-Kruger Effect, it can be helpful to consult others about what they see as our strengths and weaknesses. Just assure the person that you are interested in their actual opinion and you won’t be hurt or offended if they give it to you.
Some of the things you will want to include in your self-evaluation:
- Are you a self-starter? Unlike being an employee, there will be no one standing over your shoulder telling you what to do or when to go to work. If you are someone who requires a lot of structure, starting your own business may not be the best option.
- How organized are you? Planning and organizational skills are important, especially in the early stages of launching a business. Entrepreneurs that “fly by the seat of their pants” rarely succeed.
- How do you handle risk and failure? The fact of the matter is, going into business is a risky proposition. Success is never guaranteed. Smart business people take calculated risks, but they are still risks. If you are someone for whom the thought of failure or losing money would be devastating, entrepreneurship is probably not for you.
- How well do you get along with people? How are your communication skills? Most of us consider ourselves “people persons”, but business owners take communication to an entirely new level. When starting out, the business owner is a jack of all trades. You need to be able to interact with clients, business partners, industry partners, suppliers, staff, accountants, lawyers, regulators, and a host of others both accurately and decisively.
- How disciplined are you? Resilience and perseverance are two of the biggest factors that will determine your success. As we stated earlier, mistakes will be made and some of them will be costly. You need to have enough resilience and perseverance to continue getting up after being knocked down. The only sure way to fail is to give up.
If you are satisfied that you have what it takes to become an entrepreneur, it’s time to move on to the next step.
2. Evaluate Your Business Idea
Again, being able to honestly evaluate your own business idea is key. However, this step is generally not as hard as the self-evaluation because the criteria used in the evaluation process is more objective than subjective.
Identify your target market – Who are the people that will be buying your product or service? For this step, it’s important to alter your mindset. Instead of thinking like a seller, start thinking like a customer.
Can you articulate answers to the following questions?
- What is the problem addressed by your product or service?
- How does your product or service solve that problem?
- Why is your solution better than the competitions’?
- Are people willing to spend money on a solution to the problem?
You will also want to gather as much information about the people in your target market as possible. At the bare minimum, you will want to know the following about your potential clientele:
- Marital Status
- Number of Children
All of this information will help tweak your product or service to better suit their needs. It is also helpful in developing a marketing strategy.
3. Evaluate the Competition
Generally, you can divide your competitors into three categories:
- Direct competition – These are companies that offer the same products or services to the same target market as your business. You can think of Burger King and McDonald’s as direct competitors.
- Indirect competition – These businesses will offer products and services that are similar to the ones you provide without being the same. Another type of indirect competitor can be one that markets the same product or service, just to a different clientele or market segment. Subway and McDonald’s would be indirect competitors.
- Substitute competition – These are businesses that offer different products or services to the same clientele in the same market segment as you. An example of substitute competition for McDonald’s would be the local mom and pop diner.
Once you have identified exactly who your competitors are, you will want to gather the following information:
- What is the range of products and services they offer?
- Are they expanding or scaling down their business?
- How long have they been in business?
- What do customers see as their positive/negative attributes?
- Can you identify any competitive advantage they have?
- What is their pricing strategy?
- What is their advertising/marketing strategy?
The purpose of the analysis is to identify your competition’s strengths and weaknesses to better compete.
For example, if your competitors sell largely to companies with more than 100 employees. You may decide to target smaller companies with less than 100 employees. This means that your pricing and marketing strategies will need to be more in line with what the smaller companies expect and can afford.
4. Evaluate the Financial Feasibility of the Business
In developing a financial feasibility analysis, you need to have answers to the following questions:
- What will it cost to get your business off the ground and become profitable?
- What initial expenses will you have?
- What ongoing expenses will you have?
- What is the source of your start-up capital?
- What is the earning potential of the business, and how long will it take to achieve?
- How will you keep the business open and pay your bills until it becomes profitable?
Once you have this information in hand, you will need to build in an extra “cushion” for all of the extra “surprise” expenses that pop up. Additionally, most people are overly optimistic when it comes to estimating the profitability of the business and the time frame needed to achieve it.
