Why are you starting a small business? What are the objectives and how to go about it?
Starting a small business is an option many professionals are considering these days. Studies show that 90% of small business owners do not aim for colossal incomes. Instead, they are “lifestyle entrepreneurs” who have taken up businesses to exercise freedom in work. These business owners are averse to dictates and wish to pursue careers as, when, and how they like. Self starting a small business allows business owners to live in areas they want to, work when it is suitable, choose kinds of work and spend as much time doing work they want to. Flexibility is the key to such businesses, leaving owners enough time to spend with family, indulge interests, serve social causes, etc.
Points to Consider before Starting a Small Business
If you are planning on starting a small business, your foremost requirement is a business plan. Your business plan should be formulated keeping the following points in mind:
1. Your Business Aim: Your business plan should clearly define your business aim; what you want from your business, earnings you wish to target, to what level you are willing to participate, the kind of employees you want for your company, when you want to ‘retire’ from business, etc.
2. Your Products and Services: Without a product, the purpose of your business is lost. In fact, your business is reduced to nothing without a tangible or intangible service which can be used by your customers and draw in profits. Make an informed decision based on market research of what products you would like to market, and if they will benefit your customers. Your business will be defined by the products it sells.
3. Your Customers: Whether you chose to market a highly competitive product, or a creative, innovative service, the ultimate success of your business is dependent on your customers. Your customer is your life-source; they help sustain your business. Before starting a small business, a market survey is imperative to gain a clear understanding of what your customers want and how strongly they desire your product. In other words, the value your customers are likely to attribute to the products you introduce to them, is important.
4. The Market: Both, the geographic location of your business, and the location of your customers, are important. Starting a small business requires extensive market research, including details of what places your customers frequent or their favourite ‘hangouts’ , and if the location of your business makes your products easily available to your customers.
A market research will also include details on customer groups you would like to target for your products. Depending on the type of product you sell, whether highly specialised, innovative, or commonplace, your customer target groups will change.
5. Your Competitors: Who are they? What products or services are they selling? Are they better, or lacking, in comparison to your product? What marketing and advertising tactics are they using? How are their products priced? Where are their outlets? What are their target groups, and how easily are their products available to customers? Competitor portfolio will help better your business; introduce new advancements and gradual development.
When you are starting a small business, be prepared for competition. When competition stops, there is a good chance that the business will too. Welcome competition as your chance to improve and expand.
6. Marketing and Advertising: Your business plan should clearly describe product advertising and marketing strategies. How you communicate with your customers and if they relate to your messages are critical to your business’ success. Advertising differently from your competitors has significant impact on your customers.
Advertising is a highly specialised and creative industry. Entrepreneurs who are serious about business growth should be prepared to invest a good amount of funds towards advertising and marketing of business products.
7. Skills and Technology: Is your professional team capable of executing your business plan? Is your technology up-to-date? What areas do you thrive in and where do you lack? When starting a small business, an honest appraisal of your expertise and knowledge, and areas you are lacking in, will set the path towards recruiting proper help for your business.
8. Raising Capital for Your Business: When starting a small business, answer these straightforward questions:
- Do you have the sufficient funds to start a business?
- If not, which is the best funding option for your business? Is it venture capital funding or angel investing? Do you want to secure bank loans or apply for Government grants and loans?
- How will you arrange funds for your business? Is an application for fund enough to secure financial support?
The more specific questions would be:
- If you approach venture capital companies, are you willing to share management responsibilities with venture capitalists? More importantly, do you have a business strategy that is capable of showing high returns in 3 to 7 years to attract venture funds?
- If you want business angels to invest in your business, are you willing to give up part ownership of your company?
- Do you have a good personal credit history? Do you have substantial securities to draw loans against?
- What kind of business are you planning to run? Is the money provided under Government grant schemes enough for your business?
- Are there personal finances you can contribute towards your business?
Financial queries require expert answers. Hire the help of a financial expert, or business coach, and have him/her review your business plan. Before starting a small business, make sure you have clear answers to all questions relating to a startup venture.
Starting a Small Business – How to Attract Investors?
Starting a small business with a strong business plan is guaranteed to draw in investors. Attracting those elusive investors however, can be challenging. A business plan with high-profit potential and structured business model is a critical component of a business. Additional features of a good business plan are:
- A lead generation and conversion strategy for product marketing.
- Smart hiring plans and efficient employee management policies.
- Specifications regarding investor participation in business.
Prior to presenting your business plan to investors, you will need the right networking, corporate look and professional expertise to attract investment firms.
Starting a small business requires strong business networking. This can be achieved by putting your name in the industrial market and creating excitement for your business ideas. Investors also favour a band of loyal co-workers who are qualified, skilled and experienced, supporting your business. Putting together a smart corporate presentation with well-defined company goals, objectives and ideas is guaranteed to impress business capitalists and set investment procedures a-rolling. If possible, get media coverage for your business to enhance visibility and broader market reach.