What 5 things do you need to start a business?
Everyone knows the old saying: you have to spend money to make money. While starting a small business and working for yourself can be exciting, the reality is that you have to make a living doing it or the business is not viable. Start-up cash can come from private investors, grants or loans. Many people choose to hold down a full-time job to earn a living while working to get their small business off the ground.
2. Fixed network.
Having a network of clients, supporters and experts is invaluable for starting a business. Your network is how you can find new clients and create word of mouth to generate cash flow. Even in this way, you can find a partner or consultant who has strengths in areas where you are weak. “My network has helped me find, identify and acquire new clients,” Stellitano said. “Without my network, we (at Dillinger Research and Applied Data) would be dead in the water.”
3. Time and patience.
Two sides of the same coin, time and patience are critical to building a business with staying power. Time is important not only for running a business, but also for lead generation work such as writing proposals and grant applications. Patience is key “because in many cases, depending on your clients, setting up a contract or paying bills can take weeks or months longer than expected,” Stellitano said.
4. Plan for business and marketing.
A business plan is a formal document that “helps identify what is needed to start a business, including any financial needs,” Eaton said. A marketing plan is “also essential.” This is a written strategy for how you will promote your business and acquire new clients.
5. Product or Service.
There is no business without a product or service to sell. You should also have experience or skills in this area. Keep in mind that “the best startup businesses are the ones that sell services, products or information that you’re passionate about,” Sanok said.
Willingness to invest the time and resources needed to start a business is ultimately what drives all five of the above, Eaton said. If you are passionate about your idea, you will naturally put in the work to realize your vision.
How to become an entrepreneur without money
When you have an idea but don’t have the money to cover the start-up costs, the best thing you can do is match your business idea with the skill set you already have. Choose whether you want to sell a product or service that you’re passionate about or that uses your skills that set you apart.
“The news is often filled with stories of entrepreneurs who have secured millions in funding from venture capitalists,” Sanok said. “But most entrepreneurs start their businesses as hobbies or side gigs. It is only after gaining experience in this way that many people go on to become full-time business owners.”
If marketing isn’t your forte, don’t worry. Writing a marketing plan is a skill that can be learned. “There are many low-cost and free tools available to help people get started with business promotion,” Eaton said. Marketing courses can also be integrated into many business degrees.
While a strong business plan is essential for any small business, it is especially important for people starting a business without much financial capital. A business plan can help small business owners find “angel investors” who might be interested in financing the business, Eaton said. You can also use your business plan to apply for subsidies to support your business. A business plan will show that you’ve done your homework, run the numbers, and determined your needs in a logical and professional manner.
Do entrepreneurs make good money?
No doubt, becoming an entrepreneur takes a lot of work. You have to be willing to endure the ups and downs of starting a business, and there will be many. “Understanding your own risk appetite is important because you may need to put in your own money to cover start-up costs and you will definitely need to put a lot of energy into getting a new company off the ground,” he said. Eaton.
What constitutes “good” money is, of course, subjective. what are your goals Are you trying to create a small business that stays small, or do you plan to expand over time to create a larger company? When you write your business plan, you come up with your own definition of success.
Whether you have good money or not, the first year of starting a new business can be difficult for anyone. “The first year requires a bit of a sacrifice to make sure the company stays solvent and your employees get paid,” Stellitano said.
Success can take many forms. Making money is important because everyone has bills to pay, but running a business has intangible rewards for you as well. “One of the main reasons I started my own company was because I wanted to manage myself,” Stellitano said. “My autonomy was important to me.
Steps to starting a small business
As mentioned above, writing both a business and marketing plan is key. Beyond that, according to Eaton, there are some other important steps:
Name your company and decide on your offers.
The starting point of any business is often the basics. What do you like to do and what skills do you have that others will pay for?
Determine the legal structure of the company. You may need to set up your business as a limited liability company, which gives you some legal protection. Consult an attorney to learn more about what type of legal protection you may need.
Register a company.
You may need to register your company in your state and you will need to comply with all state statutory tax filing requirements.
Hire an accountant.
Once you start making money, you’ll want to work with an accountant “to make sure you’re handling taxes, payroll and necessary insurance correctly,” Eaton said. If your interest lies in numbers, a business degree with an accounting concentration can be very useful.
Decide on your online presence.
