Afraid to start your own business because you "don't even know where to start"? Start right here!
So you’ve decided that you finally want to start your own business. Or maybe you’ve decided that you no longer have a choice because a bad economy means that pretty soon you’re going to be on your own anyway. Whether you’ve always wanted to start your own business or now find yourself forced into doing so by circumstances beyond your control, a lot of soon-to-be small business owners struggle to get into the game because the very first step is the hardest part. In fact, a lot of people who want to start their own small business get stuck at this very point, telling others, “I just don’t even know where to start.”
Well, let’s take care of that problem and get you over that hurdle as quickly as possible, shall we? When you’re planning to start a small business, what you need is a checklist of the things you need to accomplish that are table-stakes for getting into the game. So here are ten items that you need to start crossing off your list as quickly as possible after you decide to start your own business:
If you ultimately end up developing a successful business, even a really complicated one, then you’ll always be able to represent it in a simplified form using a business model. A business model is basically an abstract, high-level overview of your business. It’s like a story that explains who your customers are, what channels you use to reach them, how you provide them value, and how you capture enough value for yourself so that your business continues to make money and stay profitable.
A great way to figure out what your business model is going to be is to fill out a Business Model Canvas. We’ve written about the Business Model Canvas before when we were throwing shade at its chubbier cousin, the business plan, but basically, it will lead you through all of the critical pieces of a business model: for example, your value proposition, your marketing channels, the types of your customer relationships, your target customer segments, your revenue model, your cost structure, your collaborators, and your suppliers.
Does this sound like busywork to you? Trust us, it isn’t. When you first start your business, your business model is basically a hypothesis for how you’re going to structure your business operations to make money. But some portion of that hypothesis will undoubtedly be wrong, and you’ll need to make a change. The Business Model Canvas is great at helping you think through your business model and make changes over and over again as you achieve better product-market fit with your customers and as you then start looking for ways to optimize your business to run more efficiently. Return to it early and often!
Once you’ve worked your way through your own business model canvas, see if you can boil it down to a short elevator pitch that you can deliver to friends and members of your network. The goal here is to be able to explain what problem your potential customers have, how your business solves that problem, how your business solves that problem in a way that’s new and different from what’s already out there, and how much it costs.
If you want to score extra points for difficulty, then try pitching your business to friends and colleagues in a mastermind group. A mastermind group is a group of businesspeople who come together to share ideas, share their problems, and get advice and feedback. Not a member of a mastermind group? Then go build your own!
But whoever you pitch to at this stage, the idea is just to get input and feedback from people you respect. Those types of people are more likely to be the types of people who will invest a little time with you exploring your business model and whose constructive criticism you’ll take seriously. Sometimes it can be a little tough to hear that constructive criticism, but ultimately you’ll find it really valuable!
Now that you’ve gotten that feedback from your friends and colleagues, go back to your business model canvas and think about whether anything needs to change. (See? We told you that you should revisit it early and often, and this is the early part.) And the answer may not necessarily be yes.
Whatever constructive criticism you heard from others, you now need to think about it as dispassionately as you can and decide whether it’s a fair point that you can address with a particular action. If so, then update your business model canvas accordingly. If not, then keep the relevant point on your business model canvas for now and monitor whether you hear it from others in the future. If so, then you might ultimately need to address it after all.
Got your business model in as good of shape as you can get it before it makes contact with the market? Great. Now it’s time to go to market, and one of the first things you’re going to want to do is incorporate your business as either a business entity. Business entities come in all shapes and sizes: There are C corporations, S corporations, LLCs, partnerships, general partnerships, limited partnerships, limited liability partnerships, and these days probably a lot more that we haven’t included here.
Now as we frequently remind you, Haven doesn’t give legal advice, and we encourage you to speak to a qualified legal professional whenever you have a legal question. But when you talk to that lawyer–which we totally know you will instead of just Google-lawyering it–make sure that you ask him about the benefits of limited liability and the tax consequences of some entities as compared with others; e.g., C corporations v. S corporations, LLCs, and partnerships. Ultimately, your goal is to pick the entity form that will best help you achieve your business’s goals.
