This article aims to explain the critical elements of what is required to start a business. So please take the time to read this article, as it will significantly increase your chances of starting a business that will succeed.
So, You Want to Know How to Start a Business?
The failure rate for starting a business is relatively high. However, these statistics can be significantly reduced if budding entrepreneurs take the steps (covered below).
The Most Important Business Advice Ever
If you have an idea and want to start a business, you must pay close attention because you are at the stage where most people get it wrong. WARNING: One of the most significant areas where businesses fail, especially with unique business ideas, is that they create a product or service that nobody wants. In other words, there’s no market need for their product or service. Entrepreneurs at the ‘idea stage’ usually believe everyone will love their future product or service as much as they do. Unfortunately, the truth is that friends and family often support these ideas to the detriment of the budding business owner. If people who wish to start a business spent more time performing marketing research, their chances of success would dramatically increase.
Vitamins vs Painkillers
Time to go deep. The big lesson in business is that the bigger the problem you solve, the more you will get paid to solve it. Most people miss this, and it’s so crucial and straightforward that it must not be overlooked before starting a business. I recommend going to business and providing product service that people not only want but need. Ideally, you should ensure that your target audience urgently needs to fix a problem and that they are willing to pay good money to fix it. People often create products that are ‘nice to have’ products. These are the types of products that their target customer may put off purchasing, as there is no immediate need. You should ask yourself whether you are selling vitamins or painkillers. You see, vitamins are products or solutions that help maintain health. However, most people put off buying them because there’s no immediate need (health concern) to purchase them. On the other hand, people will need to buy painkillers immediately. For example, if you have a migraine, how quickly will you hand over the cash for those pain relief tablets? If you are anything like me, probably right away! And you will be far less concerned about the price – because the immediate need is far greater. If you are considering selling a product or service, I highly recommend selling painkillers over vitamins.
Before performing market research, consider yourself a ‘problem seeker’. You look for an opportunity (problem to be solved) in the market. Being a problem seeker is often the best way to find new business ideas.
Being a Problem Seeker
How do you find a problem in the market? There is no easy way. You must speak with people in the industry and ask them. You can do this by connecting with them through LinkedIn and asking them if they could spare 15 minutes for a phone chat. On the call, you can ask your target market questions like “What is the biggest frustration in your business?” “How much would you pay to fix it?”. Ask numerous “why” questions to uncover their emotions connected to the problem. For example, “Why is that a big frustration for you?”.
What if You Already Have a Business Idea?
On the other hand, if you have a business idea, you must define your hypothesis. For example, if you want to start a food delivery business, you would hypothesise that people in your area will pay you to deliver food instead of Menulog. It would be best to analyse your hypothesis by determining what people would like home food delivery. What type of food do they want? Why will they pay for your service (over a competitor)? And how much will they pay you? To answer the above questions and many others, you must perform market research to see if the business is viable. Once you establish a market need, you should also make sure that the audience has the money to pay for the solution. It may seem harsh, but you should ensure you’re not selling to an audience of broke people. The initial steps to avoid your business from early failure is to perform Market research to determine whether there is a demand for your product, whether people are willing and able to pay and, importantly, who your target audience is.
To understand your audience better, you must research their demographics and psychographics. Demographics are people’s attributes such as their age, where they live and their income.
Psychographics refers to people’s beliefs, thoughts and stance on particular issues. For example, if your target market is yoga enthusiasts, you may learn that the audience’s belief balance is the key to life. Perhaps your target audience is teachers. In that case, they may strongly believe in gaining a traditional education.
Once you understand the demographics and psychographics, you should create a customer Avatar that is an actual image of your ideal client. Your customer avatar will be a product of your market research. Don’t worry too much; changing your customer avatar at any stage of your business is easy. However, creating one before you start a business can be very helpful. You can then search stock photography websites to find an image of what your customer avatar looks like (based on your research) and then print that image and pin it on your office wall or save it to your computer’s desktop. All marketing, business material and other communication should be written as if you are writing to this person. This makes engaging with your ideal clients easier and helps you understand precisely who served in your business.
The Secret Market Research Step!
