Starting your own business can be very exciting. And very scary. You want it to be successful but you can’t keep the thoughts of failure from crossing your mind. People will try to guide you in many ways and you may end up feeling very overwhelmed.
That is why we have compiled 5 most important tips that you must know for starting a small business.
5 Tips for Starting a Small Business
- Create a Business Plan
A business plan is a roadmap that helps you clarify strategy and evaluate the viability of your idea before you get started.
Creating a business plan also helps you identify potential roadblocks and understand which business area needs the most investment.
In order to come up with a detailed business plan, you have to do a lot of research. Spend time researching what resources the business needs and how you can make the business profitable. It is also important to understand what exactly the customers need.
- Money Matters
Add up how much it will cost to start the business. Consider every single business expense that would be necessary to launch and operate the company. Include the cost of rent, supplies, marketing, hiring, etc.
Whatever number you come up with, quadruple it. This way you can cover the unaccounted and unexpected costs too. It is always better to be over prepared monetarily than coming short.
Initially, you might need outside capital to get the business running. Consider a personal loan for businessmen or other funding options that seem attractive to you.
Do NOT start the business unless the money is lined up properly.
- Solve a Problem
Focus on what problem your product can solve instead of channeling your energies on what product would sell the best.
Once you fix a problem that many consumers face, it becomes a lot easier to sell the product. Your product should fill a gap in the market. Understand the problems that your target customers are facing and learn how you can solve them.
Finally, design the product or service reflecting that solution.
- Be Flexible
You have created the perfect product for the market. Great! But, don’t celebrate just yet.
Markets can be volatile and they keep changing. So will the needs of your consumers. What’s perfect today may be irrelevant tomorrow. This is why it is important to be flexible.
If you are stubborn about not changing your ‘perfect product’, be assured of your customers going to someone else. Listen to what the market wants and react to those changes accordingly.
- Understand the Legal and Tax Issues
Setting up a small business can come with a lot of questions. The legal questions may be the most difficult ones to get around.
- Do you need to register your company?
- How to deal with payroll taxes?
- Will you have to charge GST or PST?
- How will the form of chosen business ownership affect the income tax situation?
It is better to learn about all the legal and tax-related issues before you start your business. One mistake and you will pay heavily. So, it is important to get it right the first time itself.
There are many things that can go wrong while trying to set up a small business. But once you have done your homework and know which financial mistakes to avoid, you can hit the ground running.
Shiv Nanda is a financial analyst who currently lives in Bangalore (refusing to acknowledge the name change) and works with MoneyTap. Shiv is a true finance geek, and his friends love that. They always rely on him for advice on their investment choices, budgeting skills, personal financial matters and when they want to get a loan. He has made it his life’s mission to help and educate people on various financial topics, so email him your questions at [email protected]