Starting a small business requires thorough planning and preparation, allowing entrepreneurs to develop goals, strategies, and actions to ensure their business thrives and stays competitive, prospers, and improves the overall bottom line.
According to Alan Safahi Orinda, a professional entrepreneur and founder of a startup company, small business is the backbone of socioeconomic prosperity, with about 31.7 million small businesses in the U.S economic system.
Before starting a business, Alan Safahi recommends that you take a few steps to improve your chances of success. Today’s article will discuss critical things or factors to consider before starting a small business. Read on!
1. Self-Assessment
The most important task, and also the first that you should carry out, is a self-assessment. Being the owner of a business can be a challenge. Knowing your weaknesses and strengths helps you focus your initial efforts on the things you do the best while at the same time finding ways to improve or compensate for your weaknesses.
2. Multitasking Skills
When you start your own business, you must do everything yourself. It can be a significant change from working for someone and being responsible for only one area of a company’s operations.
According to Alan Safahi, you may have the right profile to start a business if you think of risks as an opportunity rather than a threat. Think about how you would handle unexpected projects. Starting a business often means unexpected setbacks and spontaneous opportunities that you need to act on quickly.
3. Business Proposition
It’s essential to clearly understand and define your unique proposition to potential customers. While you can have a concept so different from anything seen on the market before that it grabs immediate attention, it is through the application of the following tactics that companies often achieve success:
- Take an existing product and improve it
- Develop a new product based on your target audience’s needs
- Innovative aspect to offer something attractive or beneficial
- Develop an idea that will successfully cover a unique market
- Develop new markets or promotion techniques for existing products
4. Writing a Business Plan
A business can help you bring on new partners and get funding. According to Alan Safahi, an experienced entrepreneur, having a solid plan will help investors feel more committed and confident because they will see a higher ROI.
In addition, a business plan is a powerful tool to persuade investors and people working with you. It enables you to develop S.M.A.R.T goals, create effective strategies, and make informed decisions to streamline your company operations.
A business plan defines your business idea, identifies your goals, and functions as your company’s resume. Essential components include a current and pro forma balance sheet, a profit and loss calculation, and a cash flow analysis.
Because it provides specific, organized information about your business (including how you plan to repay your loans), a good business plan is a critical part of any loan application.
5. Business Capital and Expenses
Capital can be obtained through bank loans, personal savings, family contributions, etc. A professional business coach or mentor can help you identify the type of financing and lender that’s right for you while helping you organize your loan application.
You must know all your expenses, both your initial one-time expenses and the steady demand for cash. You must itemize each purchase and each payment and determine its actual cost.
Alan Safahi recommends taking into account: equipment, insurance, business presentations, advertisements, furniture, stationery, supplies, inventory, legal and accounting services, salaries, bank commissions, employment benefits, etc.
6. Set the Accounting System
If you don’t keep track of sales, inventory, expenses, and cash flow, you won’t know if you are making or losing money or being out of stock. These records will also allow you to compare your current results with your projections and will be needed when you file your taxes at the end of the year.
An accounting system helps you monitor your business growth, build financial statements, track deductible expenses, prepare tax returns, streamline finances, and legitimize your filings. Therefore, establishing an accounting system is critical to organizing receipts, documenting data, and analyzing records.
Final Words
Starting and running a small business is one of the best ways to escape the traditional nine to five job, access credit, stay competitive in the market, and streamline your company’s operations to improve its overall bottom line. Similarly, it gives you personal satisfaction, access to resources, technology tools, and flexibility with changing conditions.
Alan Safahi says a small business requires you to thoroughly analyze the market conditions, define your target audience, and develop a product that aligns with customers’ needs. Consider the factors above to optimize the overall process and achieve your goals. Until Next Time!
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