I have always been interested in starting a business and making money. My capitalistic curiosity has led me to doing research on the topic, so let’s talk about how to start a business.
To start a business you first want to have a business idea or a product to sell. You then want to make sure you have customers to sell to, this is done by doing market research. After that you will want to set up for website or find a business location. Then, you want to form a legal entity and get the required permits for your business. Finally, you want to start selling your product.
Now, let’s take a look at the details of starting a business.
1. Generate A Business Idea
There are generally a few ways to find a business idea. You can think of an idea and start based on passion alone, you can find a problem to solve within a market, or you can find a product to buy low and sell high.
I personally don’t think one way is better than another, it depends on your preference. If you are an idea person, start with a list of your ideas.
List 20 ideas that you have based on things that make you feel energized.
What are your interests and hobbies?
What do you think or talk about often?
List these interests and you’ll be on your way to a great idea.
If you are a problem solver, look at the businesses in your local town or neighborhood and think of products or services that solve a problem for a lot of people.
Do you live around a lot of families but there are no family based restaurants? Are a lot of sandwich shops but no pizza shops? Make a list of 20 ideas that you can come up with that solve problems in your local community.
If you are more of a businessperson, you can use the buy low and sell high technique. Find a product that you can buy for a great price and sell for a higher price.
2. Do Market Research
Market research is performed to figure out who your customers are. Market research is very important because if you don’t know who you are selling to you cannot sell your product!
When you begin to do market research you first identify your target market. A target market is a group of people that you want to sell your product to. Find out the demographics of your target market, age, location, income, profession.
It is better to be specific with your product and marketing. It builds trust in the customer’s eyes when they see that you specialize in one product or service and do it well.
Find out what motivates your target market to purchase a product like yours. McDonald’s customers know they are going to get a burger fast and it will taste the same no matter the location. I think it is safe to say McDonald’s customers are looking for a quick, inexpensive meal that tastes good.
You will have to find out what your customers want and this will drive your communication with your customers.
Find out what problems they have and how your product can solve them. What problems are your customers experiencing? Are there a lot of musicians in your neighborhood but the nearest music equipment store is 2 hours away? Can you open a store for them so they have a closer place to purchase music equipment? Do construction workers frequently have back pain? Are you able to open a massage clinic or physical therapy clinic?
Make sure your product is solving a problem.
3. Build The Product
Now that you have a business idea and you have done some market research to understand your market. It’s time to build your product or service.
Know your skills
There are different ways to go about this depending on what your product is and if you have the skill set. If you are creating the next linux or windows OS and you are a computer engineer then you can do most of the work yourself.
If you are going to start the next Domino’s pizza chain you will need to make a pizza and test the pizza to make sure it tastes good and can be made with cost efficient ingredients so you can make a profit.
If you are writing a book you will need to come up with the idea and outsource the writing, or if you are an experienced writer you can write the book yourself.
If you are building a product you will need to manufacture, you will have to find a company who already builds that product and purchase the product at a wholesale price or if the product is unique you can look for manufacturing companies in the US or outside of the US. Make sure you communicate your expectations to your manufacturer to make sure you are on the same page.
If you do not have the skills you need there are other ways to continue starting a business. Part of starting a business is being resourceful. So in this case you would need to find a business partner that compliments your skills, in other words you need a business partner that has the skills that you don’t have.
4. Build a website
Over the last 10 years internet presence has become an important factor in being able to reach customers. It is important that you have a website to drive customer to so they can get additional information about your business and you can capture their contact information for future sales prospects.
The best part about building a website in 2019 is that you don’t have to write code to build a website. Here are the top 5 website builders to use for building your website.
- Weebly-how to use Weebly
- Wix-how to use wix
- Squarespace-how to use Squarespace
- WordPress-how to use WordPress
- GoDaddy-how to use GoDaddy website creator
Your website does not have to be perfect when you launch so don’t spend too much time with design.
However, the most important thing is that you do have a way to capture emails for future marketing and sales prospects. Mailchimp is a great tool for subscription buttons on websites that capture contact information for potential customers.
5. Build A Team
Find people that can help your business grow
If you want to build a team for your business you should look for people that will complement your strengths. Steve Wozniak and Steve Jobs were a great combination because Wozniack was great with technology and Jobs was great with vision and sales.
Here are a few ways to find teammates for your business.
Coworkers from your previous jobs is a great place to start looking for a new business partner. This is an advantage because you are familiar with their work ethic, quality of work and skill set.
