How Can an Individual Start a Business?
Starting a business begins with a great new idea, but there are also many other factors, such as the type, purpose, goals, target demographics, and capital.3 min read
How can an individual start a business? Starting a business begins with a great new idea, but there are also many other factors, such as the type, purpose, goals, target demographics, and, perhaps most important, the capital needed to run the business. The following are some important considerations when planning your new venture.
Don't Give Up Your Job
Until your new company has been established and is generating revenue, consider holding on to your current position. Yes, this might mean working harder and longer hours. However, knowing you have a steady source of income to cover your expenses reduces a lot of the stress of becoming a business owner.
Develop Your Business Plan
Having an idea for your business is just one step of the journey. Having a business plan in place helps you to flesh out your idea while forcing you to evaluate whether there are any important factors you haven't considered, such as:
- The scope of your business.
- The goods or services your business will provide.
- Your business goals and objectives.
- Your company structure.
- How you will raise equity capital to start the business.
- Whether you will run the business alone or require a workforce.
- The target demographics of your business.
- The amount of competition your business will face.
Build on What You Know
The fastest way to start a business is to build on your existing skills and interests. Attempting to start a business in a field in which you have no interest is a sure way to fail. Focusing on developing and using your existing skills can save you time and money. Instead of delaying your idea so you can learn new skills, such as attending classes or getting certifications, focus on using your current skills to begin your business. Also, using skills you are familiar with provides you with more confidence as you begin a new venture.
Analyze Your Market
When developing a business plan, it's important to analyze your market and any competitors your company might face. This will help you determine the uniqueness of your idea. Potential investors will also want to know this information. Many resources are available for market analysis, such as the U.S. Small Business Administration, which provides national, state, and local industry information and resources. After analyzing your market, consider how you will address any challenges, so your business will remain profitable.
Raise Your Equity Capital
One of the most important things to consider when starting a business is how will you raise enough money for your business to operate. Many new businesses begin with the owner investing his or her own money into the company, but that isn't always enough to establish a company successfully. Some ideas for raising money include:
- Asking family and friends to invest in your company.
- Applying for small business loans with banks or other lenders.
- Using a crowdfunding platform, such as Kickstarter or Indiegogo.
- Network with other potential investors, such as attending trade shows and other industry events, or by participating in social media groups associated with your industry.
- Partner with someone who will also invest his or her money into the business instead of being a sole proprietor.
A lack of startup capital doesn't doom your new business to failure. There have been many successful businesses that began with almost no money, such as Whole Foods Market, Apple, Dell, and Yankee Candle Company.
While assessing the capital needs for your business, it is also important to determine the value of your business. Without a realistic valuation, it is unlikely you will convince anyone to invest in your business or approve a loan application.
Get a Second Opinion
A great way to gain input into whether you have a good business idea is to get a second opinion from someone familiar with the market. Because this person is likely aware of the challenge faced by your industry, he or she may be able to provide you with good insight into the potential success of your business, as well as any factors you may have overlooked.
Another way to get feedback on your business idea is to offer a pilot version of your company. For example, once you have identified your target audience, give away samples of your products or services and gather their responses. This small-scale trial run may provide you with more insights into challenges you may have overlooked.
If you need help with starting a business, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.