- Get an idea
- Find the money
- Set up shop
- Spread the word
- Marketing Bootcamp
“A journey of a thousand miles begins with a single step,” said Chinese philosopher Lao Tzu. Unfortunately, the saying has been appropriated by so many self-help gurus and motivational posters that it doesn’t have much impact these days.
But it’s worth pausing a moment to ponder the statement, because it actually holds a lot of truth. Every great business you can think of started with that first step.
Sadly, though, not enough people take that first step. Starting a business is difficult and daunting, and more problematically, has no firm deadline. Very few people have someone looking over their shoulder forcing them to get a business started. So that great idea is never acted on. Starting their own business remains something they’ll do ‘one day’.
The best way to actually take that first step is not to think of launching a business as one (massive) project, but to instead break it down into more manageable goals. We’ve compiled a four-step plan to get your business off the ground. It starts, as you might expect, with finding an idea.
1Get an idea
Finding a great idea can be both the easiest and the hardest part of launching your own business. It’s easy because you don’t need to spend any money on it. And when you strike on that amazing idea, it can be tremendously fun and rewarding. Also, thanks to the Internet, there’s no shortage of ideas. Inspiration is everywhere.
But finding the right idea can also be hard. There are so many options that it can all feel a bit overwhelming. Moreover, no idea is a guaranteed success, so you can never be quite sure if your ‘amazing’ idea is actually as good as you think it is. Doubt will almost always be gnawing at you.
When looking for an idea, many people would recommend ‘following your passion’. This can be good advice, but it doesn’t work for everyone. You might love to cook, but if you’re not bringing something new and innovative to the industry, your restaurant probably won’t make it.
Passion is great, but it’s not enough on its own. To really be successful, you need to solve a burning problem, and since most problems are already being solved these days, it often comes down to solving it more efficiently than someone else.
If you have ideas, you have the main asset you need, and there isn’t any limit to what you can do with your business and your life. Ideas are any man’s greatest asset. – Harvey S. Firestone
Related: A – Z Easy Small Business Ideas
2 Find the money
Thanks to all those over-funded unicorns in Silicon Valley, the global start-up culture has become obsessed with VC and angel funding. The reality, however, is that your business probably won’t get millions in funding.
Only a very, very small percentage of start-ups will ever see external investment. But that might not necessarily be a bad thing. As the quote by venture capitalist Fred Wilson suggests, loads of funding doesn’t guarantee success. In fact, it might actually be a bad thing.
Being able to throw money at every problem creates the wrong culture in a business. You want to get the fundamentals right and start showing positive cash flow as quickly as possible. You don’t want to scale quickly because you’ve got the money to do it, only to find out later that your business model doesn’t actually make sense.
The amount of money start-ups raise in their seed and series A rounds is inversely correlated with success. – Fred Wilson, Union Square Ventures
3Set up shop
Once you’ve launched a start-up, there are only two things you really need to do in the short-term: Maximise your income and limit your expenses. That means signing customers and selling goods, without burning through a ton of cash to do it.
The good news is that this is easier to do than ever. There are a lot of solutions out there — both digital and real-world — that can help you launch your business successfully. You just need to fight the temptation to lease swanky offices and buy expensive equipment, and commit to the cost-efficient way of doing things.
Also, you need to get the fundamentals right — from the very first day that you operate. You need to always be aware of the financial situation of your business. Neglect this early on, and you’ll pay the price down the line.
Never take your eyes off the cash flow because it’s the life blood of business. – Richard Branson
4 Spread the word
There are only two ways to increase revenue: Increase the price of what you’re selling, or sell to more people. So, unless you want to try and up your prices (which is very risky), you need to increase your customer base. You do this through marketing.
Thankfully, marketing is easier than ever. Thanks to technology you can now market your business without having to spend money on expensive television or print campaigns. You can make a big impact, but you need to be smart about it. Your marketing budget can go a long way, provided you know how to utilise it.
This starts with knowing your customer. If you don’t truly understand your customer, you will struggle to make a success of your business. In an era when consumers are spoilt for choice, the companies that truly thrive are the ones that know their customers and have empathy for them.
