Entrepreneurship is, by definition, risky. Putting yourself and your resources out there and taking a chance on success can be nerve-wracking, but it’s also a tremendously exciting decision that can become a great part of your life.
Whether you’re so excited you can’t sit down, scared out of your wits or a little bit of both, you’ll need to be prepared for the full range of ups and downs that come with owning a business. These eight tips will help you prepare for your journey into the fascinating world of entrepreneurship and get you in the right mindset for business ownership.
1. It’s not going to be easy.
There will be late nights, there will be successes and failures and there will be lots of unglamorous, tiring work behind every achievement. One study indicated that 50 percent of businesses fail in the first five years. So, although you shouldn’t let that deter you, you should know what you’re getting into.
But you’re not doing this because it’s easy or because it’s guaranteed money—right? (If you are, you might be in the wrong line of work.) Entrepreneurship helps power dreams, and the feeling of accomplishment that comes with creating a successful business is a powerful incentive–even if it comes with a lot of risks and potential heartache.
2. Pick something that you actually like and believe in.
If you don’t truly believe in your business idea, why should your customers? Picking an idea that just seems like the current best way to make money might seem like a good idea, but if you’re not passionate about it, you’ll find it harder to justify putting in the huge amounts of work that a start-up requires. That work includes a lot of research on the industry you’re entering—and if you’re not strongly interested in the subject, you’re unlikely to invest the hours poring over data in search of the right insight.
3. Make sure your business plan is detailed and robust.
It can’t be stressed enough how important it is to have a solid business plan. Many great business plan templates are available online, including ones that are designed for specific industries from restaurants to apparel to construction. Having a well-written business plan will help you attract investors, satisfy regulators and make better decisions.
Of course, your business plan shouldn’t be written in stone. It will likely need to change as your business navigates the waters of entrepreneurship. The important thing is that you have one and that you use it as a guide for the basics of your operations.
4. Keep the customer in mind at all times.
Without demand, supply is useless—so make sure you’re focusing on how your business provides actual services to actual customers. That means that you need to have a strong idea of:
- Who are your target customers?
- What do they need and want from a company like yours?
- How are your competitors’ options falling short of fulfilling their customers’ needs?
- How quickly can you expect demand to scale?
- What are the key pitfalls that could alienate your customer base?
- Is your business located somewhere that your target demographics will find it accessible and useful?
These demand-side considerations should be a big part of your business plan, and they should be accompanied by hard data gathered through market research. If that sounds like a big task, don’t worry—it’s perfectly possible to do market research as a small business with the wide array of tools available today.
5. Doing the little stuff is great, but don’t use it to encourage procrastination.
Who doesn’t love a great business card design or a witty social media post? Adding these little touches to your business can make it come alive and is a great source of joy. However, these are tasks to be addressed once the groundwork of the business is in place. Get your funding and business plan in place first—then, you can focus on the fun stuff.
6. Get licenses, taxes and insurance squared away as quickly as possible.
Neglecting the essential setup paperwork of a small business can come back to bite you in a big way later. Make sure you’re on top of all of the following:
- Establishing your incorporation as either a sole proprietorship, LLC or corporation.
- State and municipal business licenses.
- Surety bonds such as business bonds and construction contractor bonds.
- Small business insurance to protect your investment.
- Specific types of licenses required for your business, such as a liquor license for a restaurant or bar.
The U.S. Small Business Administration offers resources to help new business owners get set up with the paperwork that’s essential for their businesses, so make sure to take advantage of everything that’s available to help.
7. Mixing your business and personal finances is a recipe for trouble.
You definitely don’t want to entangle your personal finances with those of your business. A worst-case scenario in which your business fails can be made a thousand times worse if the money you need to live is tied up in your business assets, as well as exposing you to potential legal liability. Make sure that you’re keeping separate accounts for your business and personal funds, and remember that you’ll need to file separate personal and business tax returns.
8. Know your strengths, and don’t feel like you have to be good at everything.
It’s true that new business owners often have to take on roles they might not be totally comfortable with in order to get the business off the ground. However, there are limits to that idea. You need to make a realistic appraisal of what you’re good at and what you’ll need help with. If you’ve got a creative bent, for example, you might be able to design your marketing materials yourself, but you may need an accountant to handle the hard numbers. Remember that you can hire someone part-time, and don’t be afraid to reach out.
The high-stakes game of entrepreneurship isn’t for everyone. It requires more grit, sleepless nights and money skills than the average person is often willing to put in. For those still ready to play, however, it offers the ultimate chance at making your mark on the world of commerce—so long as you get creative and stay sharp.
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