There are many viable business ideas. While identifying the right idea is crucial, it’s only one step. The real work begins once you have an idea. Most businesses fail before they ever start. If the right person is there to make the great idea a reality, it’s not worth the effort. The Bureau of Labor Statistics has some good news.
“About half the new establishments last five years or longer.”
It is common belief that only 1/10 businesses survive their first five year in business. It is simply not true. You can increase your chances of success by investing your time, energy, planning, and money in your idea. This will help you build financial independence. These are the key steps to make your idea a profitable business.
Phase 1 – Initiation
This phase will help you determine if your idea is worth pursuing in the business world. This phase will require more time than money. The key is to find out if your idea is profitable before investing too much. The ultimate goal of the initiation stage is to minimize your personal risk.
Market research: You have two options. One, you can do it yourself. Two, you can hire a company. You want to find out if people are willing to pay for your product/service/idea. Honestly, the only way to find out is to ask. GreenBook.org is my favorite online resource for market research, but there are many others.
Identify your Target Demographic: This will help you target market research to the right audience. If you are a skilled developer of mobile apps and want to find out if anyone would pay you for it, you’ll need to target your market research to businesses that offer services or products that could benefit from a mobile app.
Do a cost analysis: To launch a business, it will need money. It is a fact that cannot be ignored. The business determines how much money they need. It is important to decide how much money you can afford to start your business. Also, consider whether you are willing to invest the money. Although it is true that not everyone has the funds to start their own business, that doesn’t mean they shouldn’t try. There are many resources and companies that can help you get the financing you need to start your business. It is enough to have a solid business plan and good credit. In most cases, collateral. Start exploring your options by visiting the Small Business Association (SBA).
Phase 2 – The Plan
You must create and follow a solid business plan to make sure your business has the best chance of success. A solid business plan is essential for most businesses to succeed in the first year. Without a plan, running a business is like driving with blindfolds on. It will be difficult to see the destination or how to get there.
These are the essential components of a solid business plan:
Executive Summary: This is a summary of your business goals, mission statement and all the elements necessary to succeed.
Operational Plan: This section describes company type, ownership, hours, product description, service or product description, as well as a list suppliers and management descriptions.
Marketing Plan: This section will contain the results from your market research as well as your strategy to obtain customers. Marketing plans should include standard advertising strategies and online marketing, as well as a budget and competitive analysis. While your marketing strategy is still in development, it will improve as you identify the best avenues to market in your niche. Do not let your poor start discourage you.
Financial Plan: Your financial plan will include a profit-and-loss statement and financial forecasts that are based on best guesses. This section of your business plan can often provide insight that you don’t have before. Realistic is the key.
The SBA has a lot of useful information about how to prepare and write a business plan.
Phase 3 – Get it done
Now you’re confident that your plan will be a long-term success. Now, it’s time for the plan to be implemented. These are the first steps to take before you open your doors.
Get your Federal Tax ID number. It’s easy to get one and it is free. It is easy to find out what type of business you want to register by doing some research. Each type of business has its pros and cons. It’s up to you to decide which type is best for you. Wikipedia has an excellent article about the various business types in the United States.
Register your company in the state where you intend to operate. Visit the SBA website to learn how to do it online. The website has a lot of information about how to get started in your state. The fees vary from one state to the next.
Get a business license. There are many licenses and permits you will need depending on the type of business that you want to operate. Fees will vary depending on the type of permit or city where you intend to register.
Register with the Better Business Bureau. This is a great way to get involved in your community and to network with other business owners. This also gives your brand credibility.