How much of a cushion do you need? No one can say for sure. Some people will tell you to double or even triple your estimates. At a bare minimum, you should add 50% to the estimates you made.
It can be disheartening to learn that your business idea really is not financially feasible, but it’s much better to make that discovery now rather than after the money is spent.
5. Have a Professional Business Plan
If you haven’t done so already, get yourself a professional business plan. When I say “professional,” I don’t mean that you need to go out and hire someone to do it. I mean that you need to know what a professional business plan looks like and take it seriously.
Too often, new entrepreneurs neglect to create a business plan in favor of flying by the seat of their pants. This is not a good strategy. Without a plan, you won’t know where you are headed.
“It can seem a daunting task when you’ve never been faced with writing a business plan before, but it’s a crucial task which will enable your venture to start and continue on a solid foundation. A business plan is also necessary when you’re looking to secure funding or investment. Essentially, a business plan is your vision for how the business will run, what you expect to achieve, and how you will achieve those things.”
6. Use Common Sense Money Principles
Successful start-ups keep a tight rein on expenses. As an owner, you should know exactly where every penny is spent. In all businesses, expenses tend to go up over time. But in the initial stages, you can count on having more expenses than income.
In the earliest stage of being a startup owner, you will deal with an array of challenges. You have to familiarize yourself with the selected business landscape and look for options to expand the business venture while saving the operating costs.
During this time-frame, trimming the operating costs is not optional; defacto is a matter of life and death for your startup. You can’t keep moving in a specific direction. It is mandatory to drift your business towards one goal with smart planning.
7. Start With a Narrow Focus
All too often, I see new business owners get into trouble by overreaching their goals. What happens is that people take on work outside their expertise.
For example, a website designer will take on a client who wants SEO optimization in addition to the design
Assuming that the web designer is not an expert in SEO, there are several potential problems with this scenario:
- Pricing – Without knowing or understanding the scope of SEO that’s involved, the chances of underestimating and losing money on the project go way up.
- Quality – They may be the greatest web designer on earth, but that’s still only half of the job. Clients rightly expect the entire project to be done right.
- Reputation – There is no second chance for a first impression. These first projects need to be done well if you want any chance of referral business. They will also determine if your first few clients become repeat customers or not.
Remember, Amazon started out just selling books. They slowly expanded their business until you can now get virtually anything on their site.
Be like Amazon. Start with a narrow focus and expand from there.
8. Search Out and Use Specific Resources
There are a lot of free resources out there that every new business owner should take advantage of. They are a great source of information, help, and most importantly, networking opportunities. Some of these resources are general, while others are targeted to specific types of entrepreneurs. Both are worth checking out.
Here’s a partial list of resources:
- The Chamber of Commerce – Their slogan is, “Designed for business owners, CO—is a site that connects like minds and delivers actionable insights for next-level growth.”
- U.S. Small Business Association – They offer free business consulting services, SBA guaranteed business loans, certification for federal government contracting, and more.
- Women’s Business Club – It is specifically for women to network and exchange ideas, but it also useful if you are marketing specifically to women.
- BLACK ENTERPRISE – Similar to the Women’s Business Club, Black Enterprise is designed specifically for African American entrepreneurs. They bill themselves as, “The premier business, investing, and wealth-building resource for African Americans. Since 1970.”
- Hispanic Small Business Resource Guide – This guide is filled with resources and networking opportunities for the Hispanic entrepreneur.
9. Just Do It!
Okay, I borrowed the phrase from Nike, but it’s good advice. It not only means taking concrete steps to start your business but also to get out of your own way.
A lot of entrepreneurs (and regular people) are afflicted by a condition called analysis paralysis. It is when someone overthinks about a decision too much that a choice never gets made, resulting in inaction.
If you are a perfectionist, you need to be especially careful of analysis paralysis. Perfectionists tend to wait until everything is perfect before launching their business, and many never get off the runway.
Accept that you will make mistakes, that you won’t make the right call all of the time, and that unforeseen obstacles will always pop up.
If you are truly committed to the entrepreneurial lifestyle and your business, then take the plunge. The goal isn’t to be perfect, but to build a business that changes lives.
