Establishing a startup is no joke, it takes a lot of hard work, dedication, motivation and of course investment, and all this is just what you’ll need in the initial stages, as your business grows and expands you will need to put a whole different level of dedication. So grab a pen and a paper and start taking notes!
- Type of company, competition and owning your name
First and foremost is deciding the type of company your startup will operate as; a partnership, sole proprietorship? It is important to know the difference and how each operates as there are specific advantages attached with either type of setting. Also this will lay the foundation of the regulations that you are meant to be following. It is important to own a name for the company, make sure the name you end up choosing is available and it defines you as a business. Search the list of trademarks registered to ensure that you don’t pick the same name that has already been chosen and a trademark has been raised.
The second most important thing is; knowing your competition. If your idea is common then you need to focus on ideas that differentiate you from your competitors, if you have a unique product you have to consider a niche and devise a marketing plan, know your demand before you start supplying. To summarize the last three lines; know as much as possible about the market before starting.
Calculate the amount of money that you will need to invest in the business. Investment doesn’t always necessarily mean the amount of money you will use to purchase the assets and carry out the business, a number of different costs add up to your initial investment which you need to include in your calculations. You need to understand the laws and regulations applicable to your start-up, this will help you forecast your future cash flows in a prudent way which will enable you to devise a return that you could expect on your investment.
- Paying yourself:
When starting out, you won’t be looking to buy a Ferrari anytime soon, but you will need cash that you will pay yourself to meet your personal expenses. Remember, a successful business keeps the business and owner separate, even if you are a sole proprietor, compute an adequate salary for yourself and don’t cheat it, stick to what you are making and reinvest the rest. This will help keep your feet on the ground and this way you will be able to better account for your personal expenses.
- Know the law:
One of the most important things is to know what law applies to you, try to obtain licenses that would be applicable to your startup as quickly as possible. Consult a lawyer and discuss all possible risks you feel are surrounding you. Its best to be safe than sorry. If you have taken out a bank loan for your startup then make sure you will have the adequate funds to make the interest and principal payments on time, make sure you understand the collateral if any, that you keep when entering business contracts, and ensure that you will have the means to fulfill your contracts
- Deal prudently:
Liquidity is an important aspect that you need to consider. If you have any stock market experience then you will know that its best to diversify the risk before it surpasses your risk appetite. Make a contingency plan whist making a business plan, it’s good to be in control of what you are doing, and prudence can help you get out of sticky situations quicker compared to if you go in unprepared. This goes without saying but always at all times keep emergency cash and make sure to rebalance the amount periodically, this will help you stay and feel secure in your business.
- Know your market
Jack of all but master of none is not something one boasts about. Know who your consumers are, the truth of life is that it is absolutely impossible to please everyone. Market research is extremely important, no matter what sector of the economy you wish to do business in. knowing your consumers preferences, taste is important because they will make you a success. Playing it smart is the way to go, I always tell my clients; make and take the market, simply this means is apply everything to yourself, see if you would buy what you are selling, be objective in your decisions and improve where you feel you lack.
- Online presence:
I’ve seen many startups who fail to update their websites and social media, which gives the impression that the owner is not passionate enough. Its fine if you have to become that ‘self-promoting’ person on Facebook, but if you don’t promote yourself then who will? It is necessary to have a front to your business where interested people can come and see what your business stands for. Presentation is key, the better you present your business online the more credible it looks and catches attention of a larger crowd. Updating the site and social media is just as important as having one, you need to show your followers/consumers that you are very much alive and developing.
With 9-5 jobs you have a pretty standard and a predictable routine, you wake up, get dressed, go to the office, do work , come home and repeat. But with owning your own business you can get a little lazy, especially if you work from home, you will find yourself watching Netflix in the afternoon and working whilst in bed, while that may seem as a privilege it can get a bit annoying especially if you have family and a thriving social life. It is important to take your own business seriously, because your attitude will inspire and motivate the people who work for you, and if you are not punctual this can lead you to end up paying a lot of overtime. Beside balance in life is very important, it helps you stay creative, too much and too little work are both not good for a business, find a moderate schedule that works for you and stick to it.
- Mission Statement:
When starting a business the first thing people make is the mission statement, i.e what reason you started your business and the objectives for which you are working for. It is important to come up with a short and long term mission statement. Usually typical mission statements are long term but it is important to challenge yourself, I like to think of mission statement as a list of tick boxes, I tick off objectives that I have achieved in the short term and how achieving them has helped me in stepping closer to my longer term objectives. This is a mere piece of paper or document on you PC which helps your thought process to develop and stay sane. Also it helps you recognize the things you would wish to change about your business and areas where improvement is needed.
- Get yourself an accountant
Managing a business is tough, there are a zillion things that you need to look after so it’s best to leave the nitty gritty to an accountant. An accountant will help you map out not only your expenses and revenues, but together you can forecast the future cash flows of your business. Forecasting investment plans helps you conclude whether your business will be a going concern entity or not. Also it helps you calculate the return that you should be making. Also if you know a thing or two about accounting and finance then you can come up with investment plans for surplus cash flows. Initially in the starting phase investing in portfolios and securities on listed on the market might seem a bit farfetched, however once you get a stable revenue stream it would be beneficial to start thinking about investing surplus cash to however long you prefer and according to the liquidity requirements of your company.
This would simply help you in reducing the opportunity cost of your cash, and also help in diversifying away your risks and reducing them to a minimum acceptable level.
Bottom line: starting a business is hard work and one has to act smartly and diligently, and it takes time to get a grip of things, but motivation and passion are the driving forces and if you have ample amount of that then there is no stopping you, Best of luck!