There is nothing like working for your own company. In today’s globalized economy, entrepreneurs have a lot of opportunities to start their own businesses from scratch. Fast paced communication networks have allowed vendors to source orders from all over the country. People sitting on the West Coast in the United States can go online to find a stationery provider or business card printer residing on the opposite end of the country on the east coast. There are multiple industries that entrepreneurs can venture into. From developing corporate websites to selling stationery online, starting a business has never been this easy. Having said that, it is important to understand that there is a fine difference between starting a business and growing the business to a level where it can pay for the raw material and other expenses. A successful business idea is one which is sustainable and has a long term opportunity in the market.
Pre-requisites for starting a business
To start up your own firm, you need to have a great idea, along with an experience or skillset that will help you implement that idea into a real business environment. Finally, you will need a good team to support your venture. If you have all these three ingredients, chances are high that you will not only set up your own firm but will take it to a level where it can pay for your fixed and variable costs, and also generate a regular monthly income. Here is a brief description of each of the components required for starting a business:
A Great Idea
For business enthusiasts who want to launch their own firm, it is important that their product or service solves a particular problem for their target audience. Entrepreneurs residing in places like Silicon Valley in California, New York City in New York State, and Beijing in China generate many ideas every day. However, only a few of them gain investor interest. Even those that get the funds required for starting a business are not always successful. The main factor that determines whether a business will grow with time or slowly die out is whether the service or product that it provides is required by the market or not? A business enthusiast may start up a career management firm for young mothers. However, chances are very slim that this business will make a strong impact on its target audience. Why? Because young mothers quit their jobs to take care of their newborn and do not require a career management service at that age.
Required Skill Set
If you do not have the experience or skill set required for running your new business, there is a high probability that you will end up losing more than what you make. Successful businessmen know their product or service inside out. They have either attained the required education or have spent a number of years in the same field before starting their own venture. If you do not have an accounting degree or experience and want to set up your own accounting firm, you will be quite dependent on your CPAs. If they can’t solve a problem for a customer, they would not have anyone to look up to for technical advice. This may result in you losing your customer to your competitor. Therefore, having the required skillset always helps in starting a business.
A Great Team
Starting a business from scratch is not an easy task. You have limited funds, there are no regular working hours, and no specific job description for each member of the team. Therefore, it is important that you hire individuals who share the same passion and drive to make the business work as you do. The team members you choose depends a lot on the product or service you want to provide to your customers. If you are an IT firm, the majority of your staff would be software engineers. On the other hand, if you want to open up a restaurant, your team may comprise of chefs and servers.
Apart from that, the individuals in your team should be hardworking and show consistency in their work. They should have a go-getter attitude and should count the number of milestones achieved rather than the number of hours worked. It is always good to lead by an example. Therefore, if you want your team to work long hours, it is best that you come into the office before everyone else, and leave after everyone has left.
How to Secure Funds for Starting a Business
There are many ways in which you can acquire funds from different types of investors for starting a business. Some people have enough cash in their pocket to get the ball rolling without taking anyone’s financial help. Initial expenses may include taking up the lease for an office space and paying for utility bills and staff members for the first few months. Once the business starts running, owner of the business may prepare valuation models and put their future cashflow numbers in front of the investors to secure the required funding.
People who do not have any capital and just a lucrative business idea, prepare a detailed business plan to attract investors. The business plan may include the information about the new product or service, who the target audience will be, what will be short-term and long-term goals, and how much revenue will be generated by the business in the coming years. After having a closer look at the business plan, the investor may decide whether they want to provide ‘seed funding’ to the business or not.
Additional Requirements for Starting a Business
Apart from having the required tools and funds, business enthusiasts need to consider legal requirements for starting a business as well. To register their business with the government, entrepreneurs need to decide what their corporate structure will look like. Whether they want to register it as a sole proprietorship, a partnership, a limited liability company or an Inc. Each corporate structure has its own tax implications and asset and liability treatment. The corporate entity will then be registered with the Internal Revenue Services so that the employer can pay their required taxes as and when required.
Although starting a business is not an easy job, it is a journey filled with challenges, surprises, and celebrations. Successful businessmen are known to have a great vision, positive attitude, strong decision power, and above all, the ability to keep themselves and the people around them motivated all the time.