Salesmanship is limitless. Our very living is selling. We are all sales people. – JC Penney
Know thy customer
Successful marketing starts with understanding your customer. If you don’t understand your customer, you don’t have much of a business.
“The number one reason why start-ups go under is a failure to understand the market,” says Dr Alex Antonides of Enterprises University of Pretoria. “For this reason, any and every business enterprise should start with customer discovery and development.”
Before you even think of selling anything, you need to discover if there’s a market for what you are offering. This means going out and speaking to potential customers.
In lean start-up parlance, this is called customer discovery, and it should form the foundation of any business venture.
If your business is already up and running, you have hopefully done the hard work of speaking to strangers and finding out if they’ll be willing to pay money for your product or service. However, customer discovery isn’t something that can be checked off a list — it is an ongoing exercise.
“I tell my students to go out to a mall and look at the things that people are spending money on,” says Antonides. “You have to know and understand what consumers want.”
Only once you know what consumers want can you market your offering successfully. Empathy is a word that’s often used in Silicon Valley, but it’s not as popular here. That’s a shame, since the companies that achieve success in a highly competitive environment are the ones that have real empathy for the consumer. This means really engaging with customers about the problems they face, and the solutions they require.
It’s not about the ‘fast sell’. It’s about spending time (and money) to get to know the customer. It’s about creating a holistic picture of your potential customer, which includes even the things that are seemingly irrelevant to your industry. Once you’ve done this, you can create a successful marketing strategy.
Search for ‘marketing bootcamp’ on www.entrepreneur.com. You’ll find a wonderful collection of articles and other resources, which have been created in conjunction with the UPS Store. Regardless of your marketing question, you’ll find an answer here.
It’s all about content
Google and Facebook ads can offer a great ROI, but you still need to spend quite a bit of money in order to make it work. If you spend a small amount of money, very few people are going to see your digital ads, and since conversion rates are generally low, you probably won’t enjoy a lot of success.
When it comes to digital advertising, the old adage of ‘you need to spend money to make money’ is very true. There’s a certain tipping point at which digital ads start to make sense. Many small businesses spend thousands of rands on Google and Facebook ads every month. It’s worth it, though, because the business generated from new customers is worth more than the cost of the ads. But what if your cash flow is too tight to allow a huge marketing spend?
“Building a community as a brand that has little to no marketing budget isn’t easy — that’s why it is imperative to look at your content approach, especially on Facebook, as a storytelling opportunity. Who are the heroes and villains within your market, and how can you position your brand differently from its competitors?” says Mike Sharman of Retroviral Digital Communications.
“Developing remarkable content is the key to providing a launchpad or a platform from which to build fans. Facebook also has an algorithm that serves your content to a limited number of fans first and — based on the success of the engagement of this content — then distributes it to a wider audience,” says Sharman.
As ex-Google employee and angel investor Paul Buchheit has said: “Start out by making 100 users really happy, rather than a lot more users only a little happy.”
Generating content can seem like a small way to market your business, but if that content is good and it makes a handful of prospective customers very happy, you’ll be surprised by the effect it can have. Great content says a lot about your business.
Of course, you’ll probably need to spend some money on marketing, but by experimenting a bit, you can make every cent work for you.
“If you are a brand/business page, you will need to spend on paid media, either via an agency or with your credit card. You know your product or service better than anyone else, so experiment by putting some money behind your posts to target first niche, and then broader audiences. Facebook spend shows what your expected reach and engagement will be as you scale your spend, and spread it out over several days,” says Sharman.
By paying attention to your campaign, you can stretch your budget surprisingly far. But it’s not a sit-back-and-watch kind of activity. You need to tweak and experiment constantly, until you find a strategy that really works.
(Infographic)The Do’s And Don’ts Of Naming Your Business
There’s a lot that goes into a company’s name.
Finding the right name for your business can be crucial to its success. If you’ve got a boring, vague name, then you might repel potential customers.
