3. Undertake studies
Once you’ve identified your business, the next step is to undertake studies. You need to conduct three studies. First is to study the market, which determines the viability of your business. The questions to be answered are as follows:
- Does a demand for my product/service exist?
- What are the demographics of my market?
- Who are the main players in the industry?
- What are the qualities that differentiate them from one another?
- What are the current trends in the industry?
The second is marketing study, which outlines your strategies in promoting and marketing your products and services to your market.
Finally, you need to come up with a feasibility study to determine your risk and reward factors. Feasibility study includes projections on cash flow and income.
4. Secure funding
The feasibility study is your reference to determine the amount of funding you need to start your business. Funding covers two types:
- Pre-operating: equipment, initial inventory, deposits, permits, licenses
- Working capital: salaries, rent, utilities, benefits, supplies, contingencies
Working capital should be enough to cover six months of operation because expecting a business to support itself within the first two quarters of operation is not realistic.
Where do you obtain funding? Unless total funding represents 25% of your savings and your cash flow shows promise, you should consider getting a business loan or perhaps vie for crowd funding opportunities.
These two options have pros and cons. A loan may be a good option if your equipment can be capitalized or if you are willing to risk collateral. In crowd funding strategies, be prepared for investors who may seek a measure of participation in your business.
5. Build your back office
Regardless of the size of your business, you should have workflows in place to ensure you are organized. Back office includes accounting, human resources, information technology, and administration.
However, establishing your back office doesn’t mean that you have to hire individuals for these departments to run these tasks. For small businesses with two to five people, it just means delegating these tasks and having processes in place to keep everything in order.
Efficiency saves you time, which translates to savings and great business opportunities. A popular option for small businesses is hiring virtual assistants to manage nonessential tasks. Virtual assistants are experienced, knowledgeable, and affordable.
Hiring virtual assistants is easier on the cash flow than hiring full-time employees because you don’t have to pay for benefits and you only pay them for hours worked.
6. Build a website
According to statistics, only 46% of small businesses have websites. However, according to 2014 data by Internet World Stats, 3,035,749,340 individuals use the Internet every day. A total of 890 million alone are on Facebook, and 74% of the respondents surveyed said that social media influenced their decision to patronize a product or service.
A website is the digital address of your business on the World Wide Web. It is where Internet searchers can find your products and services. Unlike the physical location of your business, the scope and depth of your market are not limited by a five-kilometer radius. Anyone who can access your website is a potential client. Building a website does not have to be expensive.
Downloadable programs are available, such as WordPress, which offer website templates that are SEO friendly with the largest search engines: Yahoo, Google, and Bing. However, always ask a professional website designer to build your website to lessen mistakes, which may become costly in the future.
7. Continually find ways to manage your costs
Some of the best business ideas have started and have been managed from homes.
Rommel Juan started a business that delivers affordable home-cooked meals wrapped in banana leaves to the offices near his home. Today, Juan’s “Binalot” is one of the most successful franchises in the Philippines.
Rent is one of the biggest items in an operating budget. Unless you have access to immediate funding or the ability to scale up your operation, start your business from home if possible. Some investments are required but these can be part of your assets, and any recurring expense is not as high as rent.