It is incomparable to articulate the lows of an entrepreneur. The responsibility, the sleepless nights, and the anxiety that overwhelms an entrepreneur are something to be aware of. To summarise the experience of entrepreneurship, it is a tough job. No amount of formal training can prepare an entrepreneur what they will expect in their business. The learning curve is entirely dependent on circumstances.
So, it's hard to fathom or premise advice for business persons. But what can be done is to draw insights from experiential accounts. Although businesses are not the same, the foundational principles might apply to recurrent instances that spring up in most business workflows.
So, this piece tries to curate a few important things that every business person should be aware of. Here are 10 business things you should know before starting a business.
1) Start with your business plan
Entrepreneurs or any aspiring businessperson with a business plan are 129% more likely to succeed in their business. In a study published in 2010, it unveiled that companies are likely to grow 30% faster when they do have a business plan. Another study that also reinforces the strength between growth and planning shows that 71% of the fastest-growing companies are all with a business plan. Companies might not refer to them as "business plans", but they prefer calling them strategic plans.
The quality of the plan matters too. Researchers have also found that plans that can forecast future trends, tracking progress, and improvising goals are likely to have a stable frame of business workflow. So, to surmise the entire point, being prepared matters, especially if you want your investors to show an interest in what you are about to accomplish and also to have a business model to rely on.
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2) Deploying a legal structure
A company, when incorporating a legal structure, can reinforce a safety net for themselves. To shed some light on this, Mark Kalish, co-owner and VP of EnviroTech Coating System said, "I've heard horror stories from people who, in hindsight, wish they had taken the time and spent the money to get expert advice upfront". So, a legal framework does impact how you pay the taxes, how much paperwork you need to fill up, and the liabilities you might face.
Different kinds of legal entities are packed with respective restrictions and requirements. So, it will entirely depend on the kind of enterprise a business person is owning. As Kalish focused on taking timely legal advice, it is highly recommended that a business account or a corporate attorney be employed to get precise and timely advice on the respective legal structure an enterprise requires.
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3) Cash Flow is Important
There are various aspects to opening a business. The details are innumerable and there are priorities to hegemonise. Aspiring business persons and entrepreneurs should also provide special attention to their cash flow. Cash Flow and entrepreneurship go hand in hand. With positive cash flow, a business person can finance their own mistakes. If there is enough money at your disposal, your company can easily fend for the mistakes made to dissolve expected disruptions.
For startups especially, the first year can determine the roadmap ahead. So, if a start-up burns through their initial investment, they can drain quickly even when they are looking at their projected growth. To avoid such contentions, the key is to check the spending threshold and also to forecast the cash flow. The cash flow projections can be re-visited and compared, analysing to see if the company will generate enough cash flow for the next year.
4) Reading good books
Bill Gates has been advocating for reading books, for quite some time. Warren Buffet, one of the greatest investors ever, recommends that every business person should read 500 pages a day. Mark Zuckerberg also has set up a resolution to reach a book every week.
Business books should not be the only books a business person reads. Diversify the genres, listen to audiobooks, look for journals related to specific areas of interest. Some of the books that can be read or are mostly sought after are - Business Adventures by John Brooks. The Effective Executive by Peter F. Drucker and The E-Myth by Michael Gerber.
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5) Market Testing can be productive
No matter how great a product is likely to perform, it can fail for several reasons. So, testing your product in an approachable market can be instrumental in providing valuable insights.
So, if the test conducted concludes that there is a significant demand for the product a company wants to launch, then the product can be released accordingly. Another successful form of testing is called product testing which can evaluate the potential performance of a product. There are various methods employed which can help a business receive valuable feedback from their potential client pool.
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6) Don’t freak out when failure comes knocking
The fundamental flaw in overcoming a business failure is deeply rooted in what we are conditioned to believe. Winter Churchill once said, "To improve is to change; to be perfect is to change often". So, failure is a part and parcel of life. It also includes business failures.
KFC (Kentucky Fried Chicken) founder Colonel David Sanders, a retired, at the age of 65 went around in search of investors across America with just 105$ in his name. Although he faced rejections and a multitude of failures, he was still persistent in his approach. Soon, the company was bought for 2 million dollars when he was 74 years of age.
Perspective matters a lot and it's easier to accept failure as just a fact than to loop in on the mental stress of having failed. It also makes a strong case to devise a backup plan for anything untoward. Disruption is often in every business venture but resilience is the key.
7) Standing out
Although unconventionality rarely pays, it has the potential to set business aside from being mainstream. Businesses never come with a guide and there is no definitive way to deal with businesses. So, the only way to receive success is to improvise circumstantially. This stands true for businesses that are either new or extremely uncommon in terms of trends.
If businesses already have an existing marketing plan, there should be enough space for flexibility. An investigation is also important since priorities can be made accordingly. If there is a corner that can be cut, an out-of-the-box approach can help in saving future costs.
A business is like managing what's available. Scarcity and Urgency can often be lead to innovations. Innovations can be discovered through unconventional steps which will largely set that business model apart from what's observed in the mainstream.
8) Networking with peers
The best way for an aspiring business person to network is to have friends in entrepreneur circles. A business is a journey that can be lonely. Why stay isolated when there can be necessary resources procured out of healthy interpersonal connections? There will be moments where a fellow business person might feel stuck in a similar business scenario. There can always be a way to collaborate and come up with improvisations that helps both parties.
Networking can be a support system that will surely strengthen the entrepreneurship amounts you and your peers. In partnerships and ventures that we have observed business growth. It is a reciprocatory system that furthers development.
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9) Competition and Marketplace
Competitions are healthy and in the most business landscape, it is the competition that has driven innovation. So, a background of the marketplace a business is soon going to deploy can strengthen the position of the concerned business in terms of market competition.
It is of critical importance that businesses feel aware of the customer they are catering to. Winning the customer vote and their advocacy for your brand only enhances your edge as an enterprise. Including the projections and numbers on the business plan can draw more potential investors as well.
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10) Specialising in one thing at a time
If your business knows what it specialises in, you can find traction by pitching to your respective market pool. So, if there is a particular aspect your business specialises in, then the focus doesn't necessarily need to be distributed to acquiring more specialties. Working on one skill and selling-point at a time will help you gather enough resources for future experiments.
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Q. Why should a business start saving early?
A. If a business starts saving up early, it will have enough resources by the end of its fiscal year to experiment or invest in innovation.
Q. How do I document my business growth?
A. Keep a journal or an online record of your business footprint. It will also help in effective analysis when you want to make trends or future forecasts.
Q. Should I rent or buy the property where I am conducting my business?
A. You need cash for your business to survive. The less you invest in the earlier years of operation, the higher will be your cash reserve. So, for the sake of survival and stability, rely on a rental lease agreement until you feel you are confident to have a permanent business address.