What are some of the primary considerations for an owner starting up a business?

Being an entrepreneur is a dream to which many people aspire, and a worthwhile financial goal. Still, many first-time business owners, and even experienced pros, can sabotage their best efforts through typical mistakes. When you're ready to roll-up your sleeves and start your own business, keep your eyes open for these four issues. Though they might sound simple, these have been make-or-break issues for the fortunes of countless aspiring entrepreneurs.

1. Do you have a formal business plan? If not, you need one.

Not creating a business plan is perhaps one of the most common mistakes, and it's a troubling one, because business plans can help you identify issues with your idea, and also help market to potential investors or other sources of funding.

Before you start on a new venture, draft a simple business plan that identifies your proposed product or service, the costs involved, your funding needs, your competitors, potential customers and market opportunity. Also detail realistic challenges your business can expect to face.

The Small Business Administration (SBA) offers step-by-step simple business plan creation guides.

2. Don't assume being frugal is the right way to spend.

With a business plan in hand, you'll have a better sense of your funding needs, which will help you avoid two classic traps: over- or underspending. Some entrepreneurs misjudge costs, and end up spending more than they budgeted, while others spend too little to give their business a realistic chance, in the mistaken belief that being careful and frugal is always the right way to proceed.

Do your best to estimate actual costs of funding your venture through launch and the first year. The SBA offers a great start-up costs tool that helps estimate new business funding needs. Then, find ways to secure the capital you'll need.

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3. Identify the right partners.

The same issue of too much or too little is present when considering business partners. In many cases, you can't launch a venture alone — you'll need partners or investors for funding and know-how. But you can overdo it, by bringing on too many people, diluting your profit, and confusing your strategy. Your business plan will hopefully have considered this issue, but think further about who should really be involved, and what impact it'll have on your venture.

4. Get to know your customer before you start.

Do you really know your customer, and market? Do you know whether they have a desire or need for your product or service, or whether your proposed pricing makes sense? Do you intend on competing on price, quality, service, or all of the above?

Get to know your customers and market. Many businesses stumble because they fail to understand their target market. And when you're ready to expand, don't assume new customers in different areas will have the same tastes and priorities — get to know them, too.

5. Don't skimp on marketing.

Too many entrepreneurs have good products or services, but do a lousy job of marketing. If you know your customer and market, this should be less of an issue. You'll know what blogs they read, and where they hang out in real life and on social media. You can market to them based on their habits and lifestyle. Don't assume traditional advertising is dead, either. Depending on your business, billboards or radio ads might make sense, and overreliance on social media might backfire.

Whatever you do, you must market. If you're shy, don't understand marketing well, or don't see its value, hire someone who can help.

Entrepreneurship can be the adventure of a lifetime, but like any adventure, it can also be a challenge. Preparing yourself for the common mistakes many business owners make will make your path to success easier.

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Starting a business is usually an exciting time for majority people. The idea of being your own boss, managing your own time and finances thrills a lot of people. With all this excitement, it is possible for one to just jump into business without prior planning. Lack of proper initial planning can be disastrous to the business owner(s) in the long run when the truth about the business environment sets in. To avoid losses or unpleasant surprises, I have discussed 20 important factors as well as steps to put into consideration before starting any type of business.

1.      Type of business

After determining whether you’ll do the business on a full time or part time basis, you will have to decide on the type of business structure to start. This could be sole business, partnerships, a company or even a trust. Each business structure has its advantages and challenges. A serious business weighs each of them, compares the benefits and drawbacks and makes a conclusive decision. The type of business will determine the legal requirements and financial requirements of the business.

2.      Part time or full time

This is the initial decision that an upcoming entrepreneur should take before starting any venture. Some of the questions to ask at this point would be; if employed, should I quit the job to completely focus on the business, or should I do it as a part-time venture. Whether unemployment you should ask yourself whether you would love to pursue an 8-5 job given the opportunity or you would solely do the business. Such decisions help one to stick to the plan and plan on the time management.

3.      Location of the Business

Location of a business is an important element before one starts the business. The location is determined by one's residence, the existence of similar businesses in the area, the distance between one's area of residence and the business, the population of the area, and the demographic. All these factors play an important role in determining the success or the failure of the business. For instance, starting a pork business in a Muslim dominated region would be a wrong idea.

4.      Competition

Competition comes from other people doing the same business. You should research how the competitors run their businesses, who their customers are, their pricing strategy, how well they do it, and their challenges. Their mistakes should be your strong points so as to outdo them. If the market is saturated with the type of business that you want to start, then be keen to develop the right strategies to be able to penetrate the market. If few people undertake the venture, then that is an opportunity to launch a business brand that will be the lead in the region.

5.      Target Market

Who are your consumers? What particular product do they prefer? What after sale service do they appreciate? These are the things that you should consider. After that, you should tailor make your business to match up to the above factors. This runs from the business website, modes of marketing, and modes of delivery.

If most of the clients are projected to be of a certain age, you should ensure that you engage them through talks, social media, or even through questionnaires so as to understand what their needs are. You should also endeavor to hold one-on-one talks to prospective clients so as to build loyalty and trust even before the business picks up.

6.      Startup Capital

People do not just think of doing a business, then hastily decide to borrow money and start the business. Starting a business requires an efficient source of capital considering that some unexpected needs arise with time. Some of the options that one would consider would be getting money from family and friends, getting a loan from a bank, or even finding a willing investor. All these plans, however, do not work out all the time especially when large sums of money are required. When that happens, do not be discouraged. Start small, then expand as profits start coming by. The success of the business might be a convincing force for the banks to offer a loan.

