6 Factors to Consider Before Starting your Business
More and more people are opting to start their own business. Flexible working hours, the opportunity to really run the show, and the option to work from anywhere in the world are just a few of the benefits that come from being your own boss.
But, while it may seem an attractive venture, there’s no denying that life in the startup lane can be difficult, and there’s a lot to consider. Here’s six factors that many budding entrepreneurs overlook, and what you should be doing to succeed.
1. An Unstable Work Life Balance
While working whenever and wherever you like may seem the ultimate freedom, many entrepreneurs struggle with a work-life balance – especially when they are first starting out. In fact, while the 9-5 office job may feel stifling, running your own business can mean late nights and early mornings, not to mention losing sleep from the stress.
While starting your own business is a hugely rewarding venture, especially in the long term, your work life balance should be considered. If you’re someone who requires a lot of flexibility in your life it’s worth putting a plan together to ensure you don’t overexert yourself.
2. The Statistics
Unfortunately when it comes to starting your own business, the odds aren’t really in your favour. An estimated 8 out of 10 small businesses fail within the first 18 month, according to Bloomberg, stats which are enough to put anyone off.
Knowing how and why so many businesses fail so early, is crucial to the success of your startup and will put you in much better stead than most people. It’s not enough to simply have a great idea. Making a business a success requires an impeccable business model, a gap in the market, a solid marketing strategy and a supportive team. Work on these and you’ll be in a good position to succeed.
3. Sole Proprietorship or LLC
Too many people go into business without considering whether they will list their business as a sole proprietorship or LLC. While sole proprietorship enables you to well and truly ‘be your own boss’, this freedom comes at a price – and you will be responsible for absolutely everything that happens to your business. LLC on the other hand, will give you protection from personal liability, allow you to hire employees, and give you a legal structure to work with when setting up bank accounts, getting credit cards, and more.
Although it may not seem an important consideration, making the wrong decision could harm your business and make it harder to get off the ground.
4. The Competition
Researching your competition is an absolute must-do before you set the wheels in motion. Look at what mistakes your competitors have made, what they could have done better and what they have done well. Check out customer feedback, and learn how much people are willing to pay for the product or service.
While competition is certainly a good thing, as it means there is a market for your product, too many competitors can make life slightly more difficult. It’s important that you provide a superior service, offering something to customers that your competitors do not. Focus on what makes you, as a business, unique, and work on your business model from there.
5. Your Own Pay
Something not many entrepreneurs consider is their own salary. While ploughing all profits back into the business is tempting, you will still need to pay your rent and other expenses – including food! Cutting back on the luxuries is a sacrifice you will need to be prepared to make while starting your own business, but equally it’s important that you look after yourself. Keeping yourself physically and mentally healthy is extremely important, and forcing yourself to live on the bare minimum may cause you unnecessary stress.
6. The Business Finances
Launching a business requires money that you may not have, which is why it’s a good idea to seek investment. There are plenty of options available. Seeking capital from friends and family is a great first step, while angel investors and venture capitalists are another great option. Ensure you have enough savings to live off until your business starts to make serious money, as well as a solid business model which you can pitch to potential investors.
Starting a business is a hugely rewarding (albeit stressful) venture. While the vast amount to consider may put people off, we recommend sticking with it, especially if you have a solid business plan and know there is a gap for your product or service. Work hard, keep your feet on the ground and enjoy the process – it’ll pay off in the long run.
Author : Jaren Nichols
Author profile : Jaren Nichols is Chief Operating Officer at ZipBooks Online Accounting Software, a modern accounting solution for small businesses. Jaren was previously a Product Manager at Google and holds an MBA from Harvard Business School.