The biggest names in business are well-known: Amazon, Google, Apple and Disney. But what do these Fortune 500 brands have in common other than being giants in the consumer world? Interestingly, all four began their business ventures from humble beginnings — in a garage, no less. And even before that, they all started with a single idea they believed in and ambition to make that idea a reality. According to the U.S. Bureau of Labor Statistics’ data, there were 843,320 new businesses started in 2021 and it’s projected that 168,664 of those businesses will fail within the first few years of their conception. Identifying and understanding what makes start-up businesses successfully work in the long-term is a critical component of starting your own business.
So, if the first step to embracing your entrepreneurial spirit starts with saying “yes” to the ideas you’ve dreamed up in your head, how then do they become a reality? We’ve broken down 7 practical steps to consider when beginning your own business so you defy the numbers of failure.
1. Research the market.
Before diving feet-first into your business idea, it’s important to perform market research. This research will determine the supply vs. demand of your product or service, the identity of your target audience, and who your primary competitors in the industry are, so you can differentiate yourself.
You might have a one-of-a-kind business idea, but if nobody is going to buy-in to what you’re producing—there’s no use in investing the time and money it takes to start it up. Through your market research, identify the market size and specific demographic(s) you want to target. Once you’ve determined who you want to reach, study their habits, buying patterns and existing brand interactions. Hosting focus groups and sending out surveys also helps gain understanding of where your product or service works and where it doesn’t. This allows you to find your segment within the market and help contribute to marketing tactics, brand planning and creative conceptualizing you’ll need down the road.
After understanding your audience, consider your competitors. The way you structure your business is heavily dependent on the success and failures of companies that have come before you or those currently active in the field. Research how they’re targeting and marketing to their audiences and find the niche in which your brand can live.
2. Create a business plan.
A business plan, which acts as a high-level outline of your company’s goals and tactics, is vital to the success of launching your ideas. This formal document determines the path your brand will take and is a foundation for all that will evolve from it.
These plans often include a synopsis of your brand model, market research, a competitive analysis, financial summary, and more. Creating a business plan helps clearly establish the brand’s identity and its segmentation within the industry. It can also forecast and predict the scalability of your idea for long-term success.
It’s helpful to consider the strengths, weaknesses, opportunities and threats (also known as a SWOT Analysis) when building your business plan. This is a simple exercise for compiling all of the takeaways you find during your research and acts as a template for building your business.
3. Determine finances.
Once you create a business plan, determine where and how you can find the support to give this plan legs. Most individuals won’t have the out-of-pocket funds to start a business on their own and, even if they do, it’s not always the most sustainable business method. One of the most traditional forms of funding is getting a business loan – a popular way to finance your startup while allowing you to pay back the loan as you earn profit. Keep in mind, to get these loans approved, it’s important to still have a healthy credit score.
If your business is a non-profit, women-owned, minority-owned, veteran-owned, etc. you might be eligible for a business grant. Small business grant programs allow for research and development opportunities within the business structure.
Another common source for funding is acquiring investors. Oftentimes, this requires giving a percentage of the company’s ownership to a venture capitalist or involving them heavily in the direction of the company.
4. Obtain federal or state tax numbers and licenses.
Once you have your business financed you must identify how your business is structured. This has a huge impact on your legal obligations, finances and tax implications. Distinguish if you are a sole-proprietor, partner, Limited Liability Company, corporation, or fall into another business category. Then you can choose to apply for a federal or state tax ID number.
A federal tax number, also called an employer identification number (EIN), identifies your organization under the IRS. This is another step to protecting your business’ assets and improving your tax filing experience. If you plan on hiring other employees, applying for an EIN is required.
A state tax number, on the other hand, is assigned by the state. Because each state’s laws are different, it’s important to make sure your business is following the correct regulations in your state.
Typically, you can file your business taxes online through the IRS. Make sure to check with your state’s website for more information on where to apply for a state tax number.
In addition to federal and state tax numbers, ensure there are no outstanding licenses or permits that are required for the industry or profession in which your business operates.
5. Hire employees.
After checking-off the nitty gritty details that go into a startup, it’s time to hire! Onboarding employees to manage your day-to-day operations removes a huge weight from your shoulders and gives you an opportunity to learn additional facets of building a business and managing others. Before offering positions, make sure you have a clear vision for what your business needs, how many people you’ll need to be efficient, and how much budget you can afford for payroll to stay financially sound.
No matter which level your business is at, make sure to hire professionals who align with your brand’s mission, vision and goals. You want your employees to invest in your company just as much as you have. Take the time to curate your roster of employees and create a healthy work culture in the early stages of hiring to set a standard for the quality of work and rapport you expect.
6. Market your business.
One of the last steps in starting a business is creating brand awareness. It likely requires time and money to shine in your respective industry, but the upfront work can greatly enhance the likelihood of success for your future endeavors. Determine what your marketing mix might look like and what channels are appropriate to reach your target demographic.
Per the business plan, ensure all your messaging and brand positioning align with one another. Let those aspects of your company inform your logo design, color palette, tone of voice and other creative elements that distinguish your brand.
Another effective tactic in brand awareness is establishing an online presence. Make sure you have a website and social channels that clearly state your services and capabilities. Continue to populate and maintain these digital touchpoints as you grow and maintain relationships with the customers engaging with your media and overall initiatives.
Do you have your dream business in mind and want to bring it to life? Check out acu.edu/online to learn more about our business degree program or contact us at 855-219-7300 today!