Starting a new small business can significantly impact your life and the lives of those around you. While starting a business takes grit, vulnerability, and a lot of motivation — it also requires the mental capacity to embrace failure.
The proverb “nana korobi, ya oki” translates to “fall down seven times, stand up eight”. When you choose the entrepreneur journey, it’s a life philosophy that you should stand by, because failure is inevitable. Even if they’re small ones.
It means that your focus isn’t on the reality in front of you, but on a greater vision that may not be reality yet.
Start a business with 5 key steps
1. Really refine your idea
By the time you’re even considering starting a business, you most likely have an idea (or two) in mind. It could be a product you want to sell online or an idea of the market you want to operate in. This entire process comes with ample research to understand not only your target audience in order to build a product fit, but also the market to understand strategy and products of competition.
2. Create a plan
Many small business owners fail to properly start a business because of pure impatience. Rushing into things without truly thinking and planning aspects of the business is detrimental.
Instead, once you’ve secured your business idea and confirmed that you want to move forward with it, you need to ask yourself some key questions:
- What is my intention behind this business?
- Who will I sell to?
- How will I finance the initial startup costs? (A bookkeeping business plan can help with this)
- How do I plan to market my business, including its products and/or services?
These are all critical questions that need to be properly mapped out in your business plan. As the foundation of your business, your business plan is a roadmap for how you structure, run, and grow your new business. This plan also happens to be the very document that helps you convince investors to fund your business.
3. Secure financing
Your business plan will help determine how much money you’ll need to get your business up and running.
When considering money, here are four common ways to fund your new business idea:
- Business loans: If you have a good personal credit history and need startup financing, a business loan from a lender could be a good idea.
- Business grants: Grants are often given to target businesses based on a variety of factors including, veteran-owned, minority-owned, specific for-profit, women-run, and more. See the SBA Grant page for more info.
- Crowdfunding: If you don’t want to go the traditional funding route, you could always crowdsource funds from a group of people online.
- Personal investors: Startups also fund their companies through VC or angel investors, or friends and family in the early stages.
Pro tip: performa a break-even analysis to determine how much money you need to be successful. Many companies fail at the get-go because they simply run out of money before turning a profit. A break-even analysis is an essential tool in financial planning toolboxes that can help you gain perspective on whether your company, product or service will be profitable.
It can be done using this formula:
Fixed Costs ÷ (Average Price – Variable Costs) = Break-Even Point
4. Craft an exit strategy
Like we mentioned in our last article [LINK], 20 percent of businesses fail within the first year. So even as you craft your business plan, it’s important to stay level-headed and realistic. Consider crafting an exit strategy as well — ideally as you compile your business plan.
While a business plan helps you figure out where your business is going, what it doesn’t do is plan for failure and any difficulties. An exit strategy, on the other hand, will. Just like how you you’re taught how to get off a plan as soon as you board one, you should have one created for your business. Start by creating 2-4 exit routes (and scenarios) that could play out if profitability takes a hit. This will ultimately lead to higher company value and improve relationships, whether it’s with yourself, your business partners or family members.
5. Choose the right tools and software
Taking the steps to start a business means that inevitably, you’ll have more to do than reasonably can be done. That’s why it’s so important small business owners and entrepreneurs do not underestimate the value of good software — it’s one of the best ways to “do more with less”. After all, there is a lot of work involved in running a business.
Software that can help budding entrepreneurs “do more with less” include:
- Project management: Having one place to plan your work and keep track of important tasks can help you stay on schedule throughout busy days. Tools like Trello and Asana can help budding entrepreneurs keep a finger on the pulse. Connective apps like Zapier can efficiently automate common workflows through Zaps, a feature that integrates two or more different systems with little coding experience required.
- Accounting: Several accounting options are available for entrepreneurs to help keep track of everything. Ranging from a meal with a prospect to ordering a new laptop, simple, intuitive accounting software is one of the best ways for every entrepreneur to start their business off on the right financial foot.
- Email marketing: Most businesses, especially eCommerce ones, will benefit from setting up cart abandonment and welcome email sequences even before they’ve made their first sale. But more than that, an email list is a vital thing to own, besides your online store or website. Your email list provides a direct connection to your customers that aren’t dependent on third-party algorithms. Invest early and create one as part of your five key steps!
- Invoicing software: Sometimes you just need to send a couple invoices, rather than a full-fledge bookkeeping software. Entrepreneurs should celebrate even the smallest wins, even if it means your services are being procured from others. For businesses that send very little transactions a year (think 500 or less), then an invoicing tool is all you need.
Time to Execute on Your Plan!
Absorbed the key five things above? If you’re serious about the entrepreneurial journey, addressed your motivation and appetite for failure, then you’re definitely ready! Define your idea well, create a proper business plan, secure financing, craft an exit strategy, and acquire all the tools you need to succeed in your niche market.