How to Start a Business: First Things to Think About

Goal setting is on-trend right now. No matter where you live or what you do, it won’t take long to find a workshop where some self-help expert identifies the goals you need to set in order to be successful. Those goals might help, they might sound generic, they might be entirely off base. Who’s to say? You won’t know until you’ve tried to achieve them.

That, of course, doesn’t seem like a great attitude for a prospective business owner to hold. You want to have confidence in the goals you set before you start taking your shots. However, that confidence can be hard to come by when you’re still in the dreaming phase of building your company. You may know how to start a business, but how are you going to deal with the thousand-and-one unexpected setbacks that are sure to occur along the way?

Young entrepreneurs walk a fine line between pragmatic planning and borderline lunacy. Let’s be clear: starting your own business is one of the more difficult undertakings. To dive into this fray you either have to be exceptionally driven or a tiny bit crazy, and a lot of the most successful business owners are a touch of both. Coming up with a business plan and setting future goals under these conditions proves more daunting than most people expect, and that’s why a vast number of businesses fail in the first few years.

But not yours.

Through all the madness, you can find ways to build a plan for the future, even when you don’t know what that future will look like. You have to remain flexible and diligent, with the ability to take every bit of criticism and turn it into information you can put to use. Do those things, follow these steps, and achieve what so many others have come short of accomplishing: a new business that stands the test of time.

1. Find a Consumer Need

The foundation for any successful company – offering a product or service people will pay for – somehow gets overlooked as a useful goal. It might be that targeting consumers doesn’t feel goal-worthy, like it’s a no-brainer which you can treat as an afterthought, but it has to remain a priority or you’ll find yourself shopping for a Going Out of Business sign ASAP.

The truth is, while the majority of small businesses don’t last, nearly 80% do survive the first year. For better or worse, four out of five entrepreneurs can run a company for 12 months, and after that things drop off pretty drastically. In many of those cases, everything looks okay for a little while, but then the shine wears off. The marketing gimmicks and word of mouth fade, and the company finds out that its product doesn’t actually meet a need. The owner probably had a good grasp on how to start a business, but never slowed down to think about ways to add value to customers’ lives.

In the age of apps, it’s far too easy to find something that feels useful or fun or convenient and try to spin that into a company. It should come as no surprise that, in the world with Uber, Airbnb and Task Rabbit, everyone wants to start a business with no physical product or overhead costs that goes on to be worth a billion dollars. Unfortunately, for every Uber CEO, there are probably 20,000 men and women who couldn’t build or sustain traction with their app. The need simply didn’t exist.

Your business plan and all the goals therein need to stem from demand. If you don’t have the capacity to meet developing needs as your company grows and consumer wants change, you probably won’t be in business for very long. A desire to help and provide should be at the core of your new business’s mission, and that desire can’t lose out to a generic interest you have in being a business owner.

2. Know Your Competition

Losing to competitors makes up for about 20% of business failures. Falling to the other vendors causes a particular hurt, as you know the need exists but you just couldn’t manage to get your slice of the pie.

Naturally, this might be out of your hands. If a massive corporation comes in and undercuts your efforts, you might not have the means to stay in the race regardless of your competitive strategy. If there’s anything that can save you from this fate, it’s knowing what you’re up against and what sets you apart. You don’t need to run smear campaigns against your rivals, and I beg that you don’t try; what you need to do is find ways to make yourself more appealing.

A couple of areas where businesses try to separate from competitors:

● Price

● Inventory

● Customer satisfaction

● Familiarity

● Convenience

Your new business’s competitive strategy depends on, well, everything. If you own a deli, you can’t just charge less for sandwiches than other eateries if you pay the same for bread and cheese and meat. You can’t stock up on inventory if you don’t have the means to push those products. Customer satisfaction is intrinsically subjective, familiarity comes with business history and experience, convenience depends on multiple factors, etc., etc., etc. You see my point.

While you might struggle to decide your unique angle in the early going, you have every opportunity to analyze what the other companies are doing. See who charges what, who gets the most online engagement, and what people are willing to pay a premium for. Studying the business models of existing companies can help you set goals as well as anything else; the successes and failures of others should always serve as a guide.

3. Foster the Right Relationships

Don’t know how to start a business, or what it takes to run one? Neither do most of the people trying to launch a new company, and many business owners still aren’t sure what needs to be done from one day to the next. No matter how in-the-dark you feel, that shouldn’t stop you from connecting with other professionals who can offer advice and assistance.

Some of us business owners are control freaks. Some hesitate to ask for help because they don’t really know what kind of help they need. Whatever the reason, we take on too much and get instantly overwhelmed by the endless work and immense responsibility of steering the ship. So much of that stress can be avoided if you work with the right people.

This means not only hiring the right employees to reduce the workload, but also bringing in mentors, advisors and experts to point you in the right direction. It requires putting ego aside at times, but leaning on someone with more experience and even taking on investors who play a role in business development can help you avoid some of the major pitfalls.

Forming those relationships – the people you allow on the inside – is an early goal. A long-term objective will be forming business partnerships and alliances that make your foundation stronger. It’s never too early to start thinking about which complementary companies you could strike deals with to the benefit of everyone involved.

