11 Factors To Consider Before Starting A Business
Great Ideas make a good sense of business, but in the absence of the other factors to consider before starting a business that comes into play when you finally decide to start your very own business can mean struggling with little to show for or even worse off flat-out failure.
When you take your time to mitigate these impediments, your chances of making a success out of your startup business increases ten times plus!
So, what should be on the checklist of factors to consider before starting a business? Let’s jump in!
1. KNOWLEDGE OR EXPERTISE
1.1 How much do you know about the industry or product you plan to sell
Your level of knowledge in the product/service offered is key a successful launch.
1.2 Your lack of knowledge leads to frustrating dealings with vendors and
intermediary suppliers so make sure you know your product or service.
1.3 Be clear of the market you plan to go into, that way you know
your point A route to point B.
2. MARKET OR DEMAND FOR THE PRODUCT
Market viability is all about you taking the first steps by exploring
how bigger of a market is available for your product.
2.1 Does your market exist domestically or is it a global opportunity?
2.2 The Goal is to understand who your real customers are and how
challenging will it be for a small business owner to reach them.
2.3 Most domestic markets will not have stringent rules and regulations
When your product or service crosses borders, you have to think about
how to deal with regulatory rules, product returns, shipping and handling
3. TOTAL PROJECT COSTS
3.1 How much will it take for you to get to the market?
3.2 Startup costs for a manufacturing plant are more exorbitant than
those of a drop shipping business model.
3.3 Does your business require immediate office space and tooling to rent?
3.4 Many business jurisdictions demand a minimum capital requirement to be met before you start trading.
Businesses like grocery stores will require you to stock large quantities
of merchandise long before you open doors. The dilemma is that these
goods demand upfront capital outlay as credit may not be given to your
business by your suppliers.
4. FINANCING OR CAPITAL
4.1 You need to figure out how to finance your business, and this comes in two parts:
4.1.1 INTRODUCTORY BUSINESS CAPITAL
4.1.2 CREIDILINE BUSINESS CAPITAL
4.2 Depending on your implementation strategy, as the business owner you will have to figure out how much to introduce and how much to borrow.
4.3 A rule of thumb on factors to consider before starting a business is to never use short-term funds for fixed assets acquisition. Instead, use short-term funds for operating capital needs.
The logic behind this is that if you spend your short-term funds on fixed assets then how are you going to repay back the borrowed money if the business is not making any money?
When you know how to move forward with your chosen financing model, your next step will be to put that money to work as planned.
As a new business it’s easy to get caught up in the euphoria of owning a business, what you should be concerned about is what sort of competition will you have to beat to get to the top.
5.1 Your goal here is to identify a winning product or service you can offer with high buying intent and demand, yet less competitive for new entries into that particular market.
5.2 Never assume that less competition is a sign for good market to go into.
always look at sales volume and historical annual demand trends
for the product.
5.3 Your primary goal competing for offers is to identify your USP(Unique Selling Point) How will you position your offer so it can withstand market competition?
5.4 This is achieved by applying SWOT analysis to your competition to unearth strategies behind their marketing success and if you are smart you will see gaps in between that you can plug in and offer a better version of your own product or service.
6. BUSINESS LOCATION/ DISTRIBUTION CHANNEL
Among the factors to consider before starting a business is Location location! Some place is ideal for tax savings while others are good for internet connections, electric bill savings and water supply.
6.1 If your business will rely on raw materials that are locally sourced then you may need to think about where to set up shop.
7. LAWS, RULES AND REGULATIONS
In business, compliance is everything.In the age of eCommerce, you would think selling knives, for example, is straightforward everywhere.
unfortunately, every country has it’s own rules so make sure to figure that out way before you ship a container full of illegal knives into your country or elsewhere.
7.1 Same apply to counterfeit products, if you spend your time and money on a product that has copyright infringements, your business will suffer greatly for your oversight.
8. RETURN ON INVESTMENT
Your return on investment also known as ROI is calculated as a net to profit made divided by the investment made. Do not count on your return on investment to be great in your early stages as it is too early.
8.1 What you need to do as you are starting a new business is to put a handful business ideas to start on the table, then put them to see which one offer you a good return on investment over time.
8.2 If you invest your money into a business, see to it that it is going to earn you more money when invested as capital seed money opposed to having it in the bank as a deposit.
9. STAFF OR MANPOWER
Your choice of brand reps will either break or make your brand. The entire success of your business brand solely relies on how you select your staff.
Manpower though being the most crucial part of your business, they are an expensive part of doing business.
Your goal is to find a good balance in skilled worker supply and mitigated reasonable staffing costs.
Never ever start a business without thinking of what sort of technology your business will need. The best practice is to invest in sound technology from the beginning than kicking the can down the road.
Most common technology will include, plant and machinery, latest office equipment.
Make sure to invest in a good cybersecurity that will look after your trade secrets and recipes from prying eyed freaks.
Making all these choices can be challenging, but making good choices, in the beginning, will save you a great deal of money while performing better
11. DO NOT SETTLE FOR LESS OR COMPROMISE
These are the most usual suspects when it becomes to starting a successful business. Once you compromise on any of these factors, you are opening yourself to imperial growth and brand impact.
You need all the knowledge you can have when starting a new business these days as running a successful business from start is quite challenging and you do not want to take it lightly. These are the basics you need to create your own custom project report based on these optics right before you start a new business.