6 Tips for Building a Solid Business Foundation
If you’re seeking actionable answers to the question most budding entrepreneurs ask: “I want to start a business, what do I do?” then the following article will help you launch that exciting brand you’ve been quietly working on in the depth of your imagination. And before that becomes a reality, it’s important to understand that starting a new company must coincide with the understanding that a solid foundation is required in order to achieve sustainability.
According to a previous report on Forbes, almost 80 percent of small businesses fail to make it past the first three years. That number rises to 95 percent if you’re an online business owner. With the odds stacked against you, you have to do all you can to prevent your company from collapsing prematurely. Hence, a sound foundation upon which your business can grow is a great starting place.
Here are 6 tips to help you with the oft-uttered remark, “I want to start a business”:
1. “I Want to Start a Business…?” Then Pick an Effective Company Name
When you’re starting out, funding will probably play a major role in your business. That’s why it’s important that you pay attention to your company’s name as banks and lenders normally favour certain types of businesses over others.
In an interview with Entrepreneur, CEO of Fund and Grow, Ari Page, commented that traditionally, some businesses are not as attractive to lenders compared to others. “Most lenders will provide financing to a marketing or management company long before they’ll fund a real estate company, because the perceived risk is so much higher in real estate,” said Page.
This doesn’t mean you can’t get into the, for instance, real estate industry. In fact, there are many highly successful real estate companies in existence. The point is you shouldn’t make things difficult for yourself by adopting an “overly-specific” real estate name (if that’s your industry), especially as you’re just starting out, with the inevitability of obstacles.
Whatever industry you’re in, conduct thorough research to monitor how banks and lenders respond to your niche.
2. “I Want to Start a Business…?” Then Find a Good Company Location
If you’re working from home, be sure to set up a good office space that is conducive to productivity. Distance yourself from the normal distractions that may occur when working remotely: constant engagement with friends and family, telephone calls, television, and the temptation to nap.
If you start your business with poor work habits, the chances are that practice will transcend to the actual running of your business. Focusing on work, from day one, without distractions, will give you a strong basis for maintaining a strong work ethic.
With a virtual business office, the pitfalls of renting office space can be eradicated: commuting expenses, coupled with general overheads.
However, if you are renting office space, find a spot that has the potential for expansion. After all, your aim should be to grow your business and as soon as you begin to scale you may need that extra space for inventory or employees.
3. “I Want to Start a Business…?” Then Build a Team
If you want to build an actual business, rather than just generating a personal income, your best option is to form an operating entity rather than being a sole proprietor. With help from the relevant organisations you should consider forming a limited liability company as one option of many — and if a solid foundation is built, you can avoid the unfortunate eventuality of being a dormant company.
4. “I Want to Start a Business…?” Then Clearly Define Your Business Functions
Although you may be the only person in your business when you first start out, covering everything from sales and marketing, you still need to clearly outline and organise your business’ functions.
Keeping things separate from one another will help you focus on each task when required. Consider an efficient filing system and database, as well as physically organising your office into “mini departments”.
If you don’t stay organised with well delineated business functions, it will be difficult for you to relay responsibilities to future employees and build an effective line of work.
5. “I Want to Start a Business…?” Then Develop a Solid Business Strategy
According to research outlined in YFS Magazine, “A solid business plan actually doubles your chance of success.” It’s vital that you have a good business plan and strategy in place in order to secure investments from banks and investors.
Some of the things to consider in your business plan, include: mission statement and business description, executive summary, products and services, market and financial analysis, and projected targets.
Think of a business plan and strategy as a map for your company’s growth. If you don’t know how to get to your destination, you’ll never end up arriving there.
6. “I Want to Start a Business…?” Then Save Your Money
It’s always healthy to have a substantial amount of savings set aside in case of future emergencies. One thing to consider is a savings account specifically for small businesses.
Small businesses take out commercial bank loans for a variety of reasons. However, loans can come from other sources as well and may be “safer” if you can source money from friends and family. Loans can be made using accounts receivable or inventory as collateral. However, borrowing money is expensive for a company and raises its risk. The crucial thing to remember is that you need to calculate your financial needs for merely starting your business and build that solid foundation; inevitably you will want to stay “in the green” as much as is possible in order to start your business with a healthy bank balance.
With so much potential market competition, you have to ensure that your company can outlive your competitors. And a great way to do that is to build from below — a solid foundation can help your company withstand all the challenges that come with growth.
“I want to start a business” is a great place to start when wanting to succeed in business. For added motivation and for expert advice, call Your Company Formations, today.