While you have to understand the competition, you also need to know that not every enterprise is a foe. Competitive strategy doesn’t need to be cutthroat. A small store that offers similar services might actually send customers your way if they can’t meet the exact need, as long as you’re willing to do the same. Have you ever gone to a mechanic who then sent you somewhere else to get your tires replaced? That tire shop likely sends customers to the referring mechanic for other services. Doesn’t that sound like an easy way for everyone to drum up business?

You need people in your corner if you want a steady stream of clients. You won’t be able to rely on commercial marketing and your own email list for everything, and you probably won’t stay open a month without at least a few reputable purveyors endorsing your new business. Start with friends and family, then branch out to businesses you support who might offer their support in return. If you entrench your fledgling company within the community, the assistance and encouragement will be there when you need it most.

4. Start a Working Budget

Launching a new company sends a lot of people into debt. Whether it’s putting everything on a credit card during a stretch without revenue or leasing an expensive storefront, entrepreneurs start their lives as business owners with a whole lot of reimbursing to do.

This may be unavoidable in most cases, but it shouldn’t stop you from forming a financial plan to keep it under control. When overspending becomes routine, people start buying unnecessarily and exacerbate the problem. “I’ll live in debt until my company takes off,” they say. That way of thinking is exactly why said company might never take off.

Not sure what your expenses will look like? That doesn’t mean you can’t form a general plan. At the very least, you know the basics you’ll have to pay for:

● Rent

● Utilities

● Marketing

● Inventory

● Payroll

● Insurance

● Licensing

● Office supplies

Your list will probably be 100x longer than this one, but you get the gist. If you can think of something that factors in as a business expense, put it in a spreadsheet and put a number by it. If you aim too high or too low, you can always adjust later. Being wrong about your budget is nowhere near as bad as being surprised to find yourself half a million dollars in debt.

Establishing a budget before you launch your startup will also help you determine the direction of your company. Perhaps your dream was to have an ice cream store, but crunching the numbers shows you it might be better to cruise around in an ice cream truck. Looking behind the financial curtain will also help prepare you for loan applications and haggling with the bank about your credit limits. People remain willfully ignorant about their finances for fear of discovering bad news, but the only way to live a wealthy life is by educating yourself and tackling your problems.

As a financial advisor, I get a little passionate about money planning. For my sake, please do some budgeting work before you start telling people about your awesome new company. Otherwise, you’ll be sending marketing emails about your business and then immediately following up with emails about your Kickstarter campaign to fund that business.

5. Become a Student of the Industry

The accessibility of business is mindblowing. We can all start companies. College students launch businesses from their dorm rooms. Six-year-olds have businesses on YouTube. In a way, becoming a CEO has turned into a really easy endeavor.

Of course, a lot of that is luck. And for those who do get lucky and find themselves building up clientele and reeling in money, sustainability is a serious issue. Luck eventually runs out, and that’s when it becomes apparent whether or not you know what you’re doing. In case there’s any doubt, it’s always best to at least look like you know what you’re doing.

There are a million ways to research and learn about a particular industry and the process of how to start a business. And while the internet will bludgeon you with articles about it, your most useful sources are probably the real-life people who can walk you through their experiences in a relatable way. Since every company is different even if they operate in the same arena, don’t be shy about asking advice from people who have no idea what your new business does. You may have to take things with a grain of salt, but you can also gain valuable insight.

You can never stop learning, and if you really want to run a business and have success at it, I hope you’re eager to research and expand your knowledge within the field. I love working as a wealth manager, and even with an established company, I’m constantly geeking out over finance blogs and articles as I try to learn more. It helps me run my business, but I mostly do it because I enjoy the learning process.

If you aren’t as passionate and hardworking as the next person, don’t expect to have as much success. Study up and do your best to become an expert, knowing that the quest for knowledge and expertise is never-ending.

6. Market Brilliantly

And then there’s the hard part. You can set goals thoughtfully and have all your ducks in a row, but the future of your new business still hangs in the balance until you find out how to make customers aware of your operation.

Marketing can make or break a company in many ways. Think of businesses, both local and global, and how many have burst onto the scene with a memorable advertising campaign. Then think of terrible marketing gimmicks that have made you less interested in giving a certain company your money. And for all of those examples, there are probably twice as many businesses that have had to shut their doors because they spent a ton of money on a generic advertising effort that didn’t help and forced them to close up shop.

You have to know your strengths and know who will want to do business with you. Just like you need to produce a product people want, you have to then find the people who want it and get their attention. Your name on a billboard could be all it takes, or maybe you’ll need to start doing a radio program that takes up a tremendous amount of time. It depends on you, your product, and your brand.

Marketing isn’t easy. You have to be creative and clever and flexible and, most of all, consistent. You can’t post things on Facebook every once in a while, you need to do it frequently enough to break through the noise and get noticed. Start a blog, make videos, join efforts with other companies, do whatever it takes and be invested in the plan. If your company is worth it, the marketing part might even become enjoyable.

These six points are as much a to-do list as they are goals. When it comes to how to start a business, that’s really what goals are. They aren’t lofty dreams you hope will someday come to fruition, but rather things you plan to accomplish. When you believe in yourself and what you’re doing, every goal feels attainable. You just need to give yourself a little direction in the beginning and you’ll be on your way.

Make it happen!

Taylor & Megan Kovar

The Money Couple