If you have researched entrepreneurship, you've probably come across dozens of books and articles outlining the steps to success. Unfortunately, there is not a simple recipe that guarantees success for each business. So where do you start? Rather than a step-by-step recipe, these 10 general steps can help guide you in the right direction.
Step No. 1: Establish company values and mission.
Values and mission statements are the foundation of your company. They serve as a guidepost to help you make important decisions, such as how you want to build your team, what kind of qualities you look for in vendors, how the product or service is presented to the customer and more. In addition to keeping you focused, lenders often look at character qualities, not only business projections, when considering you for a loan. When at a crossroad, you can ask yourself which option aligns with your mission and values.
Step No. 2: Conduct market research.
Your business idea is great in your own eyes, but is there really a market for your business? To truly know the answer, you can find out by compiling primary market data – surveys, testing online and prototyping directly with your ideal customers. You can also look at the secondary market data – studies, statistics, reports and other relevant data.
Once you've collected data to understand your market, you can also use this data to improve your product or service. Building a cheap prototype, either half-built or completely finished, gives customers an opportunity to experience your business and give better feedback, as opposed to simply hearing about the product. The same can be done with an online platform where customers can view your product's or service's design. Hint: Set up your questionnaire online to grab those emails, and when you are ready to launch, you'll have a decent-sized list!
Step No. 3: Organize your finances.
Budgeting and creating financial projections are crucial to your business. When you begin operating your business, budgets and projections serve as a reference point. Are you doing better or worse than you predicted? Will you break even in the time you had originally hoped for? What areas require more budget than you expected, and which areas can you reduce spending?
Using budgets and forecasts will also help you obtain the additional capital you might need to launch your business. There are several options to obtain the resources you need, but some options require more effort and preparation than others. You can fund the startup yourself, apply for grants and loans, pitch to angel investors and fundraise. Each one of these may take more time away from your core business operations and may require more detailed financials.
Step No. 4: Create a business plan.
A business plan is a 15-20 page document that summarizes a business owner's objectives and strategies for each part of the business. Business plans include an overview of operations, market strategy and competitive analysis, product design and development and financial statements and projections.
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It's beneficial to have a business plan on hand when meeting with investors and lenders. Once you are an established company, keep an updated copy of your business plan in the event of an emergency or when you might need financial assistance in the future.
Step No. 5: Register your business.
The next step is to register your business with the state. Decide on what kind of business structure (LLC, corporation, nonprofit, etc.) your company should have. Research this carefully, as each structure has its own personal asset protection, tax, and operational implications. Other legal aspects of registering your business include choosing your business name, obtaining your EIN (federal tax ID), filing any trademarks, copyrights, or patents, and choosing a primary business bank account.
All of these tasks are doable on your own, but consider registering your business with a business filing service or lawyer to make sure your paperwork is complete and accurate.
Step No. 6: Obtain necessary licenses and permits.
Depending on your business and area of operation, you also need to obtain relevant licenses. Research your industry's business licenses to see if you can conduct business in that area. For example, a hairdresser may not be able to run a salon in her home without a professional cosmetology license, as well as a permit to conduct business in a residence.
Certain cities have ordinances that require permits for other parts of a business, such as location or zoning, fire, air and water, signs, health and safety and other permits within the county. Contact your local government’s permits and licensing department to ensure you have all of the required paperwork.
Step No. 7: Build a team.
Now it's time to build your all-star team. Prioritize what areas you are struggling with the most, and budget accordingly. Do you need a business partner, freelance design work or even an HR development coordinator to help put your team together? This is also where values come into play; mold the hiring criteria around your company's values to ensure a good fit.
Investment in your employees shouldn’t end at salaries. When you hear the buzzwords "company culture," ping-pong tables and free beer in the fridge probably come to mind. In reality, a healthy company culture means empowering your employees and instilling a positive experience. Invest more time and energy into respect, training, and mentorship for your people, and the positive experience should also transfer to your customers.
Step No. 8: Find a location or office.
Where will you conduct business? Do you want to work with a remote team of employees, meet up once a week or operate in a building? Today's technology allows teams to work remotely much easier than before, and collaborative workspaces are common in the startup scene. However, if you need to operate in a standalone building, here are some things to look for:
- Parking availability
- Rent, utility and other costs
- Demographic research
- Nearby businesses to collaborate with
Step No. 9: Create a marketing strategy.
You've done the bulk of your marketing research in the beginning, so now you should be able to focus on growth and outreach. Build a team, outsource a marketing agency or hire an experienced marketing specialist to carry out your future marketing strategies. Depending on your industry, your company may benefit from inbound marketing – SEO, online advertising, social media marketing, and content creation – and outbound marketing such as cold calling, email marketing, attending events and other canvassing tactics. There are always new ways to reach your audience, so make sure to stay updated with the current marketing trends.
Step No. 10: Monitor your growth and encourage feedback.
The first six to 12 months are turbulent and might require many changes. Establish a system to test and monitor your progress within your marketing, operational, financial and product design departments. Are they converting to sales as you had originally planned? Where should you pay more attention next quarter? Which departments should you allocate more budget to?
Always encourage feedback and reviews from your employees and your customers. Although your business might be operating smoothly, it might plateau and eventually fall without feedback. Finally, understand that there’s always room to grow – for both you and your business.