When it comes down to it, there are some major do’s and don’ts that go along with naming your company. For starters, keep things simple and short – a long name can confuse potential customers and won’t make a lasting impression on them.
Your name should also tell your story. Not only will this help people recognise your company but you’ll build the brand’s character.
Something a lot of people don’t think about is how their company’s name will sound in another language. Even if you’re in the early stages of building your company, who knows what could happen in the future. So create a name that sounds good and has a positive translation in any country. Next, always test your ideas before setting them in stone.
Ask potential customers to take a survey and compare your name with other companies in the same industry. Of course, you also must ensure that the name you came up is even available.
To learn how you can create the best name for your business, check out Business Backer‘s infographic below.
This article was originally posted here on Entrepreneur.com.
Fuel Your Hustle
These two practical goal posts will keep your start-up on track, even when things get tough and you start to lose traction.
Make sure you have a clear vision and a plan — something to chase and celebrate when targets are achieved.
When you start a new business, everything is exciting. You have a dream, something to work for. Once the business takes off, it’s easy to fall into a rat race of just going to work and reacting to challenges as they happen. Many established business owners get to a place where they wonder if it’s all worth the effort. Whenever I talk to entrepreneurs feeling this way, I always ask them what they are working towards.
Most times, they don’t have an answer.
No, I’m not going to give a motivational talk on how important goals are, but I do believe it’s important to work towards something. To chase something worthwhile. Is it a vision and mission statement? Maybe that fuels your energy, but there are two practical things that I can suggest to any entrepreneur to keep you on track, and keep you motivated with a reason to wake up in the morning.
1. A one-page business plan
The logic behind a business plan is great. It’s a plotted journey, with marked goals and targets. It gives you something to work on, and work towards. And you’ll definitely need one if you’re looking for financing. But very seldom does it actually become a real working document for the small business owner; business plans are too long-winded and rigid and don’t allow for the fast changes and flexibility you’re going to need when you’re running a business.
So, gut instinct is how most survive, and the plan goes into the middle drawer.
That doesn’t mean you don’t need a plan. It just means you need a different kind of plan — one that works for you at the stage you’re at. A one-pager plan that acts as a dynamic working document is where it’s at. The keyword here is dynamic.
Try to compile a one-pager of what you aim to achieve in the next year. Break it down per month and list the small steps that you will be taking to reach your bigger vision at the end of the year. This plan could include anything, but you should know that it will be your guide to what is important and what isn’t.
Work on it weekly, review it monthly and ensure that you are moving in the right direction. At the start of every month, review your plan and list your priorities for the month. If you hit a snag, stop, re-evaluate your plan, make changes and move on. It is not set in concrete. It is dynamic.
Too many entrepreneurs go to work each day and solve issues as they arise without planning proactively for what they want. Others view their business plan — all 100 pages of it — like it’s the Bible. Neither approach will get you very far.
The one-pager will be your plan, your guide. Keep it with you at all times so it can be as flexible as you need to be.
2. Your break-even figure
For most entrepreneurs, numbers are one of those complicated matters best left to others, although it needn’t be that way. And when it comes to one particular number, it cannot be that way: That number is the break-even figure. It’s the one number every entrepreneur must know. If you don’t have a break-even figure, how will you know if you’re succeeding or failing?
A break-even figure is the amount of sales you need to make in a month to cover all expenses and to make a target profit. If you can calculate this, then you have a number that you can chase every day — something that is measurable and understandable for the entrepreneur.
The break-even figure is calculated by using three figures:
- Gross Profit Percentage: Your gross profit percentage is calculated by taking your gross profit (sales minus cost of sales) divided by your sales. Let’s say you sell a product for R200 and the cost of that product is R150, then your gross profit will be R50. Your gross profit percentage therefore is 25% (gross profit (R50) divided by sales (R200).
- Overheads: Overheads are the total of all your fixed expenses each month. Examples include rent, salaries, Internet, fuel and all other costs that you need to pay, e.g. R100 000.
- Profit Target: This is the profit you would like to achieve in a month, e.g. R20 000.
