Top 7 Tips For Starting a New Business
There are some pretty clear characteristics that differentiate successful from unsuccessful start-ups. So before you begin operation you’ll want to check-out these top 7 tips:
Tip 1: Start Your Business in a Growth Industry. One of the biggest mistakes made by entrepreneurs is starting the wrong business in the first place. It sounds simple, but choosing the right business in the right industry is a critical factor that could make-or-break your business.
To succeed, avoid mature industries with little growth or potential for growth. You’ll also want to stay away from markets characterized by too many competitors and undifferentiated products offerings. Be sure you understand the margins of the products that you’ll be selling and stay away from those with razor thin margins. Thin margins require a greater sales volume that is often difficult for start-up to achieve.
Tip 2: Establish a Sustainable Competitive Advantage. Take a hard look at your own capabilities and work to gain an understanding of your key competitors. You’ll want to start your business with products or services that stand out from competitors.
Think about where you can develop a competitive advantage – be it price, customer service, product quality or other factors. The harder it is for your competitor to replicate your strength, the more sustainable the advantage.
Tip 3: Select a Powerful Company Name. For growth focused firms, a good name is simply not good enough. You need a great name that’s inspiring and distinguishes you from your competitors. The name should be short, clear, memorable, easy to spell and pronounce.
You’ll need to ensure that you can legally use the name without infringing on another firm’s trademark. The name should be screened through domestic and international trademark databases. And it is vital to secure the.com domain name. Customers have come to expect that your company name to be the same as your.com domain name.
Tip 4: Create a Working Business Plan. Successful start-ups start with a plan. It’s just common sense. When you develop a plan you’ve given thought to all areas of the business. Most entrepreneurs feel overwhelmed at the thought of writing a comprehensive business plan – and they usually don’t do it.
So unless you need to raise money from venture capital firms or are applying for a small business loan, don’t worry about writing a highly-formal business plan. Cut out the formal elements and fancy language and write a practical “how-to” user guide for your start-up. Don’t stress about not getting every word just right. A good plan is one that forces you to think about every part of your business … before you start.
Tip 5: Start with Sufficient Capital. An entrepreneur will usually save up enough money to start their business but fail to consider the expenses during the lean growth years. Many exhaust funds just at the time the business begins to grow. One of the biggest mistakes that could break your business is not having sufficient capital for the first three years of the start-up.
Many entrepreneurs think in terms of profits instead of thinking of cash. But cash flow is critical. You’ll need cash and credit to not only open your business but also to sustain it while it grows. As discussed earlier, with a firm understanding of your break-even point, you’ll know when you’ll be making a profit.
Tip 6: Build a Solid Professional Team. Successful start-up leaders recognize that they are not an expert in every area of their businesses. Many build expertise, achieve excellence and contain costs by developing a team of outsourced professionals, rather than hiring, training and managing a team of employees.
A top-flight team of advisors and experts can often be developed at a fraction of the cost of full-time employees. Keep in mind that the stronger the professional team – be they employees or contractors – the stronger the probability of start-up success.
Tip 7: Test & Measure (Almost) Everything. If you can’t measure it, you can’t manage it. You’ll want to have clearly defined goals for every functional area of the business. From these goals you can set specific and measurable performance objectives.
Testing should begin before you ever start your operation. It’s important to empirically validate your business idea. This early testing may well be your most important undertaking. The result will tell you whether your concept is a “go” or “no-go.” Then consider testing all the key areas in your business. You’ll likely start by testing the things that aren’t working in an effort to see how they can be fixed. But also consider testing those things that are working in an effort to see if you can achieve even greater result.
Following these 7 top tips will have a powerful impact on the success or failure your new business.