More Tips on How to Start Your Own Business
Unsurprisingly enough, all businesses are online today. Considering the advances in the smartphone industry as well as the increasingly accessible internet facility, it was only a matter of time before businesses took advantage of the online environment.
This increasing popularity makes for a promising future for a lot of young entrepreneurs. And knowing how to start an online business will open up a world of possibilities for you that was not possible 10 years ago.
So, keeping the potential for exponential growth in mind, let’s dive into the article below, and explore the steps of starting an online business that will bring you success.
1. Becoming the Master of ‘ONE’ Trade
Most successful online businesses are the master of one trade. And that’s why beginning with a niche is always a good idea.
A niche market is a focused segment within a larger market. Imagine a men’s shoes market and then, imagine handcrafted brown Italian leather shoes for men. While the previous one is a bigger market, the latter one is simply a more focused segment within that market.
Knowing the niche helps a lot to start an online business and if you are feeling a bit lost, here are some self-queries that will act as a perfect guide:
What Speaks to Your Heart?
This first way of discovering the niche is perfect for those who want to do what they love. Working in a market that you love will ensure that constant excitement and drive to do better, eventually leading to ultimate prosperity.
Decisions Based on Knowledge
The second way is perfect for those who have a lot of untapped knowledge about a specific industry. Utilizing the insights on a specific industry is a great way to find a niche. This way, you’ll already know all the ins and outs of the industry and can easily get ahead of all the competitors.
Lastly, conducting research into various industries and finding an untapped segment is another amazing way of finding the right niche. This practice will require you to come up with a new and unique solution for uncatered audiences.
2. When Is Your Idea Valid?
All the great ideas for starting an online business needs to be valid. And once you have found the niche, this validation process is what comes next.
Proving the soundness of the idea is not at all hard. A detailed industry examination is all you need initially to understand the value of the concept and recalibrate it to turn into a great online business.
Market research is a systematic unraveling of the target market. This research will include all the information on the product/service you are about to sell, the target audience, and how the competitors are operating in this crowded market.
This in-depth research will give you the initial idea of how the products can make an impact in the outside world. And once the small online business ideas are validated, it will be time to move on and craft a plan and start working on establishing the business.
3. Crafting the Map to Success
Having a proper plan for an online business is like having a map when you travel to an unknown city. This is a document that includes all the factual information on the business and crucial business data.
To help you out, here’s a list of all the information online business plans must include:
- An idea of objective – The best online business plans always have a clear outline of the business goals and intentions. Having this clear outline will increase the efficiency of business functions later on. The target demographic, business model—all kinds of information needs to be a part of this document.
- Taking stock of available resources – A startup needs to utilize all the resources it has, and that’s why the plan needs to have an in-depth outline of the financial resources in use as well as the employees and their expertise. With a better idea of all the resources in hand, starting an online business will be an easier process.
4. The Virtual Storefront: A Process of Development
The steps of how to start an online business are incomplete without the website creation process. With the right website approach, you can easily succeed in increasing business revenue.
What does that perfect business website look like? Let’s follow these steps to create an effective business website.
Choose Your Approach
There are numerous ways of making a website and for a positive outcome, you need to choose the perfect approach. Depending on the business model, initial finances, and end goals, there are two kinds of approaches for the online storefront:
- Third-party approach – Third-party platforms will connect you with the customers out there. For small online business ideas, Creating an account or site with these platforms will be beneficial because these platforms come with a large array of services as well as a big enough existing consumer base ready to utilize.
- Creating a new website – A business-specific website will help you eliminate the third party go-between and connect directly with the buyers. With this approach, you get more control over the business and how it is presented to the consumers out there and the revenue you make. Any of the above-mentioned approaches can be beneficial for easy online business startups. However, to achieve some specific business goals, having a customized website will be more beneficial for you.
Design Can Bring You Maximum Success!
For those who have decided to create their own site, the design is of paramount importance. With a great design, you will be able to engage and interact with the visitors better and encourage them to make a purchase.
The design, however, is not just a matter of aesthetics. A website’s design encompasses all aspects of it, from the visual effects to the content that’s used on the site.
