5 Things You Should Never Do When Starting a New Business by Paul Haarman
Every entrepreneur has dreamed of starting their own business. But while everyone talks about how great it would be to start your own company, few people are willing to go through with it. How do you get started? What are the key things that will help your new business succeed? I spoke to some successful entrepreneurs who shared their insights into making a small business work to find out.
Here are five basic tips they gave me on getting started:
1 . Know Your Market
Before you start marketing or investing in your new venture, make sure there is demand for what you’re selling. That might sound like an obvious point, but it’s one that entrepreneurs often ignore when starting a new company. “Many people fail as entrepreneurs because they don’t really know their market,” says Eric Lease Morgan, a small business consultant and author of ‘All I Need to Know about Business I Learned in Kindergarten.’
As per Paul Haarman before you launch your company, talk with family and friends who might be interested in what you’re selling. Then continue looking for customers until you’ve reached saturation — that is, until potential customers seem completely uninterested or overwhelmed by the information you’ve given them.
2 . Aim for One Big Client
Sometimes, it’s easy to get caught up in the excitement of finding lots of little clients when starting a new business rather than going after one big fish. But according to entrepreneur Jason Nazar, this is a bad move. “Everyone says don’t put all your eggs in one basket,” Nazar says. “But when you’re starting a business, make sure that 80 percent of your revenue comes from 20 percent of your clients. You want to fill up your client roster with big names.”
Why? Because, as Nazar puts it: “If you have more than three large accounts and something happens…they’re going to run faster than you can keep track of them. And if they’re bigger than you — even if they’re not better — the perception is that they are and that will be hard for you to overcome.” To prevent this problem, aim for getting just a few good clients rather than many smaller ones. This way, if one account ends up becoming too much work or pulls its business, you won’t have to worry about losing the rest of your revenue.
3 . Pick a Good Location
Where do you want to start your business? While many entrepreneurs choose to launch their companies from home, this isn’t always a good idea — especially when starting. “It’s not easy for people who use their house as an office,” Nazar cautions. “You can get distracted easily and it’s hard to keep things professional.” Instead of working at home, entrepreneurs should look for storefront locations in commercial areas with plenty of foot traffic. Related: 5 Essential Tips for Anyone Who Wants to Open a Franchise If possible, try renting a space that is near other small businesses so you can form a community with them and benefit from their resources.
4 . Get A Great Loan (Or Don’t Bother Getting One At All)
Before you launch your business, make sure you have enough money — whether it comes out of your pocket or not. If you decide to ask for a loan, try to get it before starting up rather than after. “Never go into business without some sort of capital,” says Nazar, who launched the billion-dollar personal finance website, Docstoc. “You need that cushion of cash…If you don’t have any money yourself, and then getting that initial capital is absolutely essential.” After all: if you’re new company doesn’t succeed quickly enough, and your bank account starts running low, you’ll be putting yourself in a very precarious position.
5 . Don’t Quit Your Day Job (At Least Not Right Away)
I’ve often heard it said: “Do what you love and the money will follow,” and it’s a nice idea — but for most entrepreneurs, this couldn’t be further from the truth. According to Nazar: “You have to do something that you’re passionate about — you need to want to get up every day and work on your business…It’s not easy, especially when you’re starting out.”
Related: How to Find a Great Mentor for Your Small Business So doesn’t quit your day job too quickly; if Nazar had done that with Docstoc, he says he probably wouldn’t have succeeded. Instead, “The best advice is to do it part-time and give yourself some runway…You can go at it 20 hours a week for one year. And if you don’t see something happening after that, change your course.” Do what you love and take the proper precautions to ensure success.
Conclusion by Paul Haarman:
Nobody knows exactly how it will happen, but someday your business will be a huge success. Maybe you’ll have a great idea that takes off, or maybe one of your smaller businesses will grow into something huge. Either way, congratulations on doing what so many entrepreneurs only dream about!
Read Also: Brian Colombana: What Are Smart Contracts? How Do They Work?