Are you looking to develop a new business idea, work as a freelancer, launch a product, service or work for yourself?
We have put together a detailed this step-by-step guide that will take you through the process of starting your own business. The guide will also enable you to assess your business idea, hobby or side hustle without wasting much of your time and money!
The guide covers nine important aspects involved in turning your idea into a viable business venture. The steps include the following:
- Assess your entrepreneurial potential
- Explore your business idea
- Assess your business idea
- Validate your business idea
- Develop your business model
- Name and brand your business
- Register your business
- Explore funding options for your business
- Create a business plan
1. Assessing your entrepreneurial potential
Before jumping onto your entrepreneurial journey and starting your new business venture, it is important to spend some time assessing your own personality traits and determine whether or not starting or running a business is a good option for you.
This step involves ‘Assessing your entrepreneurial potential’ to determine your own entrepreneurial attributes as well as confirming whether starting your own business is the right thing for you.
You will need to ask yourself questions such as whether the reason for starting your own business is to fulfil your lifestyle as well as to provide yourself with a certain level of money or an income; to be your own boss and have a work-life or family balance, whether you have enough money to live on while you get your business off the ground; start a business that can grow, scale nationally or globally with intentions of selling it within a short period of time; you are able to cope without the benefits provided by conventional employment; you are willing to put in a lot of energy and effort in the new business or would rather prefer buying a business that is already established and can start operating straight away.
These are some of the questions you will need to ask yourself and answer truthfully as they will help you determine whether entrepreneurship is the right route for you or whether you will require to find someone to get into business with.
The other important aspect to consider before starting your own business is assessing your own skill sets hence is it’s worth identifying some of the skills that you already have or your strengths; what skills you are lacking or weaknesses, what aspects of your skills you need to improve on and what aspects of your life might affect your success or that of your business.
2. Exploring your business idea
Coming up with a great business idea isn’t an easy thing for everyone. However, with some practice it can get easier, particularly for people who are able to notice or identify certain problems or needs of people in society.
This step involves the narrowing down of your business idea as well as knowing what to focus on including idea generation and using the problem and solution approach.
Business ideas are usually generated from problems and challenges that you either come across, that of others around you or elsewhere in society.
Hence you will need to determine whether your business idea helps solve a problem in society; helps you or others to utilise relevant skills, interests and hobbies such as those you are passionate about; makes a society better or people’s lives easier such as helping people connect, enable people to easily access a range of services, making certain services and things convenient etc; improves society or those that improve or fulfil people’s needs such as easy access to products and services; and an idea that improves ways of doing things e.g. alternative or digital versions of existing products and services.
Once you identify the problem the next thing to do would be to come up with a solution that would solve that problem.
3. Assessing your business idea
Determine whether your idea is worth pursuing further or turning into a viable business by assessing its feasibility.
This step involves determining whether your business idea is worth pursuing further or turning into a viable business. You will start by assessing the feasibility of your business idea. The process involves finding out whether the idea would work in the real world; whether your product or service is something that people would use or buy; whether your product or service is something that can be sold and make you money or a profit; whether it has the potential to grow; and whether there’s anything like it already.
You need to ensure that you gather as much information as possible about your business idea, product or service as this not only helps you determine whether your idea would work, it also helps you determine whether your business idea would actually turn into a viable or profitable business venture.
Assessing the feasibility of your business idea would involve collecting, gathering and analysing of information to find out if the business idea is good or not.
Assessing the feasibility or validity of your business idea is one of the most crucial aspects and important stage when starting a business venture. Therefore it may involve various activities such as talking to potential customers, partners and suppliers. It’s may also involve conducting surveys, sampling and testing of your initial product or services.
4. Validating your business idea
Testing your idea and concept in the real world. This includes methods of testing your idea such as proof of concept, prototyping and much more.
This step involves the process of testing a product or service before it’s finalised or launched. The aim of business idea validation is to expose your potential product or service to the end user and see what response might be prior to launch.
Before you launch your business, develop your product or service further, it’s crucial for you to test your idea in order to have a better understanding of the solution that you’ve created or come up with. There are various ways of testing your idea or product such coming up or developing a prototype (preliminary version of a product); proof of concept (evidence or demonstrate the need for the idea, product or service); pilot testing (experiment the idea to a small group of users); and Minimum Viable Product (MVP) which is a version of a product with just enough features to be used by early customers to provide feedback.
5. Developing your business model
This step involves exploring business models to help you choose and develop your own model for your business.
