Starting a business is always a challenge. Regardless of how good your idea is, you still have to set the right infrastructure and make some business decisions that might shape your enterprise in the future. You also need to be aware of the challenges that you’re going to face on your way to success and prepare to face them head-on. Sure, no list is elaborate enough to encompass everything that you need to know when starting a business. Still, here are the top seven things worth bearing in mind.
1. It will cost more than your estimate
The first thing you need to understand is that your initial estimate is going to be off. By how much, it really depends on how pessimistic you are with your initial projection. The initial investment is relatively easy to estimate, even with all the licenses and permits. However, operational costs and unexpected costs can vary quite drastically. This is one of the main reasons why you need to leave some room in your projection. Add a certain percentage to your initial number and try to have a cash reserve at hand. Chances are that it will take you at least 6 months to become self-sustainable.
2. Failure is a possibility
No matter how optimistic or self-confident you are, there’s always a chance that you will fail. So, you need to be careful about what you’re putting on the line. Sure, running a sole proprietorship is the simplest way to get started but this scheme does nothing to protect your personal assets from your business failures. This is why starting out as an LLC might be a better idea. If you are a specialist in a field that’s prone to malpractice and negligence suits, you might even have the option to register as an LLP. All of these variables are something you need to keep in mind.
3. Outsourcing is the way to go
Whenever you need help with a task that requires a high level of specialized knowledge, it might be best to just outsource. For instance, freight companies can handle your delivery chain more effectively than an in-house fleet, especially with all the paperwork and management that this involves. The same thing goes for the IT, HR, legal and accounting tasks. Sure, if you have long-term plans that you want to pursue, the idea of being self-reliant and having all the control is a valid one. In reality, nonetheless, outsourcing might provide more for the same value.
4. Hiring is not an exact science
Knowing who you should hire or who you should team up with isn’t that easy to tell. Just because someone is perfect on paper, this doesn’t mean that they’re the right fit for your company. If you’ve ever worked with others, you know just how much a single backstabber or emotional vampire can hurt the team. The problem is that these traits can’t be seen in one’s CV or even in their performance report. The performance report only focuses on the KPIs regarding productivity. When choosing a partner, finding someone with the same vision is more important than finding someone with the same goals.
5. Delegating is important
Finding a way to delegate tasks is difficult but important. First of all, even if you can manage everything on your own, it is only a matter of time before the workload surpasses your capacities. You need to be proactive and find a solution before the problem causes a bottleneck. Get to know your staff so that you know which people are best for which roles. This will also allow you to groom them and show them that they have your confidence by giving them both autonomy and authority over the task in question.
6. You are never too small to copy
Protect your intellectual property as soon as you come up with your brand markings. You see, one of the worst misconceptions ever is the idea that your business is too small and that, for this reason, it flies under the radar of those who would “borrow” your ideas. So, as soon as you register, get in touch with suitable legal bodies and ask about what it takes to protect your IP. Copyright, trademark and patent should be protected in order to ensure the future development of your company.
7. Set measurable goals
Lastly, when it comes to measuring performance, you can’t rely on your own subjective impression. The fact that you feel like you’re doing fine doesn’t really tell much. What are your sales like? How close are you to your break-even point? What’s the traffic on your website? These are the valid KPIs and something that you can follow on a daily basis. Long-term goals are great as a motivation but you don’t have the luxury of doing business for five years just so that you can see how you’re doing.
For all those who are uncertain in the face of this intimidating list of requirements, all that we have to say is – starting a successful business was never supposed to be easy, to begin with. There’s a reason why 95% of all startups fail within the first five years and why some enterprises make it despite all the odds. Will abiding by the above-listed seven rules ensure your success? Absolutely not! It will, however, increase your odds of success and minimize the risks. It may not sound as much but it’s the best you will get.