Starting a successful business, as most conventional wisdom would tell you, is not easy. That said, many people repeat varying incorrect statistics such as “90 percent of businesses fail within their first year.” The reality isn’t quite as dire. According to the Bureau of Labor Statistics (BLS) , nearly 51 percent of new businesses established in 2014 are still operating as of March 2019. Thus, starting a successful business is not as impossible as so many make it out to be. But it will require countless hours of work along with high levels of stress and exhaustion, mixed with excitement, enthusiasm and, hopefully, satisfaction. Becoming an entrepreneur requires you to take some essential steps before your dream company is up and running. Read on to find out how to become an entrepreneur and embark on the road to business success. Here’s how you can become an entrepreneur:
Every successful business should begin with a sound business idea and a plan for future growth. Just because you have a clever idea does not mean it translates well into a successful enterprise. From the start, you should zero-in on a viable startup concept. Here are some basic strategies for coming up with profitable business ideas:
There are other methods to come up with viable business ideas. Networking with other entrepreneurs is important when starting a business in general, but especially so to find out which areas have a better chance at success than others. You can gather your network of fellow entrepreneurs together for a group brainstorming session. Another simple route is to research patent applications. Naturally, you shouldn’t search patents with the intent to copy. Instead, researching patent applications can give you a better idea of current trends in innovation.
One of the first steps in creating your business is drawing up a business plan. A business plan lays out any objectives you have as well as your strategy for achieving those business goals, and potential business risk. Your business plan is critical for getting investors on board or other forms of funding. Although business plans vary from business to business, there are some basic features that people expect when reading a business plan. Some fundamental parts of a business plan can include an executive summary, company description, organization and management, key partnerships, cost structure and much more. You should lay out your business goals and business risk as well. Learn more about all the essentials you need to create your business plan .
Figuring out a location for your business and your business’s target audience can be closely intertwined. If you’re starting a restaurant or retail store, foot traffic will be a crucial factor in choosing a location. If you’re starting a tech company, being in close proximity to other tech firms and their infrastructure is important. If you’re starting an online business , location matters less, but you may want to take state taxes and regulations into consideration. In terms of audience and customers, do research on the age, gender, income, race and culture of your target group. Doing both geographic and demographic research will help you clarify the best location and customers for your business.
Deciding on the structure of your new business is important because of the many organizational and tax implications it carries. For instance, if you choose to incorporate and establish a C corporation, your business will get taxed very differently than if you were to form an LLC. Your business structure also designates who are owners and their stake in the company. Here are the most common business structures you can choose for your startup :
Each one of these business structures has its pros and cons. Deciding which business structure is the best fit requires self-evaluation of your business objectives and where you see your company going.
Unsurprisingly, entrepreneurs often view their startup idea as their baby. However, bringing in outside help in founding your startup can provide major benefits, even if it means sacrificing total control and financial compensation. Consider the pros and cons of having a co-founder to decide if it’s right for you.
While total control over your business might be appealing, there are definite advantages to having a co-founder, including:
An analysis of thousands of new businesses revealed that businesses with one founder accounted for a minority of successful startups. A slight majority had at least one co-founder.
Here are some of the most notable drawbacks of having a co-founder:
Even though a majority of successful startups have co-founders, you should make a decision based on your situation and not necessarily traditional advice. Each entrepreneur is unique, complete with their own objectives and goals, so seeking a co-founder should fit in with your overriding vision for your company.
The traditional route for securing funding for a business is through investors, big banks and other financial institutions. Finding angel investors is a difficult prospect. And, although banks tend to offer the best terms and rates, they’re also more difficult than other, less traditional methods of funding. One of the main stumbling blocks from the get-go is that banks and institutional lenders tend to have criteria, such as multiple years of business history and revenue, which necessitates your having an existing business, not a startup. If you’re an entrepreneur starting a new business, you might need to pursue alternative means of funding. Here are five creative ways to fund your startup without investors or traditional bank loans :
Closely tied to securing funding, opening a business bank account is an important step that keeps your business finances separate from your personal accounts. Opening a business savings account is also a smart money move, especially an account designated for taxes. Opening a business credit card is another financial move you should consider for your business. You’re going to have ongoing and unexpected expenses when running a business. A business credit card — especially one that earns reward points — is great for such day-to-day expenses. Using your business credit card responsibly will build your business credit history, allowing you to access a wider variety of funding options in the future.
The final step, and really a never-ending one, is lining up clients or customers for your business. Both networking and marketing are key for this step, as you’ll need to find customers and make your business appeal to them. The Small Business Administration (SBA) has some solid strategies for acquiring new customers:
The last tip can be taken further. Rather than just one-off events and deals, forming a long-term strategic alliance with a complementary business can be a major advantage. Allying with a company that shares your customer base, but fulfills different needs, can help attract more customers, increase profits and keep costs related to customer acquisition down.
These steps cover the most essential aspects of becoming a successful entrepreneur. Of course, there are always more steps and moves you’ll have to make once your business is up and running. For more practical help, below are some useful entrepreneurial resources and entrepreneur associations that can assist you in starting your successful business: