Starting a business is no easy task. As fulfilling as it may be to have something you create enter the marketplace, there are several steps you should take to make sure your business will succeed. Before you leap to entrepreneurship, make sure you have a few things down.
First things first, are you cut out to be in business? This may sound harsh, but the harsh reality is that many people are not prepared for what being a business owner entails. For instance, are you a risk-taker? Are you okay with all the responsibility of a business resting on your shoulders? Are you willing to work 9-9 instead of 9-5? If this doesn’t fit your personality, entrepreneurship may not be the route you want to go. There’s also the issue of managing employees. Would you be able to fire someone? Not everyone can. Figure out if you’d be able to let go of an employee who isn’t working out. As Nina Joan Mattikow, a longtime SCORE Westchester mentor puts it, “never hire anyone you can’t fire.”
Know Your Industry
Next, do you know your industry and what potential customers will want? Not doing your homework is one of the biggest mistakes an aspiring entrepreneur can make. “Being in business means having your fingertips on what’s going on out there,” Nina explains. Doing a competitive analysis of businesses similar to yours and finding out what they do that you can appropriate is critically important. You must know how your competitors present themselves. Pay attention to the opening statement on their website. This isn’t stealing ideas, but it is finding out how to distinguish yourself from your competition.
The best way to get first-hand experience in your preferred industry is to get a job in it. Working in the industry with someone who already has years of experience can prove invaluable, as you will be able to learn from the ground up and avoid rookie mistakes you’d make by going it alone. It’s also a good idea to find a partner who has the skills that you may lack. This might be an SEO expert who can drive traffic to your website, someone well-versed in marketing, or maybe someone who is better with the financial portion of the business.
Know Your Costs
It’s important to know all the costs associated with producing and selling your product or service. Your costs include everything that goes into getting your product to your customers such as overhead, packaging, warehousing, and shipping. You also have to know at what price you are going to sell your products. Many people think if they sell a product at a greater price than they bought it, then they have priced the item correctly. This is not true. You have to figure in a share of all of your fixed costs, such as salaries, marketing, and rent, to come up with a price that will cover all your expenses and still make a profit. You need to have at least a 50% margin in your pricing to allow for all the “unknowns” and remain competitive in the market. Don’t think you can automatically cut costs by manufacturing a product overseas. You must still add the cost of shipping, trucking, and delivery into the overall amount. Ideally, you should always have a domestic supplier, even if you manufacture abroad.
Entrepreneurship can be fulfilling, but it takes a lot of work and preparation just to begin. Know whether you are prepared to go into business, do your research, and gain as much expertise as possible in your industry, and you’ll have laid the groundwork for success.