What are the main factors to consider before starting a new business?
To succeed in any business, you must have a burning desire. Because, when things go south (and they will), you will need to be able to wake up each morning to fight and prepare yourself for a stressful day.
An Idea for A Business
Whether it is a new product or improving on an old product or design, you must be able to solve a problem that people or companies are having. Your business needs to have a reason to exist.
Once you have formulated your idea, there are going to be areas where you lack knowledge or skill. This is when you should look to learn new things, get some books, take some courses, get a mentor. Do you need specific licenses? If so, where, and how do you get them? How much do they cost? How long does it take? Research the internet seek help from others. This is a crucial part of your journey; you cannot afford to start a business without having a good understanding of all the forces and requirements at play.
Economics of The Business
Now we begin to figure out the feasibility of everything. There are two parts here, your expected expenses and the revenue that you plan on receiving. Expenses are broken down into two areas, start-up expenses, and working capital. Start-up expenses are the one-time expenses needed to get up and to run. Such as computers, machinery, office, furniture, cars, trucks. Working capital is your ongoing expenses for software programs, rent (you must be in the right location for your business, choose it well) for office space, marketing advertising, inventory, and staff. Good people cost money, and good people are what is going to build your business. Salaries and benefits will most likely be your most significant obligation, so plan it well. Now that you have an idea of what the costs are, you need to figure out how much to charge for your service or product. What are your competitors doing?
Who is the Competition?
You are most likely going to have competitors. You need to know how they do things and why. You must find a competitive edge, something that makes you stand out as a viable product or service substitute. If you are a monopoly, you will most likely wake up one day to find someone taking your market share. You must always be watching what the competitors are doing a look for new technologies and trends.
Now that you have your idea, you need to understand the economics. Get to know the competition. You must figure out the amount of money required to get things started and how much you need to run everything (working capital ) until your cash flow is sufficient. Are you going to use your savings? Borrow from friends and family, borrow from the bank? Find investors? Partner up with an existing business? A big part of figuring out how much money you need is also to understand when you are going to break even and start returning profits. If you must approach investors, they are going to need to know when they can expect to see profits. Or get paid back.
Revise Your Plan
Once you finish collecting all your ideas and findings and get it down on paper, getting things down on paper will serve as a business plan or even an investor deck. You should keep tweaking it. I guarantee that you will forget the many expenses. You may learn new things about your competitors
So now that we have everything mapped out share your plan with trusted people and get their feedback. They will most likely tell you that you are crazy and give you a hundred reasons for what you will fail and that it is a stupid idea. No matter what, there will be arguments against your idea. Some arguments will be factual, and some will be nonsense. Listen to them, take the criticism, and revisit your idea and plan. Find answers to their concerns and points, separate the facts from the nonsense.
If you can do all this and still have the burning desire, go for it!
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