When starting a new business, 100 things will got through your head, but you need to be very systematic about it, otherwise you will fail.
1. Idea validation. First and foremost – validate your idea. You might think that you have invented Facebook, but guess what? There is already a Facebook out there, and good luck competing with them. Seriously, click on the link above, it has all the instructions you need to validate your business idea: do the market research, find potential customers, sell your idea to them before you have a product to sell.
By doing the above, you will find out how easy it would be to go into the market, operate on a bigger scale and grow your business quickly. You will be able to assess channels that you can use to showcase your product to potential clients.
Don’t start a business, because you want to supply. Start it, because there is demand.
2. People. You have probably heard the saying that it’s the people that make the company what it is. Decide if it’s going to be enough to just have one person – i.e. yourself – in the company to start off with. Assess yourself, and be your own harshest critic: What skills do you lack to make your business a success? Are there enough hours in the day for you to achieve your goals on your own? Do you need a mentor?
If you can start a business on your own – great. That means that you don’t need to worry about salaries, splitting up equity in the company, ensuring that the other person is as motivated as you are etc. You can scale when you feel like you need another person, because you are running out of time yourself/you lack some key knowledge that you can’t learn within a given time period.
However, if you feel like you need someone: to code the app for you, to create a website, write content or reach out to customers – then you are adding a whole other level of difficulty to your task.
Ideally you want to find someone who is as passionate as you are about your idea. That person cannot be doing it just for the money. Monetary reward carries a great incentive within itself, but in all startups things don’t work out, and when they don’t – you need have that extra motivation to look past the temporary problems.
Your first employee is often you co-founder – but if that’s not the case you need to figure out: are they full-time/part time/an intern? How will you pay them? And also, as it leads us to the next point…
3. Taxes. Structure of the business. What do you need to do to register it? What type of company is it? Do you need register your employee/s for a pension scheme? Process payments for them? Will you be submitting corporate returns and updates on (VAT for example) the company? All of this you need to decide in advance, and figure out if you would be the one doing it, or if you would rather (and have the means to) hire an accountant.
4. Capital. How much money will you need to put into your business to see the first results? Be as lean as possible, but at the same time you need to have a good enough product for the 10 customers to buy it from you. No marketing or sales will help you if the product itself isn’t good enough, and that can cost money. Underestimating the initial costs can mean the difference between the life and death of your business.
5. Unit economics. This plays a large part in calculating the initial startup capital that you would need. As a business owner, maximising profit margin and minimising costs should always be on your mind. Questions to ask yourself:
1. Am I selling physical products? If so, where will I store them, how much would it cost to manufacture them and bring them to the “warehouse” or “distribution centre”? (Most likely both of this would be your home to start off with). How much would it cost to deliver them to my customer (and how much would I charge my customer for delivery)?
2. If they are not physical products, how much will it cost to: host a website where these would be presented? To use any additional plugins to enhance the website? Would I need to pay a freelance web designer/coder to enhance the product/platform that I am building?
3. How much time will it take to prepare all of the above? Remember, each hour you spend on your business, will later determine if you can scale your business further (how much can you pay someone else to do the repetitive tasks, while still making money from your business?).
6. Scale. While your business does not necessarily need to be scalable, it is important to take this into account when looking into your long-term goals with your business. A scalable business means that you can try to grow it quickly, and potentially raise the value of your business 10x/100x, and even work on a franchise model. Scalable business means that you can hire more people/and open in new locations, while still making it work from financial stand point. Ideally, you want your business: to maintain quality standards, keep the company culture and be something you are proud of at the end…
…which brings us to the final point.
7. Your mission. You don’t always have to have a big mission. You don’t always have to go into a business to “save the world”. Sometimes, there is just a need for the product, you realise before anyone else that there is a need for it, and you go for it. Businesses can be built that way.
However, having an overarching mission that serves as the reason for building something will help you to keep focus, enjoy what you do, and attract top talent. Having a big goal or idea that is noble, means that it is much easier for people to rally behind you, and that could be invaluable. This idea helps the company get through the tough times, and sets you apart from the competition that’s only in it for the money. There is a reason why all big companies, unicorns and simply quality businesses have a mission statement. And you should have one too.