Looking to make the leap and start that business that you’ve always talked about? Are you looking to make this a banner year for your business, by hiring new employees? Expanding production with new accounts? Or bring on a new product line? Whatever your goals are for the New Year - as it pertains to entrepreneurship - let’s get you started on the right foot.
A good place to start (if you haven’t already done so), is to write up a business plan. Business-planning is a great exercise for new and existing businesses as it forces you to really think about your new or current venture critically, by making you answer key questions that often get overlooked. According to Forbes, “50% of businesses run out of gas within the first five years.” Some business owners make the mistake of skipping this process altogether, and end up making errors; or worse, they end up making poor decisions that could have been avoided had they taken the time to complete the planning exercise. :
Whether this is your first business plan, or you are updating your current plan - to reflect the current goals of your business or the state of your industry - make sure that you finish it. You need to be able to know the answer to questions like:
What problem(s) in the world are you trying to solve?
The more people that have a problem that you can solve with your product or service, the more successful you will be.
How many people have this problem, and how will your solution differ from your competitors?
Some businesses fail because there isn’t enough demand for their product; others fail because people just may not be motivated to solve their problem. By assessing the amount of demand for your product or service; and how customers feel about their problem, you can determine how to better position your product or service. Or, more importantly, even determine if it is a business worth pursuing.
How much will you charge for your products or services?
This is extremely important. Will you be the low-price leader? Or will you be a brand that is known for quality and high value, and thus can get away with selling your products or services at a higher price.
Who will be on your leadership team?
A common - and dire - mistake that entrepreneurs make, is trying to do everything themselves. Being the visionary is great, but you can’t be strong at everything. Especially if you intend to seek investment. Who will be in charge of operations? Customer service? Sales and Marketing? Accounting and finance?
While you may not be able to hire all of these people full time, it’s important to have a designated consultant or resource to help you during the different stages of your business. That way your efforts aren’t thwarted all because a CEO didn’t play to his or her strengths, and, more importantly, fill in the holes to compensate weaknesses.
How much will it cost to produce your products/services?
This is important - you want to be able to produce and deliver your products and services at a profit, while still being competitive. You’ll want to make key decisions within your business based on how profitable you can be and whether or not anything that you do adds to or takes away from the cost of your products/services. If your costs increases, it may be time for you to increase your pricing. Without planning or paying attention to these metrics, you could be selling more and more products and services, only to be losing money. So be sure to keep an eye on profitability.
And most important…
How much will you need in order to start your business and operate your first year?
Once you determine how much you need, you’ll then need to determine how to fund your new venture. Small/new businesses are typically funded in one or more of the following ways:
Bootstrapping is one of the most common ways that new businesses are funded. Founders and co-founders pool their liquid cash to cover some - or all - of their startup expenses. While this is risky -due to the fact that if the business fails, they lose their cash - the benefit, is that the owners do not owe any interest from money-borrowed, and don’t have to answer to investors or a bank.
Investment is another viable option for entrepreneurs looking to startup or even expand their business. To do this, you’ll need a business plan or pitch-deck, that you can shop around to investors. They may want a piece of your business, so be ready to give up equity if someone shows an interest in investing in your company. They may even want to be involved with day-to-day decisions, so take into consideration how much autonomy you’re willing to sacrifice before settling on this option.
A business loan may be the way to go in order to bridge the gap - or even completely finance - your business needs. Getting approved by LoanMe is simple, requires only 3 documents, and you can get funded within about 4 hours, and the approval process doesn’t affect your credit.
If you decide that a business loan is your best option for funding your business needs, we’d be happy to help you through the process. Visit LoanMe.com to get the process started for your small business financing needs.