Starting your own business sounds like a path to freedom. Pursuing your passions, being your own boss, setting your own hours — does it get any better than that? Despite the rewards of owning a business, it’s not right for everyone.
Not everyone can succeed in business. It requires a certain type of person to leave behind the security of a 9-to-5 job and a 401(k) in exchange for the uncertainty of business ownership. You have to be willing to take risks and make contingency plans for when your Plan A doesn’t pan out. When obstacles arise, you have to adapt in the moment and find solutions. You need to be self-motivated, to possess the discipline to do the work even when it’s hard and nothing is going right. And at the end of the day, you must be introspective and self-critical to truly improve and grow. For more detail, Plexus has a list with personality traits of born business owners.
If you check all those boxes, you’re probably feeling pretty good right now. But no amount of tenacity can substitute for a solid plan and an understanding of how to run a business. Before taking the plunge into small business ownership, these are the three things you need to do:
Conduct Market Research
So you have a great idea. But do people want what you’re selling? Unless you’ve done market research, you don’t know if there’s a demand for your product or services, if you can sell it at a profitable price point, or if the market is already saturated with competition.
Market research is a necessary step to determine the feasibility of your business idea. As you assess the market, consider what niche you can fill. When you find a niche for your business, you fulfill a previously unmet need in the market rather than directly competing with other businesses for customers. For help differentiating your business from the competition, Microsoft recommends asking five questions:
- What makes you different as a business?
- What makes your best clients or customers unique?
- Why do your customers buy from you?
- What about you makes people pay attention?
- Why do you do what you do?
Write a Business Plan
Once you’ve conducted market research and determined your business’ niche, it’s time to write a business plan. A business plan should answer three big questions:
- What will you do?
- How will you grow?
- What do you need?
In detail, lay out what products or services you’ll offer and how you’ll market them. Consider both the logistical aspects of selling a product or service as well as how you’ll reach potential customers. Create a marketing plan as well as plans for scaling your business over time. Identify sources of financing and know how you’ll make ends meet in the early days. Many new businesses don’t turn a profit in the first year, so you may need outside income or savings to stay afloat.
Create Systems and Processes
Running a small business means juggling many tasks at once. In order to stay on top of it all, you need systems and processes. Factor not only the day-to-day operations of your business, but also the things that keep it running from year to year: storing files, tracking cash flow, keeping the books, paying taxes. These aren’t the glamorous parts of small business ownership, but they’re no less necessary.
Sometimes doing it all yourself simply isn’t feasible. Rather than trying to become an expert at bookkeeping and accounting, web development, and social media marketing on top of running your business, follow American Express’ advice and delegate. Don’t worry if you can’t afford in-house staff; by hiring remote contractors, you can get the perks of professional services without the hassle of payroll.
Starting a small business isn’t easy, and the challenges don’t stop once you’re open for business. There will be days that everything is great, and days you wonder if you made a huge mistake quitting your 9-to-5. But when you look at the business you created and feel a sense of satisfaction and pride, you’ll know that business ownership was the right choice for you.