Going to a networking event for the industry of your new business can get you in contact with people who have experience in the industry and may be looking for a new business opportunity. Think about what skills you want your business partner to have and be prepared to look for that when you are networking.
Your Professional Network
Linkedin is a great place to look for talent and people that would be a great fit for your business. Linkedin is a good strategy because you can look at the candidates professional credentials and experience that is relevant to your business needs.
6. Build Your Marketing Strategy
A marketing strategy is a strategy needed for reaching your target market and turning them into customers. This is where your market research comes into play. You can now create content that speaks directly to your potential customer.
Here is a list of marketing strategy tactics.
When you need to find the nearest restaurant in your city where do you go to look? I am sure you go to google to look for the answer. Google is the most used tool for finding information. It will help your website and marketing efforts to have blog content on your website that can get a good google ranking.
You will want to make sure your content has keywords that are searched on google. Use these keywords to create a good title and meta description that includes the keyword so your content can be found on google.
Ads are also a good way to communicate your message to your target market. There are plenty of ad services out there but the most popular for internet content is facebook ads, google ads and youtube ads.
These are some of the most popular avenues for ads because these are the search engines that are used the most for people that are looking for answers or information. Make sure before you start using ads you take into account the cost for your ads. It would be good to test ads so you can tweak your images or communication style as needed.
7. How To Legally Structure Your Business
Creating a legal structure for your business is one of the most important steps you can take in starting a business. Creating a legal structure for your business can protect your business, provide a way to sell parts of your company to partners or shareholders, or act as a vehicle for managing your financial assets. There are five types of legal structures to consider.
- An LLC is registered within a state and protects your personal assets if something goes wrong with your business, hence the phrase “limited liability”. With an LLC your business entity owns your assets and you as the member (owner) owns the business.
- Sole proprietor
- A sole proprietor is a single person who owns an unincorporated business and gives you full control of the business. Sole proprietors cannot sell stock.
- A partnership is a relationship between two or more people who wish to create a business together. Each person contributes to the business and each person shares the profits and losses of the business.
- When forming a corporation, an owner can sell shares of the company to raise capital for the business. They also pay income tax on their profits and also on personal income taxes for stock dividends that are paid to shareholders.
- An s-corporation is a corporation that elects to pass revenue and losses through the business so the owners can avoid being taxed twice.
8. Find Capital For Your Business
Businesses need money to run, this is a fact and it is something you can not ignore. Whether you are starting a small ecommerce business that doesn’t take much capital or you are planning on starting a software company that needs venture capital, either way you have to raise money.
The best way to raise a large amount of money for your company is to ask venture capital funds to invest in your company for stock or equity in return.
I am placing this part of the process here because you need to have solid presentations and market research to get a yes from a venture capital team.
9. Price Your Product
There are several ways to price your product and there is no one size fits all for pricing. We will go through the ways that you can determine a good price for your product.
Compare To The Market
You must know how much competitors are selling their product for, this will help you compare your product and confirm your product pricing is in the right range. You must also know what customers are willing to pay for your product. Do they like to purchase cheap with the intent to save money? Or do they like to pay top dollar for quality? Once you know this you can make a better decision on your pricing.
You must know how much it costs to make your product so you know how much to charge the customer. Break down your costs to find out how much one unit of your product or one hour of your service costs to make. Once you have this number you can figure out how many sales you will need to cover the cost of producing your product.
Costs Plus Pricing
Once you know how much it costs to make your product or service add a mark-up percentage to your cost. Once you have figured out how much it costs to produce one unit or one hour of service for your product you can add a percentage of a mark-up. For example, if it costs fifty dollars to build a table you can add a fifteen percent mark-up to the cost of the table and use that as your selling price.
10. Sell Your Product
Last but certainly not least you need to start selling your product!
This is the exciting part, if you did the previous tasks correctly you should be off to a good start with selling your product. As a business owner you want to make sure you are always prepared to sell your product to potential customers. Make sure you listen first and attempt to solve others problems when selling. It is always good to make sure you are setting high sales goals and projections to ensure you are bringing in enough capital for profit and growth.
If you are making sales calls, set your goals high and try to increase the goal on a monthly basis. If you are making 25 sales calls each day, increase that number by 10 every other week.
Make sure you are networking and meeting people in your industry. When networking you can always find potential customers or people that can put you in contact with potential customers.
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