You may want to create or hire someone else to create a website for your company. “You may want to purchase a URL for the company and set up any necessary social media accounts or email accounts,” Eaton said.
While there are practical matters to consider when starting a business, try not to forget that your ability to think for yourself, work hard and be creative also counts. “The key to starting a small business is 50% planning, 50% hard work and 50% openness and adaptability,” Stellitano said. If you think this equation doesn’t fit, it’s a realistic look at the level of hard work you’ll need to put in to get your small business off the ground.
Above all, make sure you always take care of your people, even if you are one company. “Your company’s employees make up your company, so
Starting a business is not for the faint of heart. It takes a tremendous amount of work, patience and grit to create something out of nothing and make it profitable. But when you do your research, understand the market, and have a plan, your passion at work and becoming your own boss can be both satisfying and successful.
In a recent survey*, 500 people were asked about their plans for the future. 17% of respondents expressed a desire to own their own company. They saw business ownership as a way to better prepare for future market uncertainty. Most respondents also felt that they would benefit from further education to help them achieve this goal of success in business ownership.
While there is no one-size-fits-all set of steps to successfully starting your own small business, there are key strategies and considerations that can help you. Any entrepreneur, regardless of industry, can use these strategies to create and run their own small business with confidence.
How can a beginner start a business?
Identify the service or product.
An important first step in starting any business from scratch is to identify a service or product that offers value to others. Be sure to choose a service or product that you have the skills, talent or initiative to provide, because “a business takes a lot of your time and the ideas that you’ve generated,” said Nick Stellitano ’12, co-founder of Dillinger Research and Applied. Data and graduate of the Southern New Hampshire University (SNHU) MBA program. If you are going to spend most of your time building a business, you should choose a field that you enjoy.
Do market research.
However, identifying your passion is not enough. No matter how well you know your industry, market research is important. Don’t have a marketing background? Do not worry; marketing skills can be learned. Start by doing your own research to learn as much as possible about your target audience.
“Start with a general Google search and let it lead you to even more detailed information,” said Ann Sanok, faculty head of business programs at SNHU. “Be sure to explore the many thousands of articles, magazines, and business information websites that you can access online through your university’s or public library’s online research databases.”
Research the legal requirements.
Consider the legalities necessary to get your business off the ground. You may need to open a business bank account, file legal documents, or hire an accountant or legal advisor.
Consider your strengths and weaknesses.
Assess your own skills in six core business areas: manufacturing, research and development, sales, marketing, human resources and accounting/finance. “You’re probably going to be the only person wearing all these hats at first, so be prepared and willing to work things out,” Sanok said.
If you are able to do so, consider finding a business partner. “The CEO of a technology company once told me that it’s almost impossible to start a successful business by yourself, but it’s more promising with two people,” Stellitano said. A partner can serve as another practitioner of your service or product, or it can be a talented operations manager who takes care of invoicing, paperwork and other necessary processes. Either way, having a trusted partner by your side increases your chances of success.
Develop a business plan. “Starting a business should include creating a business plan,” said Meleena Eaton, associate dean of business at SNHU. A solid business plan identifies the scope of your offerings, what is needed to start the business, and any financial needs you anticipate. “You’ll also need a marketing plan,” Eaton said. The first deals with business structure, cash flow and your goals. It outlines your plan to market your business to find new clients, promote your business on social media, and create and produce advertising.
What are the 3 main ways to start your own business?
Since you may not be able to afford the luxury of dedicating a full-time job to get a new business off the ground, you’ll need to start strategically. No matter how you start, you’ll need money to cover start-up costs such as your own living expenses, paying an accountant or lawyer, and buying any goods you plan to sell. Covering these costs requires a lot of money upfront, a high tolerance for risk, or very likely both.
1. Find a sponsor or investor willing to provide or lend you startup money. While not impossible, “it’s usually unlikely,” Stellitano said.
2. Run a part-time business and work full-time elsewhere until you have enough clients and can afford to quit your day job. “Unless someone is willing to give you a lot of money up front, which is unlikely, you might have to go that route,” Stellitano said.
3. Take a chance, quit your day job and start your business full throttle. This leads to the most risk, but the returns can be huge because you give the business your full attention.
In each of these scenarios, cash is paramount. “So, no matter what, you should have a plan to pay your bills, especially wages,” Stellitano said.