Before you continue with this step, it’s better to have a better understanding of what a Business Model is. Simply put a business model is a description of how your business makes money. It’s also an explanation of how you deliver value to your customers at an appropriate cost. It’s a plan that is easily and quickly used to describe the operation of a business or in your case how you are planning to run your business.
There are various types of business models for different types of businesses. Some models work on their own, some have a mixture of models, while some are new to the market and others have been existing for a very long time! Hence whatever business model you choose, you need to ensure that it aligns with your business idea. If it does not fully fit in with your business idea, there’s no harm in combining models in order to make it work or become viable.
Some of the known business models include retail, subscription, E-commerce, franchise, manufacturing, drop shipping, marketplace, network marketing, agency-based, auctions, on-demand platform, peer-to-peer etc.
6. Naming and branding your business
This step looks at the importance of naming and branding your new business and how that helps you stand out from your competitors.
Before you get started with naming or branding your business you need to ask yourself this one important question – What is in a name and why is your business name so important?
Just like human beings businesses need an identity. How or what you decide to name yours may determine how you position yourself or your business to the public. Hence you must ensure that it’s appropriate and makes it stand out from your competition. You must also ensure that it can easily be remembered and recognised! It’s also important that the name of your business is easily associated with what it does or what you offer customers.
As a business owner you are free to come up with any name that you want as long as it’s within reason and it’s legally right. Therefore you need to ensure that you have researched the name properly and that it’s free or still available to use; done a thorough check before you name your business; choose a name that gives a clue or an idea of what your business does; and you should consider registering it after you come up with the name of your business.
Branding your business
Every business needs a Brand! Branding is one of the crucial ingredient of any business – be it a micro business, start-up, SME, corporate or an organisation. This is why it is important to have an effective brand strategy that provides a competitive edge and makes you stand out from your competitor and other businesses. Not only does branding separates you from the competitors, it also helps your prospective customers about know your business name, story, products and services that you provides.
So what is Branding?
Branding is one way of identifying your business i.e. how your customers recognise and experience your product or service. Branding includes business logo, website, business stationery as well as your marketing materials. Your business logo should reflect your branding and your slogan – the message you are trying to put across to your customers.
The word “brand” refers to the mark or label related to your products or services for people to identify them. It also serves as your business identity or to prove ownership.
7. Registering your business
This step involves the legalising your business such as choosing your business structure, opening a business bank account, bookkeeping and accounting.
One of the major decisions you will have to make before you start your own business is to determine the legal structure for your venture. The question is how do you decide which legal structure is right for your business?
By legalising and registering your business you are protecting yourself and your business from serious penalties if anything goes wrong. It also provides you and your business with some form of legal identity and prevents you from a number of risks in the future.
Therefore before you start your own business or get involved in any business activities, you should consider carefully which legal structure is right for your business. You need to seek professional legal guidance and advise before you make any decisions of choosing a legal structure for your new business.
There are various types of business structure to choose from. However, there are four main legal structures and these include the following: Sole trade (Sole proprietorship) an unincorporated business owned exclusively by one person in which there is no legal distinction between the owner and the business entity; Partnership which involves two or more individuals that agree to share in the profits and losses of their business; Limited company which is a privately managed business, owned by its shareholders and run by its directors; and Limited Liability Partnership (LLP) which is similar to a partnership except that the partner’s liability is limited to the amount of money they invest in the business.
Each comes with its own advantages and disadvantages. The structure you choose depends on your situation, business activities, your long-term goals, and your preferences.
Opening your business account
When it comes to finances, it’s important that right from the start of your business you set up a separate bank account for your business as combining business and personal finances can be a very risky thing to do.
As you setup your business bank account you must ensure that you open it using your business or trading name. This not only helps you separate your personal finances from your business finances, it also gives your clients and customers confidence and also confirms that you are a properly registered business.
So whether your are operating your business as a sole trader, partnership or as a limited company, it’s worth opening your business account as soon as possible. You should make this one of your top priorities as some of your customers or clients, particularly other businesses, may prefer to pay by cheque or bank transfer into your business bank account.
Book-keeping and accounting
The process of planning, managing and tracking aspects of business finances such as expenses, payments, bills, payroll etc can be time challenging, consuming and frustrating. As an entrepreneur or a small business it’s even harder to find time to manage all these tasks or hiring someone who can handle these functions on a regular basis, especially when you are just starting up.
