Starting a business can be one of the most challenging and liberating endeavors someone can undertake. Many people dream of being their own boss, but it can be difficult to start a company from the ground up and successfully scale it into an efficient, lucrative operation. When starting a business, it is exceptionally important to avoid the common pitfalls that can plague entrepreneurs by following the tips outlined below.
Organization can make or break a small business during any stage of its life. Starting up, it is extremely important for entrepreneurs to have a sound business plan, which includes production methods, overhead, marketing strategies, strategies for raising capital, and growth plans. Because starting a business requires entrepreneurs to wear several different hats all at once, implementing an organization strategy during the start-up phase can be a lifesaver for the company. Successful entrepreneurs turn to integrated point-of-sale systems, database management and marketing platforms in order to maintain an organized business as efficiently as possible.
Go Where the Competition Isn't
Many times, entrepreneurs are inspired to start a business after seeing a store or vendor around town. They think, "Hey, that doesn't look so hard I could do that too!" Well, starting a business is harder than it looks. The primary component in determining a successful business is meeting an unmet consumer need. That means entrepreneurs should look at the business in their desired area and start their company where there is little-to-no direct competition. Without direct competition in the area, a business is more likely to succeed as it can naturally capture a larger share of the market.
Once an entrepreneur has started a successful business, it can be difficult to determine when it is the optimum time to expand. There is a fine-line between an entrepreneur being successful and taking on more than he or she can handle. Scaling can be tricky: if a business expands too soon, costs can be too great to overcome, but if a business grows too slowly, competition can move in and take away business. Expansions in the business should be based on opportunity and occur only after the flagship store has proven steady success. Before looking to expand, a small business owner must assess their management team and ensure they have the right people for the job. A strong management team can help secure additional funding, determine the optimum location for additional stores, hire the appropriate staff and ensure that the owner is not having to take on growing the business alone.
Delegate, Delegate, Delegate
Often times, an entrepreneur sees the business as his or her baby. It can be easy for entrepreneurs to want to take charge of every aspect of the business in order to ensure everything is in line with the vision. However, this will leave a small business owner tired and unsuccessful. When starting off, it is important to determine if there will be partners involved, and if so, then how many. Successful entrepreneurs partner with individuals who have the opposite strengths and weaknesses. That way, the company will have strong leaders in the key positions of operations, finance, marketing, and human resources. Once small business owners have their ideal team in place, they must rely on other individuals to do the jobs for which they were hired. Hiring well-performing key managers to run the day-to-day operations of the business will also enable small business owners to have the freedom to focus on big-picture planning and successfully scaling the company.
Manage the Money
Writing their own paychecks is the primary reason many entrepreneurs look to start their own business. In order to keep this dream alive, it is crucial to have a team in place that can correctly manage the profits and losses of a company at any given time. Sales fluctuate, and depending on the type of business, it can take a while to turn a profit and receive a paycheck. Before starting a successful company, business owners should have a financial plan in place that spells out funding sources, partnership earnings, overhead, production costs and projected earnings. Working with financial experts, accountants, and key partners to develop such a plan sets a company on a strong foundation. As the business picks up and sales increase, proper management of the budget sheet and income statement can provide insights on where the company is losing money and how to increase profits. Many lucrative companies point to proper financial management as a fundamental component of success.
While starting a business can be one of the most challenging things to do, it can also be one of the most rewarding. Being able to grow a company from the ground up takes time, vision, persistence and adherence to these key strategies for success.