Principles of starting a business

 

Among the many other ways to increase your income is starting your own business. To get started, consider the following:

Write a business plan

The business plan will enable you to evaluate whether your business idea is feasible. The goods and services that you offer, how are they unique and will they appeal to the customers. Thoroughly study your competitors, what are the primary differences between what you offer and what they offer. 

Define your business and vision

Defining your vision is very important, it will be the driving force of your business. Ask yourself the following question:

What business are involved in ?

What do you sell?

What is your plan for growth?

What is your primary competitive advantage?

Write down your goals

Create a list of goals with a brief description of your action plan. A new business concept will require a lengthy period of research and development before the outcome can be clearly and accurately predicted for the long term. 

Create two sets of goals:

Short-term goals to be accomplished between 6 to 12 months

Long-term goals to realized in 2 to 5 years

State as clearly as you possibly can what you want to achieve. Start by listing your personal goals, then list your business goals.

As the owner of the business, what do you want to achieve?

How large do you want your business to be?

Is your business addressing a specific problem in society?

How would you describe your competitive advantage? 

How will your business impact the lives of your customers?

Understand your customers

It is not realistic to expect to meet everyone's needs, no business can. Select your target market carefully and you will be more than pleased with the results. Get this wrong and you will be disappointed with the performance of your business.

Customer needs: identify what unmet needs your prospective customers have and see if your business meets these needs. 

Wants: the desires and wishes of your customers.

Problems: What problem does your product or service solve? 

Perceptions: What are the negative or positive perceptions that customers have about you, your profession and its products or services? Identify both the negative and positive perceptions. You will be able to use what you learn when you start marketing and promoting your business.

Learn from your competition

You can learn a lot about your customers and business simply by looking at how your competitors do business. 

The following question will help you learn from your competitors:

What do you know about your target market?

What competition do you have?

How are competitors approaching the market?

What are the competitors' strengths and weaknesses?

How can you improve upon the competition's approach?

What are the lifestyles, demographics and psychographics of your ideal customers?

Financial matters

How will you make money? What is your break-even point? How much profit potential does your business have? Take the time to invest in preparing financial projections. These projections should take into account the collection period for your accounts receivables (outstanding customer accounts) as well as the payment terms for your suppliers. For example, you may pay your bills in 30 days, but have to wait 45-60 days to get paid from your customers. A cash flow projection will show you how much working capital you will need during those “gaps” in your cash position. I recommend thinking about these six key areas:

1 Start-up Investment 

2 Assumptions 

3 Running Monthly Overhead 

4 Streamlined Sales Forecast 

5 Cumulative Cash

 6 Break-even Identify your marketing strategy There are four steps to creating a marketing strategy for your business: 

1 Identify all target markets: define who is your ideal customer or target market. Most companies experience 80% of their business from 20% of their customers. It makes sense then to direct your time and energy toward those customers who are most important.

 2 Qualify the best target markets: the purpose of this step is to further qualify and determine which customer profile meets the best odds of success. The strategy is to position your business at the same level as the majority of the buyers you are targeting. It is critical to figure out who your best customers are and how to best position your company in the marketplace. 

3 Identify tools, strategies and methods: a market you cannot access is a market you cannot serve. Marketing is the process of finding, communicating and educating your primary market about your products and services. Choose a combination of tools and strategies that, when combined, increase your odds of success.

 4 Test marketing strategy and tools: the assumptions we do not verify are typically the ones that have the potential to create business problems. Take the time to test all business assumptions, especially when you are making major expenditures.