For anyone setting up a new business venture there are tax implications and legal requirements that you need to fulfil. A qualified accountant can help keep you up to date with all your accounting and book-keeping needs.
Your accounting needs will initially be very minimal and straightforward, particularly if you utilise the online accounting and book-keeping software to do your own book-keeping. Some of the well known accounting software are Xero, SAGE, Quickbooks, FreeAgent, FreshBooks KashFlow just to mention a few. These range in price so shopping around and comparing the features would be essential.
8. Exploring funding options for your business
This step involves exploring various funding options for your new business.
After coming up with a great business idea and having determined its viability in the real market environment, you may begin to wonder how you will be funding your business, looking for sources of funding or where to get capital from to take your business idea to the next level.
You may or may not have made your own initial investment in the business at this point but are now ready to learn more about some of the funding options that are available for your business. Some of the funding options include own revenue, bootstrapping, family and friends, debt finance, equity or venture capital, crowdfunding, peer-to-peer lending, asset-based, government and private grants.
Not all funding options are a good fit for your type of business. Therefore you may need to seek professional advise, help and support from financial experts and other relevant professionals to learn more about funding options that available to you or your type of business.
9. Creating a business plan
This last step includes information on how to prepare your presentation deck or ‘one-page business plan’ that can be used to build a team, partners, source funding and investment.
You may often hear from business experts and advisors how important it is to have a business plan when starting a business. However, many entrepreneurs find the task of preparing a business plan daunting! You may also be wondering whether to prepare one for your business and whether it’s necessary at any stage of your business to have a business plan for in place.
As you may or may not be aware, many business advisors and experts usually encourage entrepreneurs to have a business plan in place as they believe that business plans serve as your ‘roadmap’ to guide you as well as help you stay focused as you navigate the world of business.
You may not require an extensive business plan right from the start. This is mainly because as you navigate the world of business there are maybe aspects of your business that may change either slightly or significantly. Hence this may lead to changes to your existing business plan which can be time consuming.
However, you can overcome this problem by simply opting for a ‘one-page business plan’ that is precise and easy to prepare and use. Besides the one-page business plan may also serve as a simple and quick presentation deck for you to share with prospective investors or individuals who may be interested in investing in your business or becoming partners. Therefore a one-page business plan serves as a pitch document or deck for your business.
A one page business plan or presentation deck may include vital information about your business which include the following:
Business summary – This is where you briefly provide a compelling paragraph about your business or idea. Remember to include your business, company name or logo above the summary.
The problem – This is where you explain what problem you’ve identified and are trying to solve.
The solution – This is where you explain what solution you’ve come up with to try and solve the problem.
Product or service – This is where you would provide an overview of your products or service that you’ve created as a solution to these problems.
Timeline – Provide a simple timeline to highlight where your product or service is at.
Target market – This is where you briefly describe who your target customers are, their profiles and persona.
Market size – Briefly describe the size of the market including such information as the total market demand for your product or service; the portion of the market that you hope to acquire; and an estimate of the market share that your product or service can gain.
Competitors – Briefly describe who your ‘direct’ and ‘indirect’ competitors are.
Competitors advantage – This is where you briefly describe what makes you different from others including your competitors and what makes your product, service or business better than them.
Traction or data metrics – This is where you provide a brief or a summary of how you measure the progress of your product or service such as sales revenue, number of subscribers, website traffic, social media followers or metrics and mailing list sign-ups.
Business model or revenue – Briefly explain what your business or revenue model is. This should include how your business plans to make money.
Team – Briefly introduce yourself, individuals or the team behind your business. Here you may only need to focus on key individuals or team who are essential to your business. It may only be you or you may need to involve outsourced individuals or team.
Financials – Briefly provide a summary of most crucial financial information for your business including costs, resources, distribution and marketing etc. You may also need to use a chart, graph
and financial forecasts.
Goals or future plans – This is where you briefly explain what your next steps and goals are including what you would like to achieve over the next few months, quarter, year or five years.
Contact information – This is where you provide details on how people interested in your products, services or business may contact you. Also include useful links such as website address, social media channels etc.
Conclusion
Starting your own business can be quite a challenging and yet exciting journey. Without exploring and determining whether your business is viable would cost time and money, particularly if you are starting on your own with little or without money.
This quick step-to-step guide contained useful information to help you as you navigate the world of business. The step-by-step approach suggested in this quick guide may not work for some individuals and businesses who apply them. Therefore it is only intended as an alternative approach that you can use start your own business without wasting too much of your time and money!