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Here’s what you Need to Think about When Starting your Own Business

Having a flash of inspiration is easily one of the greatest things that you’ll experience when you start your new business. One day you may wake up and feel as though you have a simple solution to some of the most annoying problems ever, and that you can’t quite believe that nobody else has it figured out. You may even rush so you can begin researching your idea. If this sounds like you, then you just need to take a look below.

How Bright is your Idea

Imagine going out for a walk in the pouring rain, when you try and open your umbrella. You then find that the umbrella won’t open and that it jams. There are many reasons why an umbrella would fail. You may find that it gets jammed and that it flips inside out as well. In every scenario here, you will find yourself being very wet and uncomfortable. Let’s say that you have come up with a fantastic idea and that you are able to solve this issue once and for all. You might have even built a prototype and then sold a couple over the internet. This is all very well, but do you have a business yet? Absolutely not. You may well believe that your idea to fix the umbrella is somewhat novel, but is it? What if someone else has been able to beat you to the market? What if someone tried to come up with an idea to fix this, but they failed? When you take the time to test out your idea, you will then be able to find out if your idea solves a problem or if it is something that someone would pay good money for. It’s also worth looking into intellectual property at this point.

Source: Pexels (CC0 License)

Defining your Target Market

Another thing that you need to think about when starting up your business idea would be for you to identify your target market. A lot of people might think that everyone needs an umbrella and that therefore the target market would encompass everyone. The fact of the matter is that this target is far too general. At the end of the day, you won’t have the time, money or resources to market your umbrella business to everyone and this is why you need to define your market. You need to think about who is most likely to be receptive to your message.  Using the umbrella example, this could include:

  •       Those who come from a rainy climate
  •       Those who need to work outside
  •       Those who play golf or work as a lifeguard
  •       Those who do not own a car

If you are able to come up with some idea of your demographic, you then need to ask yourself what your competition are doing. At the end of the day, you need to ask if there are any niche markets that you might want to appeal to, such as travellers or even students. It’s vital to find out why your product differs to the traditional umbrella, and if it offers any new features too. It may be that your umbrella offers some kind of UV protection and that this makes it very easy to combat the sun’s harmful rays. It may be clipped onto a pram as well, making it an easy option if you want a hands-free alternative.

Business Plan

In this day and age, it’s vital that you have a business plan. It’s true that so many people rush into the process of starting the formation process but you have to make sure that you are setting yourself up for success at the same time. If you don’t then you may find that you end up crashing and burning very quickly, and this is the last thing that you need. People who are selling their creations do not need a long and written plan as to how they are going to grow their business, but nearly every other type of business will do themselves a very good favour by having a good business plan.

Misconceptions

PowerPoint might seem like enough but at the end of the day, investors still need to know some of the hard data as well. Investors know that any numbers are theoretical, but they also know that your methodology is sound and that you have a very good understanding of both your market and your competitors. Business can be unpredictable, and you may think that nobody can predict the future. This is understandable, but you still need to make sure that you have a good business plan for your venture capital. If you do, then this will help you to stop throwing money away on a bad idea. Writing a venture plan will help you to determine how much cash flow you need to get started as well as how much you may end up needing in the future.

Picking the Right Business Partner

Are you thinking about taking on a business partner? Do you want to take on multiple business partners? Having a business partner is always a good thing but to begin with, you have to ensure that you are a good match as well. Working with family or friends will give you another set of complications. In any circumstance, you have to make sure that you have a good set of legal documents so that you can protect your interests where possible.

Considering Partners

What role does everyone have? Never assume that the people who are forming the company have the same idea about how much involvement they are going to have. It’s helpful to make sure that every potential partner writes down the visions and the goals that they have before you even think about forming the partnership. It’s vital that you work out how you are going to share in the profits and the losses as well. Partners normally invest money or even assets into a new venture but before you rush into things, you have to know how you are going to split the money. Write down how much everyone is investing, as well as how profits and share losses are going to be distributed. Talking about the day to day operation of your business is also crucial. Nothing can be assumed at the end of the day.

You also need to think about the capital investments that are going to be made by each partner. A huge number of business owners begin accepting investments without defining how much ownership is going to be vested in everything. This can work against you far more than you realise, so it’s always a good idea for you to draft a general partnership agreement if possible.

How much Money do you Need?

How are you going to have enough money to fund your business? You may want to consider things such as financing as soon as possible. It can be intimidating, but you need to explore options such as this. If you go through all of the numbers at the start, then this will pay dividends later. If you need to take out a bigger investment then you have to make sure that you create all of the legal documents you can so that you can protect investors as well as yourself. If you do take out a loan from your family or your friends, then you have to make sure that you get it in writing still. If you do, then you will soon find that you are able to reap the benefits without the stress.

BIZCATALYST 360°
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