News & Tips
6 Things to Consider when Starting a New Business
Have you taken one of the biggest leaps of faith and decided to leave your day job and become your own boss? Have you been sitting at home pondering a business idea that you are sure will be the next best thing since sliced bread? No matter what ignited that spark to embark on the journey of becoming an entrepreneur, several things should be considered along the way.
At Space Coast Credit Union, our Business Advisors meet with small business owners daily, as a free service offered to our business members. In meeting with these business owners, we have seen many of the challenges entrepreneurs face in the early stages of starting up a small business.
We’ve found that these six steps help business owners think through some of the important considerations when starting a new business- allay their fear of the unknown and growing their confidence.
Step 1: Do your research
Whatever industry you decide to start a business in, it’s crucial in the very early stages to do your research; and this doesn’t just mean Google your competitors. Research is more than just knowing your competition. It’s also about knowing your target audience’s needs, the market capacity for growth, and the resources available to produce and sell your product/service. Here are some questions to consider while researching.
- Why will customers want or need your product or service? What need is your product/service filling in the market?
- What are your business’s purpose and goal? What is your “why” in wanting to start up a business?
- What makes your business unique?
- How will you test your idea?
- What skills do you already have to help you start your business?
- What resources are at your disposal?
Step 2: Develop a business plan or model
After you’ve spent some time doing the research, now is time to map your results. Whether you choose to use a tool like a traditional business plan or prefer a more visual approach, like the business model canvas, either of these methods can help you clarify why, what, and how you will run your business. These questions will help you fill out the key components necessary when developing a business model.
- What does your small business do? Think along the lines of a value proposition and an elevator pitch – three sentences or less!
- Who are your customers? More on this in step 6. Stay tuned!
- Who will benefit from your product or service?
- What do they think? See? Feel? Do?
- Who are your competitors?
- How will your customers find out about your small business?
- What resources will you need to produce and sell your product/service?
- How will your business generate money?
- What will you charge? (Answering the questions below can help you determine what to charge.)
- What is your cost to produce your product or service?
- What do you need to charge to breakeven?
- How much profit do you want to make?
- What are the going market prices for your product or service?
- How long will it take you to start making a profit?
Step 3: Know your start-up cost
Becoming an entrepreneur is exciting. However, crunching the numbers can take all the joy out of it. Coming up with estimated numbers can sometimes even be terrifying. The Small Business Associate (SBA) offers an easy to use worksheet to get you started. Keep in mind that depending on your business, these costs will vary. We recommend you have at least six months of expenses set aside as you get started. Here are some things to consider as you determining how much money is needed to start your business.
- How much do you need to start up your business? Consider the cost of resources and supplies needed to open your doors. There may be some one-time costs associated with getting started.
- How much will your monthly recurring business expenses be? This includes rental space, utilities, monthly legal fees, payroll, and more.
- How will you fund your business?
Step 4: Determine how you will manage your business finances
Being able to track and understand your finances is a very important part of running a successful business. Bookkeeping is something that comes easy to some and is dreaded by others. You will have to decide, as a business owner, if it will be something you want to do yourself or hire somebody to manage for you. Using some basic software tools like the Wave App or QuickBooks will make this not so fun part of managing your business a little easier. You should also consider:
- Which financial institution is the best fit for your small business?
- How will you track your income & expenses?
- How will you invoice your customers & pay your expenses?
- How will you accept payments?
- How will you pay yourself and your employees?
Step 5: There is no “I” in teamwork:
One of the first things you’ll experience once you become a business owner and leave your 9-5 day job is that you don’t get to clock out anymore. The very early stages of building your business will be very demanding, and if you go at it alone, you are at risk of fizzling out quickly! Building a strong support system early on will keep you going when things get rough and celebrate with you when business is good. For more on building a support system for you and your business, click here.
Step 6: Determine how you will reach your customers
There are a plethora of choices for marketing to consumers. The first place most businesses start is online. But how do you reach and grow your consumer base online? Should you have a website, should you be on social platforms – which sites, how do you leverage the online resources to make more sales?
The clearer you are on who your customer is and why they would want to do business with you, the easier it will be to know where to find them and attract them to your product or service. To get started, here are some questions to help identify your target customer and how your service or product will benefit them.
- What makes your business better than your competitors?
- Who is your target audience? Where are they online? What social sites or websites do they visit?
- What would be the biggest compliment a customer could give you on your service or product?
- What pain points will your customers find remedy in your product and or service?
- How will I track the results of my marketing efforts?
Starting a new business can be overwhelming. An SCCU Business Advisor can help you break down actionable steps to setting your business on the right track for success.