7.      Naming of the Business

The name of the business is usually the first thing the customers get to know about. This step, therefore, requires a long thought since once the business picks up, it would be hard and expensive to change it. The name will also coincide with the businesses website and web domain. Some questions that you will have to consider are; How do I choose the best name for my business? what does the name say about your business? If it a personal name, has your name being on the negative public light? You would not want to use a name that has had been mentioned in corruption or negatively as it will definitely kill your infant business.

8.      Putting Your Brand out There

A business is not helpful if it is in the closure. Before you could start the business, you should come up with a clear outline on how you will develop a good marketing plan, and make your business known. Making your business known does not need an enormous budget considering you are just starting. Initiating and maintain relationships should be the initial focus. Learn how to market your business online for free, and network, network, network. It is through meeting with people that you will tell them about your business and distribute your business cards. Seminars and business shows are also a perfect time to broadcast your business. Making your business known requires a lot of work, so get up, develop a good media plan and strategy, and work hard.

9.      Unique Selling Point

There must be that unique part of your business that attracts customers, and that makes them decide it should be business A and not B. identify that uniqueness in your business and capitalize on it. A unique selling point could span from the type of product or service you offer, after-sale services, packaging of the products, or good customer care. Find that unique point in your business and stick to it.

10.  Financial Management

Before you could start a venture, it is very crucial to have a clear financial plan on how you will manage your finances, or how you will hire someone to do so. Financial management requires a professional accountant who understands the balancing between the inputs and output. It is very easy to think that the money in the business is enough, only to end up using the capital for the wrong purpose. To avoid such, you should come with a clear financial plan which captures the amount of money that will be allocated to which session. For a start, you should hire an affordable accountant who will help kick start the business.

11.  Possible Partnerships

Partnerships usually help in terms of expanding one's customer base, getting lessons concerning starting or running a business, and various elements required for a business startup. You should, however, be careful that the partners do not use the relationship to their advantage. By forming a partnership with someone on the same line of business, you will be open to accessing their customers as well as sharing ideas.

12.  Online Presence

Nowadays, everything is done online, from the start to the growth of the business. Before starting the venture, you should have plans of creating a business website or a blog, creating a twitter, Facebook, and Instagram account, and much more. These are main areas where people get to know about your business. You could also use these channels to chat and speak directly to your clients. A business website is the face of the business. It is from the website that the clients can view what you offer at once, and leave questions or comments.

13.  Method Of Selling

Determining the means by which you will sell your product is very important. Will you consider using eBay, or amazon, or even Google Adwords. Taking this simple step will help in determining the budget and the approach to use to reach to customers. You could consider renting a place to put up your business or doing it online.

14.  A Business Plan

Many people avoid this phase. Really. They think is a tiresome process of looking into all the aspects of the business and noting them done. To build a successful business, you should work on putting all aspects of the business together, from the executive summary to business objectives, to finances, to location, to marketing and strengths and weaknesses of the business. In case this is tiresome for you, look through how to build a business plan or go through a list of business plans for different businesses at bisworld.info.

15.  Legal Requirements

Different businesses require different legal considerations. For instance, a business dealing with foodstuffs would be required to provide a safety license. To be on the safer side, you should make sure that you have set terms and conditions that ought to be signed to avoid any inconveniences. The local authority takes care of offering such licenses, so you should make sure that you acquire one. There are more legal considerations to take care of, so make an effort to talk to a legal advisor to clear any doubt.

16.  Education, Experience, and Skills

Going into a business with no experience, or skills or even knowledge on that particular field could be very dangerous. Wearing designer clothes does not mean that you know how to run such a business. Before going in a business, make sure that you have prior experience, or the required knowledge needed to do that venture. If you are green on that sector, do not be in a rush simply because you have an idea. Take a course on that particular business, arm yourself with the right knowledge and you are good to go. Alternatively, you could look for a mentor who has been on that field to guide you through it.

17.  Future Expectations

A business is prone to failure, though it is not something that most people planning to start a business would love to hear. A business is either made to be successful or unsuccessful. You should be prepared for both situations. When the business experiences losses, you should be able to pick up and soldier right ahead. Failure could also mean that you missed a step, so use that as a lesson and go to the drawing board to discover where you went wrong.

18.  Mode of Paying Yourself

You will start the business, get profits and move on. But at the same time, you will have personal needs to take care of. How you remunerate yourself is very important. Will you do it weekly, will you get a certain percentage of the profit, will get a certain amount at the end of the month? Whichever way you think of is very crucial at the initial phase of the business. You will not want to get 50% of the profits without considering factors like restocking, paying rent, taxes, etc. The business should take a bigger percentage of the profits

19.  Hiring of staff

If the business will be a small venture requiring only your services, well, and good. But if you will require the expertise of other people, you would be needed to plan on how to pay them, when, and how much. At the start, the employees should be as minimal as possible, and with a reasonable remuneration.  Having a plan will make you organize your budget, resources, and the environment in which they would be working on. Before hiring anyone, learn how to choose the right employee for your business and be sure that they are the right fit for the job. You would not want to hire someone who will mess up the business.

20.  Return on Investments

The ROI is got by dividing the Net Profit by the Investment. During the start of the business, the Return on Investments is usually low, then rises as the years go by. For a business to be successful, the Return on Capital should be bigger than the interest rates earned from a bank deposit. 

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