Almost nobody talks about this. My mind boggles that people skip this step. If you want to start a business, you must talk to people before starting. You need to confirm your hypothesis and that your target market will purchase your product or service. Even if you are selling something already in the market and others are selling, you still must take this step. It’s crucial because you must understand why it is selling and essential to the customer. You must do this part. If you’re unwilling to do this part, don’t continue any further in business. I don’t feel like I can’t stress this enough. Now that you have your hypothesis and have researched your target market, you need to call them to arrange to speak with them. It would be best to ask the right questions about their thoughts about the product or service you want to sell. It would be best to ask them what problems they have had or other things that may prevent them from buying your product or service. Remember, at this stage, you’re not selling them anything – you’re merely asking questions to find out who they are, what they want, their fears, and to validate your hypothesis otherwise. This will be the best market research step of all.
Creating Your Offer
Once you have spoken to people in your target audiences and understand precisely what they want, you may move to the next stage, creating your offer. Your offer should be compelling and should address the concerns.
Validating Your Business Idea
Once you complete your offer, you should return to the people who said they would pay for the solution to their problem and tell them you have solved the problem and ask them for an order. You must have a proof of concept, meaning that you should be able to demonstrate that you have solved the problem. You can do this by preparing a slide show demonstration.
Creating a Business Plan
Business plans are boring, long-winded documents no one cares about when starting a business. So should you do one? Well, yes and no. I’ve got a great way to do a simple business plan you will use, and it gets to the point. You don’t need an extended business plan unless you raise capital or require a loan to start your business. Instead, using Lean Canvas, a business plan you can put on one page would be best. To read how the Lean Canvas works, read our article: The Ultimate Guide of How to Write a Business Plan Fast!
Before you start with the visual branding components such as logo, stationery, business cards, etc, it is essential to understand and clarify your message and who your brand is targeted towards. A brand is how people view your business. A brand is more than just a logo. A brand should also communicate your business’s values, beliefs and goals. In other words, a brand should represent and evoke an identity. Jeff Bezos, the founder of Amazon, advises, “Your brand is what other people say about you when you’re not in the room”. A brand is important because people look for brand values and identities similar to traits that they have themselves. For example, a brand is trustworthy and family-focused, and who communicates that in the brand Communications will not only be able to sell it to that target market more efficiently but also want to attract employees who want to join their cause. When you are developing your brand for your new business but want to start, consider how you would like to be perceived in the market and how your branding will separate you from your competition. Ultimately, developing a brand that connects with the audience and builds trust with them is necessary.
Your Unique Value Proposition
A unique value proposition is an essential component of branding. Your UVP should be a short sentence that describes what your business does, for whom, and the value that your business provides. This should be followed by a small statement describing how your business differs from the competition. A unique value proposition could be this: “We provide Thermal clothing for campers to stay warm. Unlike our competition, we guarantee our product for five years.” Remember, a unique value proposition doesn’t have to be public; it can be public. Dominos made their UVP public when they released the “Pizza in 30 Minutes, or it’s Free”. Yes, I know it was arguable that it was just a promotion; however, even if it was, there is a lesson that you can use unique value propositions in your promotions. The important part is to identify what makes you unique and how and to whom you provide that value. Remember, just like the business model canvas, simplicity is the key. We will be bringing you the rest of this article soon.