Once you have your basic corporate structure in place, it’s time to get a business bank account. Notice that we said a BUSINESS bank account and not just a regular ol’ bank account. What we mean here is that your personal checking account doesn’t qualify. You want to segregate business assets from personal assets, and mixing business and personal bank accounts is one of the most frequent areas where small business owners get into trouble.
While it may take a little more time up front, walking into your local branch bank with all of your incorporation documents and getting a business checking account and a business savings account is well worth the time. When tax time rolls around, your accountant will have a much easier time understanding what happened in your business, and you’ll have an easier time making business decisions based on the numbers, too.
Once you’ve got that business bank account set up, make sure you set up accounting and payments software. Payments software, whether it handles point of sale or invoicing, will make it easier for you to take payments and get them deposited into your bank account quickly and efficiently. If you’re accepting cash or personal checks, then you’re going to have to make regular bank runs, which will eat up time. Accepting electronic payments will save you time and make paying more convenient for your customers, too.
Accounting software keeps track of all of your balances, both in cash accounts and, if you’re using accrual accounting, in your accrual accounts, too. In other words, it’s a lot like the scoreboard; it helps you know just how the business is doing at any given point in time or over any given period of time.
Here’s where Haven comes in handy. We’ve combined accounting and payments–along with a number of other core business tools–into one app that your whole team can use for all your business needs. For example, using Haven, you can send out an invoice, take payment electronically, get it deposited into your bank account, and then check your financial statements, which will automatically update to reflect the fact that you’ve earned revenue and the fact that you’ve successfully converted an account receivable to cash. Simple!
If your business offers the best service in your industry and no one knows about it, then are you actually even in business? We’d argue that you aren’t. In the old days, if you wanted to sell something, then you’d take your goods to the city market and shout at the top of your lungs what you were selling. Well, in today’s world, the market isn’t always a physical place anymore, but you still have to shout at the top of your lungs.
The first step toward doing that is setting up a marketing website. You want to have at least a basic landing page that tells people (i) what you’re selling; (ii) what the benefits of buying it are; and (iii) how to buy and/or contact you to start the buying process.
This is one of those things that you can technically do yourself with all of the various tools available to you online, but it’s also one of those things where you can get better results if you hire it out to the right person after educating yourself well enough to be able to clearly communicate what you want. We’ve written before about how to improve your online presence, so give that post a read before you start hiring out the design of your website to a web designer.
But don’t leave everything to your marketing website, which is just a passive way of responding to potential customers who come to you. Instead, get out there and meet people in your network. Tell them what you’re doing and who you think your target customer is. Ask them if they know anyone who’s already in the market for the services you provide and then ask for a referral.
Even if you think that you’re ultimately going to rely primarily on digital marketing to acquire your customers, this type of customer acquisition never really goes away. A small business should always be networking. Make sure that you have a good elevator pitch for your business, be ready to use it when you meet someone new out around town, and then go put yourself in a position to meet more new people so that those situations are more likely to arise.
Once you start acquiring customers, make sure that you’re regularly asking them what you’re doing well and what you could be doing better. This feedback is valuable not only because you can take any constructive criticism to heart and make changes if need be, but also because you can identify who already thinks that you’re doing a good job and ask them for a testimonial.
Testimonials are valuable because they signal to your potential customers that the risks of buying from you as opposed to a competitor aren’t quite so high. Get that testimonial and slap it up on your marketing website and on other marketing materials, and you’ll be signaling to potential customers that they can be confident of having a good experience if they buy from you.
Once you’ve started getting referrals and positive reviews, you know you’re on to something. You’ve got pretty good validation that the market values the service you provide and likes how you do it. Start thinking about your target customers and how you reach them on the most cost-effective basis. Whether that’s digital advertising or some other medium, pick the one that you think will give you the most bang for your buck and go after it!