The Best Guide of 2022 for Starting a Small Business
If you are thinking that now is a bad time to start a business, note that there has never been a good time. Over the last decade, there has been a great decline in the number of startups. However, with the pandemic, a trend developed. Businesses sprang up here and there.
And this should not be surprising as due to the economic challenges spurred by the pandemic, people must surely find a way to survive. New problems will demand new solutions thereby giving entrepreneurs opportunities to make more money and potential entrepreneurs to join the entrepreneurial world.
With the current increase in digital technology, the world will experience a massive transformation in the next decade. This is as the shift to artificial intelligence, the rise of robotics, switch to electric vehicles, etc takes over.
Guide on launching your business
So if you are already nursing that unique idea, here’s a guide on launching your business.
#1. Pick the Right Business idea
The main aim of every business is to attract and retain a customer. What this means in essence is that if a business wants to earn revenue and gain economic profits from its business it must have a strong value proposition.
There is a shocking fact most entrepreneurs do not know, a business can earn large revenue and still make less than a cent worth of profit. How will your business beat this? It must be able to create sustainable value. Doing this has two angles, first the economic margin of the business and the growing appreciation period.
The economic margin refers to the difference between the size of the company’s ROI and the cost of capital. While the company’s growth appreciation period has to do with how long the company can earn this margin.
In essence, a business should be able to earn returns higher than the cost of capital. But then the competition in most industries is so much that competitors do not have pricing power. They even price their products and services a little close to the capital cost or below the capital cost.
To defy the odds, your business had to have what no other competitor can offer and your customers can’t do without. Your customers should feel that if they walk past you to your competitor they would be at a disadvantage.
Your value proposition should make your customers feel that no matter what you charge, what they will get is a lot higher than what you are charging. The first indication of this is if your product or service has a product-market fit. Secondly, if you have pricing power.
#2. Write Your Business Plan
Even though theoretical plans hardly survive on hitting the market the first time, we still have to plan. The next stage after picking an idea is to develop your business plan. We plan so that we can remain unscathed after being hit by real-life market experiences. So that we can understand how the market works, how to price, the rules guiding the industry, the competitive landscape and other factors.
Your business plan will help to guide you on how to navigate the industry. It should not be rigid, as you might find yourself deviating from your original plans as you deal with dynamic market forces. However, the presence of the business plan helps you to overcome some of the challenges.
More so, without a business plan, you are very unlikely to get external funding, so it is that important.
#3. Secure Funding
Owners of many businesses fund their businesses themselves, sometimes family and friends come in. But to fulfill your business model, you will find out that you need funds from external sources.
If your business plan is done right, it can help you source external funds successfully.
You can go for a traditional bank loan which is a more common way of getting external funds for your business.
You could also get small business grants or equity financing. Tradition bank loans are usually not easily accessible to business owners, especially if they have no collateral. If this is the case, you can go for angel investors, crowdfunding platforms, and venture capitalists.
#4. Decide on A Business Structure
All businesses have a business structure which can either be a corporation, partnership, sole proprietorship, etc. Before you decide on the kind of business structure you want for your business, you must get additional information. This is because a business structure has tax and legal implications and should not be taken lightly. State statutes permit Limited Liability Company(LLC) as a basic business structure.
#5. Register Your Business
The next step to starting your business is to officially register your business to become a distinct legal entity.
Registering your business with Federal, state and local agencies not only establishes your business but gives you the business licenses you may need including a federal tax ID. It also protects your business trademark, patents and brands.
If you would want to ask further questions, or need guidance on business formation, strategy and advice, you could always seek the help of business law attorneys like Scheid Cleveland.
#6. Focus On The Customer
One mistake new business owners make is focusing on their competitors instead of the customer. When you are starting your business, you must listen to the customers, understand their pain points and figure out how to serve them better. Your business is about your customers, never forget, and do not place your competitors in the position of your customers.
Starting a business is not a smooth ride but a surely exciting one. More so if you are starting this business in 2022. It is a crazy time, yeah but there’s no better time. You will have challenges, you will want to give up. It will be hard but it is also profoundly profitable in the long run and you will emerge stronger. With these tips above in mind, you are ready to launch out with your new business idea, survive the market forces that tend to blind your focus and scale.