Starting a business is tough. But applying sound principles will increase your chances of success. Five key areas you should focus on before you get your startup running include: financing your business; creating an effective marketing plan; managing your cash flow; conducting market research; and being committed to excellence.
It is absolutely essential to develop a plan of action before you open your doors and begin your enterprise. Once you’ve come up with a good plan, the other details will fall in place. It could mean the difference between having a hobby and being a successful entrepreneur. If you understand and apply the following five steps, you will already be headed down the path to success.
6 Finance your business Insufficient financing is one of the top reasons businesses fail. Whether your business is just starting or beginning to grow, you should be aware of the different ways to finance your business as well as the pros and cons of each. A good rule of thumb is to try not to put all your own money at risk. Also, don’t limit yourself to seeking just one source of funding. Consider venture capitalists, commercial banks, angel investors, and friends and family. In any case, having a solid business plan is a must. This includes realistic revenue and market share projections and a clear, understandable business model.
7 Create an effective marketing plan Once you decide to start your business, getting the word out about your company is a priority, regardless of the size of your marketing budget. But promoting your business doesn’t have to be expensive. There are cost-effective ways to attract new customers and make every penny count in the process.
Marcia Layton Turner, a start-up business expert and author of The Unofficial Guide to Starting a Small Business (Wiley; 1999), points out that marketing is critical for startups. Unless you invest in promoting your business, you’ll have difficulty attracting customers. “The fact is, some of the most effective marketing tools cost little or nothing to implement,” says Turner.
The first step toward achieving marketing goals for your startup is to create an effective written plan you can follow to avoid wasting time and money. Whether you decide to send a press release to a local newspaper or announce your business by placing flyers on the windshield of parked cars, an effective marketing campaign requires careful planning in advance. Devote some time each day to develop marketing ideas and tailor your promotion strategy to your targeted audience.
8 Manage your cash flow Cash flow is simply the money going into a business and out again: cash on hand and/or in a business account used to pay company bills, salaries, and other expenses. Companies that are cash flow negative are spending more than their revenues bring in. Improving cash flow involves many techniques, the simplest of which is managing payables/receivables. You want to improve the speed with which your product or service generates
cash, while slowing down the rate at which you spend. It’s critical that you prepare cash flow projections and a cash flow statement. An accurate cash flow projection can alert you to trouble well before it strikes, while a statement is used to analyze the cash inflows and outflows during a specific time period–something most lending intuitions ask for. You should also consider hiring a financial adviser. Referrals can be obtained through the National Association of Personal Financial Advisors (www.napfa.org) and the American Institute of CPAs (www.aicpa.org).9 Conduct market research There are a number of ways to conduct research on an industry or a particular market before starting your business. Research can be as simple as asking family or friends about a specific business idea or it may require hiring a professional research firm to perform comprehensive market research and analysis.
To get a clear picture of what’s happening in your industry and where the opportunities are, consider getting the information you need by conducting research on the Web, joining trade associations, attending conferences, and subscribing to trade journals.
The Internet can provide you with countless information sources about any industry. What you can’t find online will probably be available in a local library.
10 Be committed to excellence Your business is more than just the production of goods and services. Recognize that you need to be committed to the whole experience of conducting business to make people’s lives better, fixing problems, and providing solutions. Mediocre and unsuccessful companies start out only to make money. But the most successful businesses strive to be greater than their competitors by delivering superior customer service and experience. Before you decide what type of products or services you want to provide, find out more about your customers. Create a strategy to consistently exceed customer expectations and you will have customers for life. The commitment must be ingrained in your company’s culture and integrated in your overall business strategy.