Despite the common headline that small businesses tend to fail, it’s small businesses that we have to thank for much of the stability of our economy. Small businesses provide create about 65% of all new jobs. In America, there are an estimated 28 million small businesses, and another 22 million sole proprietorships. With so many people starting businesses, there’s a chance that you yourself have done so, or that you hope to do it someday. For many first time entrepreneurs, knowing where to start is the most difficult part.
The first step in starting a business that lasts is finding a problem in the world that you can fix through hard work and strategy. The Harvard Office of Technology and Development breaks this into a simple guide to starting a business:
Demand: You want to make sure that your business is fulfilling needs that cross through several marketplaces.
Competition: Successful businesses understand who is their direct competition, and how these businesses compare and contrast with the new business.
Funding: Successful businesses identify and initiate funding methods.
Commitment: Investors are identified who will be committed and involved throughout the startup process.
Support: A leader must be identified. Legal counsel is frequently sought out at this stage.
Management: Managers, Advisors, Directors, and involved investors must be identified and organized.
Once you have these details figured out, you can move to other plans, such as:
The Business Plan – The business plan explains what your business is, how it is going to act, and how it is going to grow. Usually a business plan must be written in such a way that a real business could last for 6 months, a year, or even five years, if it were to follow this plan. Issues of product, pricing, demographics, and other considerations will be contained in the business plan.
Networking – During this stage, relationships with key industry people and thought leaders are sought out. Team members are identified and brought on board.
Acquiring Funds – You’ve got the make the money to start up your business somehow. These funds will cover marketing efforts, legal fees, equipment costs, and much more.
Create a Minimum Viable Product – This is a product that, if you didn’t expand your business at all, could sustain you. It sells for much more than it costs to produce. This is the foundation from which your future business grows.
Presenting to Investors – An important stage by which you bring in capital necessary to sustain and grow your business during its first months and years. Some of your investors will have an important hand in crafting key aspects of your business.
Equity – Have this conversation early, and get it in writing. Having a legal agreement about how founding members split up equity at the sale of the company, or when one founder leaves the company, is very important. It lets everyone know where they stand and establishes a precedent for anyone else brought on board.
Marketing Strategy – This is an integral step with many aspects. It’s the only way to grow your business, but good marketing is almost like a new business in itself. Approach this with the help of professionals.
As you can see, starting a business is no cake walk. But it can be done and it can be done well, the first time. So take the time to make a strong strategy before you bring your business to market.