If you’re reading this, it means you’re interested in starting a new business. Now it’s time to focus your entrepreneurial spirit using the following five steps to launch your new business.
1. Finding an idea for starting a new business
Sometimes the inspiration for business ventures comes from what’s around you, or from what isn’t. For example the lack of fast-food restaurants in the area of a media company meant treks across town for lunch, prompting two young men to ponder, ‘Wouldn’t it be great if we could get some good food delivered?’
Rather than waiting for someone else to capitalise on the idea, they launched a restaurant delivery business. So far, it’s served more than 15 million people.
The lesson? Everybody whines about what’s missing in their corner of the world, but only a select few — the entrepreneurs — do something about it. It may be cliché, but it’s true: Where there are problems, there are opportunities.
2. Plan ahead when starting a new business
You’ve got the inspiration. Do you really need a business plan?
Plenty of people argue yes. Entrepreneurship professor William Gartner of Clemson University analysed data from the Panel Study of Entrepreneurial Dynamics, a survey of more than 800 people in the process of starting businesses. He found that writing a plan greatly increased the chances a person would actually go into business. You’re two and a half times more likely to get into business.
People who write business plans also do more, like researching markets and preparing projections, which is valuable in itself, and also increases the chances that an entrepreneur will follow through. And if you want to get funding from banks, VCs or government agencies, a business plan is often required.
But more isn’t always better. Aim for 20 to 40 pages. The shorter, the better.
3. Value your new business
Unless your start-up funds are coming out of your own pocket, someone will have to value your business. Be prepared for a reality check: If investors say your start-up is worth R4 million, then that’s what it’s worth. You might think it’s worth more and be able to back that up by pointing to, say, R8 million in liquid assets. But unless investors agree, you’ll have to live with their valuation.
4. Find the right location for your new business
Location equals money. In the brick-and-mortar retail world, it’s said that the three most important decisions you’ll make are location, location and location. Careful determination of new sites is critical for most retail and consumer service businesses.
For example, look at neighbourhood traffic generators, such as other retailers that draw people to the area, industrial or office parks, schools, colleges and hospital complexes.
(Or lack thereof, as in the case of the restaurant delivery business.) Consider both highway and foot traffic if most of your customers will be coming in that way as opposed to, say, the Internet.
While you’re at it, look for competitors. “Quite simply, the best place to be is as close to your biggest competitor as you can be,” says Greg Kahn, founder and CEO of Kahn Research. “By being in close proximity to your competitors, you can benefit from their marketing efforts.”
5. Find your first customers
Your first customers are key, and not just because they’re turning on the revenue spigot. They also legitimise your idea, demonstrating that there actually is a market for your products and services.
They’re also a source of valuable feedback that will help improve your business so more customers keep coming in. Don’t overlook the opportunity to ask if you can turn some of the positive feedback into testimonials.
Where do you find your first customers? The answer varies somewhat based on your industry, but one common strategy is to leverage your personal and professional contacts, and their contacts. Those could include former employers, employees and customers, contacts within your civic activities, and tradespeople and professionals, anyone from your dentist to your plumber.
Consider sending each one a personal letter, then follow up with a phone call a week to ten days later. In this letter, announce your new business and offer something, such as a free consultation or a special discount, or even a finder’s fee for any referrals they send your way.