Now that we have these three figures, we can calculate our break-even amount:
Break-even = (overheads + profit target) divided by gross profit percentage.
So, continuing the above example:
Break-even = (R100 000 + R20 000) / 25% = R480 000
This means that you must make sales of R480 000 per month to cover all your overheads and achieve your profit target.
If you have this figure you can now plan how to achieve this target and go out every day chasing a goal, rather than just crossing your fingers. One can take this number and divide it by the number of working days in a month to get to a daily target of sales. Also, make sure it’s on your one-page dynamic plan.
Sometimes, we just need basic things to give our journey meaning again. Something to chase and something to celebrate once we’ve achieved it (yes, make sure you celebrate). To have goals, a clear vision and a one-pager plan might sound like petty things when you run a business — but you might soon realise that you need these things to keep you going.
Insurances To Consider If You Are Starting Your Own Business
Below are just some of the insurances you need to consider if you are starting your own business.
Starting your own business is a brave and bold step. You will be joining many others in the journey of becoming your own boss, and this can be a stressful time. You will need to have a sound business plan in place, as well as other aspects that will secure both your business and your financial future. These include certain insurances that are geared toward insuring your salary, your investments and yourself.
All small business owners should look into taking out funeral insurance so that their family is not burdened and can pay for their funeral, investment insurance so that their money is protected and commercial insurance to protect your business and your property.
Below are just some of the insurances you need to consider if you are starting your own business.
General liability insurance
General liability insurance is important because it will protect you and your business from any possible legal action taken by customers. This insurance protects you in case of any injury to or damage to a customer which happened on your property.
It is also important if you manufacture products, but this would fall under product liability insurance. If a product harms a consumer, then you are legally responsible for expenses which means that having liability insurance will help immensely with costs. If you sell homemade cakes, toys for children or even clothing, liability insurance should be at the top of your list.
Now, you might not think that funeral plans are that important but, in fact, they are. Not only for you but for the employees you might have. Funeral cover pays your family a lump sum within 48 hours of your death so that they can pay for your funeral without having to worry about expenses.
As a small business owner, funeral plans make sense. You will likely be the sole breadwinner, which means that your family will be under considerable strain if you die. The same can be said of your employees. Their families will need to be able to pay for their funerals, and it will also ensure that employees stay loyal to your business.
Funeral cover is a benefit that many companies offer their employees to ensure they’re happy and satisfied in their roles.
If you own property or are leasing a building, property insurance is vital. This insurance covers your office equipment, the signage both inside and outside the building, all office furniture as well as your inventory. These will all be covered for disasters such as fire or a storm as well as in case of theft or damage.
However, it is important to note that if your business is based in your home, your homeowner’s insurance will not cover any business equipment. This means that you will have to take out additional insurance for your business equipment. You will also need to speak to your insurer about disaster coverage, especially if your business is based in an area that is prone to fires and floods. Property insurance is important because it will protect your business from incurring costs it cannot afford.
Commercial auto insurance
If you use a company car or have bought a car specifically for your business, you will need to take out commercial auto insurance. Just as homeowner’s insurance will not cover your business inventory, personal auto insurance will not cover a commercial or business vehicle. This is why commercial auto insurance is so important.
If your employees drive their own vehicles to and from work, you should try to ensure that they have personal auto insurance. And if they use their own vehicles for business reasons, you could ask your insurance provider about covering the risk as part of your general liability insurance. This will keep them safe in case of any accidents that might occur during their trip.
It is a good idea to purchase or hire a company car for your employees to use for any business trips so that your employees are safe and correctly insured.
Look after your staff and business
Along with funeral insurance, workers compensation insurance is important for ensuring your staff is covered for any eventuality. And it will show them that you value them as employees, which will keep them happy and content in their roles.
This insurance will cover medical bills, death and disability benefits if an employee is injured on the job or on your property as well as salary protection. If you offer these as separate packages, you will not have to worry about worker’s compensation insurance but you will need to speak to an insurance broker about this. Protecting your employees is the mark of a true company leader, and happy workers are also more productive.
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