According to Business News, only a small number of new small businesses will last more than two years. The success or failure of a recently started businesses is typically dependent on the quality of the idea, as well as the execution and performance of the operation.
Before diving in and beginning a small business, examine how sound your business idea is and how you can properly kickstart the enterprise. Here are six steps for your small-business startup:
"A simple way to evaluate your idea is to ask for opinions from potential customers."
1. Evaluate the idea
One of the first things individuals should consider when deciding whether to start a business is identifying whether customers will pay for the product or service.
"An idea is just an idea until you have a paying customer attached to it," Will Chroter, co-founder and CEO of Fundable, told Business News Daily. "Anyone can discredit a simple idea, but no one can discredit paying customers."
A simple way to evaluate your idea is to ask for opinions from potential customers. Gauge interest online and in person to determine whether demand for your product or service will be sufficient enough to pursue the idea.
2. Create a business plan
According to the U.S. Small Business Administration, your business plan should include the following components:
- Executive summary or brief description of your business plan
- Description of the markets you will serve
- What makes you different from other businesses
- Market analysis
- Management structure
- Products or services provided
- Marketing plan
- Sales strategy
- Required funding
- Financial projections
One of the most important aspects of a business plan is understanding the market you will serve. Becoming familiar with this demographic and determining whether you can expand to other markets will help you develop a quality marketing plan and ultimately improve the performance of your operation.
3. Take care of tax obligations, permits and licensing
When you start a small business you will need to ensure you have the proper paperwork and have completed all necessary tasks to ensure you can legally operate. Entrepreneur noted you must know and understand the taxes you and your business will need to pay.
In addition, a business cannot operate without a local permit or any state licenses required for your enterprise. Consider meeting with a legal adviser to ensure you meet all criteria and have all required paperwork and other matters attended to.
4. Invest in insurance
Depending on your small-business idea, you may have varying insurance needs, noted Entrepreneur. However, all operations should have insurance to cover any issues that may arise during the process of starting up, as well as during operation.
In addition, you will need to consider coverage for liability related to injuries employees may suffer while working.
5. Know who to hire
Because you will be operating a startup business, it may be difficult to know who you need to hire and what skills will be best for the job. Entrepreneur recommends employing people who are creative and competitive. These qualities will help your business further develop and grow.
Ask applicants to demonstrate their ability to come up with new and unique solutions for problems. This skill will be especially helpful when you hit hiccups down the road as you embark on your journey with a new small business.
In addition, a competitive nature is good for a startup because these employees will set goals and help your operation succeed.
6. Always remain patient
It's important to remember that your small business will not automatically attract crowds of happily paying customers the moment you decide to open your doors. Profit and success require hard work and an understanding of exactly what needs to get done to achieve optimal performance. Follow the right steps and invest in the right elements to ensure your small business weathers the storm.