To create a truly amazing design that reflects new online business concepts here are a few matters to consider:
- Keep it responsive – Many markets are simply skipping over the desktop phase and launching the business for mobile users around the world. Considering this popularity of the mobile internet market, the business website has to be responsive. This approach will help you to reach a bigger audience and conduct business on a larger scale.
- Users want a fast experience – Using high-quality images on the site does improve the visuals, but make sure all those images are compressed. Having a faster website will enhance the user experience on the site. Besides compressing all the media content on the site, you can also utilize an asynchronous loading technique that loads all the contents simultaneously, reducing friction. With a faster site, it will become easier to implement the online business startup ideas into reality.
- Define the brand – The design stage determines a lot of things for the business website and one of those things is the business image. To make an impact on the world with the business, you have to create a perfect image and for that, a brand guide is necessary. The brand guide is a document that includes all the information and guidelines on various visual elements on the site that makes up the business personality. Based on the kind of image you want to create, all the elements will be outlined in this documentation.
Where the Website Becomes Reality
Since we know how website design helps to launch a successful online business, it is time to move onto development. Online business development is where the idea becomes a reality. And to make this reality perfect, you need to make sure that the development and deployment process goes well.
A high performing site always includes all the right features that enhance the user experience as well as helps you to convert more traffic. And for the best results, ensure the use of only the latest tech stack during development.
Here are some development issues you have to pay attention to while building the business website:
- The right partner makes all the difference – For small startups who are wondering how to start an online business, finding the right development partner is going to make all the difference. However, before making a decision, there are a few things you should contemplate. The team that you are about to hire should have experience in catering to your industry, as well as an extensive portfolio and good reviews. Additionally, it will be perfect if the agency or freelancer also provides a 360-degree service, from development to maintenance.
- How to assure the quality of the site? – Testing the site is an integral part of the answer to the question of “how to start an online business?”. An experienced partner will be able to help you the most with this. From security testing to split testing, this stage in development will help in understanding how well the site functions and what needs to change. And once the changes are made and the test results come clean, it will be time to launch the website.
5. Some Tricks to Increase Online Sales
Selling online is not easy, but not hard either. In a physical store, you can use campaigns, go door to door with pamphlets, and such. However, successful online businesses have their own style of campaigns that helps them to sell more without any problems.
So, what are these tricks?
Utilize the Magic of SEO
With an increase in quality traffic, the sales ratio will go up too. And to drive quality traffic on the website, you need to utilize the SEO tricks, and probably hire an SEO expert.
When starting an online business site, ensure all the content on the site is optimized to rank for the right queries by target consumers. With a higher rank on the SERP, the traffic will increase on the site.
With the increase in quality traffic, it will become easier for you to convert visitors. The visitor data will help you to adjust the site performance. In brief, utilizing SEO will open the doors to a lot of possibilities for your small online business ideas.
Entice With Free Value
Consumers today have lots of options to choose from. And keeping all that in mind, it will be wise to create a business plan for an online startup that provides free value to the users before asking them to buy something.
Consumers want to buy from someone who knows what they are doing, especially in the case of a curated service or goods provider. And that’s why to turn the profitable online business ideas even more effective, you need to start offering free value on the site, with free products and content.
Having a blog is also another way of displaying your expertise. With specialized content on the industry, you can easily grab the attention of the audience. And once assured of your knowledge on the matter, consumers will feel a lot safer about making a purchase.
A Killer Customer Service Is Everything
Your small online business idea needs a better service option. Using AI-based interactive features to implement better support for the global consumer base will prove to be extremely beneficial. With a 24/7 automated support channel, customers will be satisfied with your business and come back more often.
It’s an Easy Process: All You Have to Do Is to Start
And there it is, the simple five-step process of starting an online business that is bound to succeed. If you look closely, you’ll notice that there are not a lot of differences between creating a physical business and an online one. The main differences are only in the consumer and competitive landscape.
While a physical store faces and caters to local competitors and consumers, the online business has to deal with the same on a global basis. So, focusing well on the global market landscape while crafting the plan will help you succeed.