Creating a Free Business Website
I highly recommend using WordPress for your business website. There is not much you cannot do with WordPress. That is why it is the world’s most popular website platform. According to research by W3Techs, WordPress is used by 65.1% of all the websites whose content management system we know. This is 43.0% of all websites. The great thing about WordPress is that it is extendable. Oh yeah, it’s also free, making it very attractive. Choose Your WordPress Theme WordPress is even better with the professional themes you can buy for next to nothing. We purchased a Newspaper from Tagdiv for around USD 60. We like it because it is swift to load, and the way the theme is structured makes it uniform, making the website look very professional. Honestly, though, I don’t think this would be a good theme for beginners who don’t want to pay web designers to update their sites. I mean, you’ll get used to using it, but there is a bit of a learning curve, in my opinion. If you are getting started, you could check out Astra. I have recommended these because they are well known to have admirable themes that are ready to go, and they load super-fast. Page speed loading is something that you should take very seriously because it helps with user experience. A statistic reverberated around the internet a few years ago that about 80% of visitors will leave a website if it doesn’t load within 3 or 5 seconds. Please don’t quote me on that; visitors may leave in less time than that these days. I know I am impatient with slow-loading websites. Page loading speed is also critical on both mobile and desktop browsers. If you want to check out how fast your website loads, Google’s Page Speed Insights allows you to test the speed of your website on both desktop and mobile. Business Website Hosting Hosting is critical and is often understood. It is tempting to settle for cheap hosting as plenty of it exists. Quite frankly, cheap hosting’s sales tactics remind me of used car salespeople in the 1980’s. Also, looking closely, their offers are cheap if you take them over 3 or 5 years. By then, you realise they are probably not the best choice. The point is that cheap hosting can cost you in the long run. This type of hosting can often be shared, which means the servers are often overloaded with low-quality (and sometimes offensive) websites. The worst thing is that these poor sites often share the same IP address as your business! No, thank you. That significantly reduces your chances of ranking in the Google search engine results. Cheap hosting also often results in a slow website, which can indicate to Google that your site is a pile of junk (even though it may not be!). But it’s not just Google that hates cheap web hosting – your website visitors will not wait for a frustratingly slow website. Approximately 70% of website visitors will leave a website if it does not load within 5 seconds. That is an old statistic, too. I would imagine that would be far less in 2022. So, there are many reasons why you should have quality web hosting. They have sufficient resources, so your site will load quickly, keeping your customers and Google very happy! For the best premium WordPress Hosting, I recommend Kinsta. I have written a long review about why you should consider this host. If you are starting out or in a growth phase, I recommend WPX Hosting as it is the best WordPress hosting in the mid-level range. We use and love WPX Hosting on this site, which has been great.
Choosing a Business Structure
The easiest and most inexpensive way to start is as a sole trader. However, it does come with risks. For example, as a sole trader, the business’s liability rests with you. The debts of the business are also your debts. Therefore, if your business goes broke, so can you.
A company has extra set-up and ongoing costs. However, there are many benefits to running a business as a company. Firstly, it provides your protection. If someone sues your business, it often won’t mean you are being sued personally. Additionally, there are tax benefits for operating as a company that you would not be entitled to. Further, if you are seeking investors, now or in the future, companies are ideal because companies are comprised of shares, which can be sold to investors. Getting an investment as a sole trader will never happen. As companies are separate legal entities, you will generally not be liable if your company goes broke and owes a lot of money. That is subject to any personal guarantees you give, such as leases and equipment.
Accounting & Tax
I recommend engaging a bookkeeper and accountant as soon as possible. The bookkeeper will do the weekly figures and pay taxes that are required occasionally—for example, GST (in Australia) or VAT (in the UK and Europe). An accountant will help you with structure in respect of your current personal financial situation. They will also make tax statements at the financial year’s end and help you plan for business growth. It would be best if you asked your accountant to take care of registering for tax. The earlier you engage these professionals, the better. They will help you set up your financial accounting systems so you can get into good habits early when the business is less busy.
Legal Documents When Starting a Business
There are several legal agreements that you require when starting a business. Avoid using templates that you can find on the internet. I have seen people use these and have lost control of their business as a result, literally.
Shareholders’ Agreement is a contract between shareholders that sets out how the company must operate. This Agreement will provide who has the voting power, who has rights regarding running the company and other things such as the process if one shareholder wants to sell their shares. The shareholders’ Agreement will also describe the dispute resolution process if there is a dispute between shareholders.
Employment agreements are pretty self-explanatory. They set out the terms under which the employees agree to be employed. Employment contracts often include employers’ workplace policies. For example, technology device policies, social media policies, work-from-home policies, cyber security policies, etc. Policies are not as fixed as the terms of a contract because they can be amended from time to time. Policies are generally for setting standards.
If you are selling services, you must have a services agreement that sets out the terms and conditions upon which you are providing the services. This Agreement will also specify payment terms and the rights of the parties. Businesses should also add their warranties and how the Agreement may be terminated. The services agreement will vary, depending on which services you provide. For example, a services agreement for a public relations firm will differ from a services agreement for a cleaning company.
Website Terms & Conditions Agreement
Website terms and conditions are similar to the services agreement. However, they may be different where you are selling products (and not providing services). The terms and conditions can refer to import policies such as shipping and refund policies. When making website agreements, business owners must ensure that they comply with their country’s consumer laws if they are selling to the consumer market.