What does it take to be an entrepreneur? Starting a successful business requires more than a good idea: You also need financial backing, support, and a lot of tenacity. It’s not an easy process: About half of Canadian small businesses fail by their fifth year in business.
But you don’t have to accept that fate for your own startup. This article will tell you all about the early stages of building a new business, including finding financial support and how to convince backers that your idea is a profitable one. With some guidance and passion, and a great plan, you should be able to build a business that you’re passionate about—and that’s profitable, too.
Know what you’re up against
When you’re first starting to build a business, it’s important that you understand what is involved so that you don’t underestimate the process. In Canada, about 15 per cent of startups fail within their first year. And 50 per cent don’t make it past their fifth year in business.
To Start Your Own Business, You Have to Be Tenacious
- There are 1.2 billion small business owners in Canada
- That’s 98% of the country’s employer businesses
- Starting a business is tough
- 15% of new businesses fail within the first year
- 50% close before their 5th year
- 46% say the first year is the hardest
- Most entrepreneurs start with $10,000 or less
That tells you that running a business is no easy task. So even if you have an idea that you’re passionate about and that you think could be successful, you need to work hard in order to make it happen. Even great business ideas have failed due to lack of resources, funding, and proper planning.
Don’t fall into those common pitfalls. Make sure you have a plan for making your idea work before investing all your time and energy into building your business.
Develop your idea
Sure, you need much more than an idea in order for your business to be successful. But having a great business idea can make a big difference for your potential for success.
For an idea to be truly great, it needs to help people in some way. Otherwise, why would customers buy from you? So your product, service, or offering should have the potential to fill a need or provide some kind of value to consumers. If you’ve got a general idea for a business offering, do some research to get specific and build on that idea to continue going forward.
Turn it into a specific offering
Once you have your general idea, figure out what that means in terms of a product or service. Say your idea is to start a company that provides design services to businesses and website owners. From there, you need to create packages of services or produce the products that you can sell. You may determine a few different packages that customers can purchase based on whether they need full web design, logos, or some other branding work. Or you could create web design templates that people can purchase and install themselves.
There are plenty of ways you can format your offerings. You need to decide on exactly what you want that to look like for your own business before you continue building your business.
Get the right skills
If your idea is something you’re passionate about, then it’s likely something you already know something about. However, you may need to hone your skills before launching a business around them.
For example, consider taking a class or becoming an apprentice for an expert in your industry. If you feel confident you have the skills necessary for creating your products or services, then learn the support skills required to run a business. These skills, like bookkeeping and clerical work, are just as important for running a successful startup.
Determine your market
Now you need to decide exactly who you are likely to sell your products or services to. You may think your idea can help people, but if there aren’t customers who are actually willing to pay for it, then you’re not going to get very far.
That means you need to have a very clear picture of your target customer as you get started. Determine who is likely to buy your products or services so you can be better prepared to research your audience, build products around their needs, and market to them when the time is right.
Challenges Every Entrepreneur Must Face
- Know when to take risks
- Learn to delegate
- Maintain a work-life balance
- Overcome any technological insecurities
- Learn to scale up
- Find your niche
- Manage your money
- Keep track of your time
Gather any startup funds
Not every business needs tons of startup cash to get off the ground. But you will likely need at least some funding for basic business expenses like permits, employees, and legal fees.
Since you’ll need to invest in your business before you ever start selling any products or services, you need to find cash. You can fund the early stages of your business yourself, seek outside investors, ask friends, or use crowdfunding. Or you can lower your startup costs as much as possible so you don’t need as much to get started. Then you can fund the growth of your business through the revenue you bring in over time.
Do your research
As mentioned previously, it’s important to have an idea of who your target customers are. But once you’ve outlined the general characteristics of your target market—and created personas—the work isn’t over. You need to find out what your target customers’ preferences are in relation to your offerings.
To illustrate, if you’re a web designer targeting young tech startup founders, find out what the members of that audience think about their current options when it comes to web design.
- Are they satisfied with what’s out there?
- Is there something missing that they need someone to offer?
- What would they be willing to pay for such a product or service?
Finding out those answers early on can help you shape your business into something that’s likely to appeal to customers and, thus, one that is likely to be profitable.
Create a plan for profit
It’s now time to come up with a business plan.
- How are you going to make money?
- How many products or services do you need to sell in order to turn a profit?
- How are you going to make all those sales?
Your plan should include topics like marketing strategies, expenses, and sales data. It’s important to have a good idea of what is necessary to reach your business goals before you even make your first sale. This type of plan may also be necessary in order for you to seek outside investors or supporters for your business.
Title: Small Businesses with a Well-Defined Business Plan are More Successful
- 40% made more than $100,000 last year
- 46% generated more than $250,000 in revenue
- 52% have 5 or more employees
- On average, Canadian small businesses earn $38,272 per year and generate $285,000 in revenue
Pitch your idea
If you do decide you need more funding to get your startup off the ground, then you’ll need to take your business plan and present it to investors. Try to set up meetings with venture firms or secure funding from angel investors. There are also startup accelerators, events, and programs where you can build your ideas and present them to potential supporters or investors.
But you’ll need to be able to show them exactly how your business is going to work and why it would be beneficial for them to invest. If they don’t see the potential for your idea to succeed or don’t see a benefit for themselves, they aren’t likely to show support for your idea.
Create a marketing plan
It’s time to decide how you’re going to market your products and services to potential customers. There are many different routes you can take, from blogging and social media to online advertising, local events, and more.
Depending on the type of business you’re starting, some methods are likely to be more effective than others. If your business is aimed at customers who need internet-based services, it probably wouldn’t be worth the time and effort to launch a local marketing campaign. Online advertising and social media promotions will likely be beneficial.
Employ a few marketing methods to see what works best over time. Create a budget, research and write down a plan based on your business goals and objectives, and then keep an eye on what methods bring you the most paying customers.
Launch your offering
Once everything in place, it’s time to launch. Ideally, you’ll have built up some buzz by this point. And if you’ve secured funding from investors, you should be able to continue getting the word out about your startup while continuously working to improve your business. You’ll also need to focus on things like customer service to make sure your business builds a strong reputation going forward.
Provide good service and create a quality offering that people actually know about through your marketing efforts. Follow these steps and you should be well on your way to building a successful startup that actually lasts.
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