2020 has been an incredibly difficult year for many, especially for those who have lost their jobs or their main sources of livelihood. If the pandemic and the recession have taught us anything, it’s that we can’t put all our eggs in one basket and that it’s smart to have multiple streams of income. If you have a good small business idea in mind but don’t know where to start, then you have stumbled upon the right place. Here is your step-by-step guide to starting a small business.
1. Do a thorough competitive analysis and market research.
Even if you’re only planning to start small, you still need to do the proper research for your venture to succeed. You need to know and understand your target market—their values and relationships, what they’re willing to spend on and invest in, how they spend their time, and what engages them. Market research is simply the process of studying business trends and consumer behavior. When done right, it allows the business owners to reduce and eliminate potential risks and threats. Here are some examples of questions that can guide you on your research:
- Is there a need or a demand for the goods or service?
- How big is the pool of interested consumers?
- What is their economic standing?
- Where are the consumers located?
- Which businesses are your potential competitors, and how much do they charge for their product or service?
- How much are consumers currently spending on similar products or services?
- What kind of marketing or branding do they respond to?
Market research can be conducted through surveys, questionnaires, and interviews. You can cold message friends and family or promote your survey through online groups and platforms. On the other hand, a thorough competitive analysis takes so much research, time, and resources because it requires looking into every company that’s already doing what you’re planning to do. So take your time and remember that being armed with all this necessary information is already half the battle.
2. Develop a business plan.
Once you have a clear grasp of your target market and potential competitors, you need to develop a business plan, which will be the foundation upon which your business will operate. A business plan can take many formats, but this is a basic backbone of what a plan for a small business might look like:
- Executive summary, which details what your business is about. It includes a mission statement, your service or product, and basic information about the people behind the company or business.
- Market analysis, which are the results of your competitive analysis and market research.
- Funding requests, which explains how much funds you will need and what your projected profits are.
3. Calculate costs and write a financial business plan.
The next step is to calculate your start-up expenses. This step allows you to estimate profits and project when you will reach your breakeven point. This is a crucial part because this is how you will secure loans and attract potential investors. Some start-up costs you may need to factor in include your market research expenses, permits and licensing, insurance, workspace, utilities, equipment, marketing and promotions, communications, inventory, employee salaries, and your legal team.
4. Find funds for your business.
Some start-up entrepreneurs choose to fund their businesses through their own savings and resources, but there are several ways to go about it if you need additional funding. You can approach or look into:
- Venture capitalists, who are always on the lookout for start-ups that have potential
- Banks that can look into your business plan and expense sheet to determine whether it’s possible to finance and if they find that it is, they can provide small business loans which you would have to repay based on agreed-upon terms
- Crowdfunding, which involves approaching multiple people who would be willing to invest in your business in exchange for simple gifts or special perks
5. Create a solid marketing strategy and file the necessary paperwork.
When your business is properly-funded, you need to create a solid digital and traditional marketing plan. This involves creating a brand identity and creating a strategy to create buzz around your company, both online and offline. You also need to file the necessary permits and licenses because you still need to operate legally, even if you’re starting small. It can also lend credibility to your start-up.
Don’t Be Afraid of Small Beginnings
Most of the successful businesses you see now started small. So don’t be afraid to dip your toes in a saturated landscape. Work hard, receive help where you can get it, and believe that you with the right risks, your investment and hard work can pay off.