Starting a New Business
Starting a business is a very big commitment, and involves balancing a lot of skills from operations, accounting, sales, marketing to general business management skills. The key to success is understanding the business in detail, and understanding the reasons behind it. Many people will start a business because someone else is doing it, or because they think it is a good idea. Although there is nothing wrong with that, it just means you won’t have a deep understanding of your business.
Once upon a time you have probably been taught to do a business plan, and completing all of the sections thoroughly. Honestly in all my time in business, I have never really seen a successful business plan, for the simple reason that it’s a large document, and so is very hard to work with.
One of my recommendations is to use the business canvas: [https://strategyzer.com/canvas/business-model-canvas]
The business canvas is a great tool to get you thinking about your new business, and to be able to simulate how your business will work from end to end.
This is the heart of the business canvas model. Your business should add value and benefit people, or even solve a problem. You need to think about what you will do to add value. Value may not be the product itself. Let’s take coffee for example. Coffee is black, served hot and contains caffeine. These are all features of coffee.
- Hard to get up in the morning? Coffee makes you feel awake first thing in the morning.
- Feel cold in winter? Coffee makes you feel warm and motivated in winter.
A value proposition is how this adds value. It almost does not matter what the product or service is.
Once you have established the value, you need to look at what benefits you provide for what customer problem. You need to identify who has these problems, and who wants the benefits of the value you’re adding.
Identify the groups of people, either physically, psychologically or technologically. Unlike traditional age / gender groups, you have social ways of grouping people. There will always be a way to identify and market to these people.
Once you have identified a promising customer segment, you can evaluate your available channels. Where do our customers live online or physically? What type of media can I use to get to my customers? What are the cost involved in getting to these customers via these means?
Customer Relationships is about how you will communicate with your customers. Is this going to be personal? self-service? automated? The type of relationship in general will affect your sales lifecycle, from the acquisition of your customers, to the on-going relationship and retention of your customers.
The key activities relate to your operations and marketing. What is going to make your business work operationally? Perhaps it is the technology, the process, or the physical operations? Understanding the key activities will give you a chance to perform and operate your business.
The key resources are what you need to get your business running. This could be the human resource, the financial, the physical or the intellectual.
What relationships do you need to establish for a successful operation? These key partnerships need to be built to ensure your business can succeed in the future. They will make up a key part of your day-to-day operations.
Cost Structure / Revenue Stream
This involves getting all your finances together, established how much the business will cost to run, and what you need to do it. Then you can identify the costing and revenue to correctly simulate your business and get it running.
Once you have your plan set up for your business, the next stage will be:
Funding Your Business
How will you cover your costs to get your business operational? At what points in time will you need to raise funds?
Knowing your business and financial goals will give you the ability to organise and execute to a schedule. For more detail on this, read our article about money management.
Forming your Business Entity
Creating a business entity will be required at some point to operate your business. (this could be in the format of a sole proprietorship, partnership, LLC or a corporation). Each of these models will have a different impact on growth, liability and taxes.
I would be recommended that you go through a trusted accountant or business set up organisation to help you make the right decision about the structure and the name. This will ensure you are best set up for tax and for your operation. You will also need to set the following up.
- Tax ID and EIN, these numbers will allow you to operate and will be required to work with suppliers and clients
- State Registration
- Licences and Permits: These depend on the sector of your business sector
As a new business you’re not alone. You can check out the Small Business Administration website [http://www.sba.gov/] to help you get started, as well as check out our blogs and videos which will talk about business operations, sales, finance, time management and many other key subjects.