We’ve all heard that thing successful entrepreneurs always say when talking about starting their businesses: “it was worth the risk.” That might be true, but making even small mistakes within a startup can be time consuming and expensive (and a slam to self-confidence) for a new business owner. By paying attention to little and often overlooked details, it’s possible to minimize the risk that comes with entrepreneurship. The following are essential facets to consider when starting up a new business.
Start up costs and cash flow.
This seems like a give-in, but it’s tempting to throw caution to the wind when starting a new business. The cost of little things, like business cards and a domain subscription, can seem miniscule in the scheme of things, but $20 here and $50 there add up quickly.
Keep logs and receipts of everything right from the beginning so you know what you’re spending versus what’s coming in. Create a separate business account as soon as you can. While it’s necessary to invest in our personal brands, separate accounts will prevent you from overspending. When you log how much you’re spending, and what you’re spending money on, you’re able to have a better idea of how to manage a budget for your business. Your cash flow log will also be vital to potential investors if you look for outside help in the future.
A good rule of thumb to remember is to budget for more than you think you’ll actually need. This creates some room to breathe in case things get tight. It’s always better to be under budget than over budget.
Trends and opportunity.
Entrepreneurship is appealing to many people for the freedom it seems to offer in terms of working for oneself as opposed to someone else. That said, there’s still a level of attention an independent business owner needs to pay to business and lifestyle trends. Just because you work for yourself doesn’t mean you’re untouched by society— you still have to appeal to customers. If you’re a B2C business, that means you have to pay attention to trends and make a modest attempt at appealing to them (even if that means creating your own.)
Just because you build it doesn’t mean customers will come. “By focusing your startup on an idea— the product or service you offer— rather than an opportunity, you risk becoming boxed in,” said Sandy Richardson, a business strategist and author of Business Results Revolution. “Opportunity exists at the intersection of a deep customer need or problem, the ability to actually meet that need, and the surrounding environment. When conditions are right, leveraging an opportunity should translate into value creation.”
Your partnerships and collaborations.
There’s a reason why some people are best friends and some people are business partners. Even though it may seem like a good idea to go into business with someone with whom you’re close, it’s vital to consider whether or not the partnership would be sustainable in the long run. Think about what each of you brings to the table— business, finance, and creative skills are good starting points. Just like a romantic relationship, a business partnership is about balance, and it won’t work if one person is giving more than the other, regardless of how much the two of you get along. Your partner should compliment your strengths and balance your weaknesses, and it’s better to consider these factors from the beginning rather than down the line, when a dissolution of partnership can be expensive and complicated.
Know where you’re headed.
Even if you’ve never been to business school, make a business plan. You don’t have to know exactly how to do it, but having a guide that you (and potential investors) can refer to is helpful when considering business decisions.
Your business plan is your home base. Anything and everything pertaining to your business should live inside it. Important information to include is your mission, your vision, and short and long term goals. It should include any resources you plan to use or are already using, and financial/budget information.
Remember that your business goals aren’t set in stone. Don’t be afraid to make adjustments and adapt as you go. A successful business, like a successful life, is developed by constantly changing and becoming better in every regard.