When starting a business from scratch, you’re going to face a lot of challenges, questions, and problems you hadn’t considered. There are positives and negatives that should be weighed carefully before deciding if entrepreneurship is for you.
While there is a lot you can predict and plenty of articles to read, it’s probable that there are some aspects of entrepreneurship you’ve overlooked. Let this article be your helpful reminder of the complexities that often go hand-in-hand when launching your business off the ground. Here are five lesser-discussed things you need to account for when starting your business.
1. It’s not often a straight shot to success
Success in a new business is often viewed on the outside as a linear trajectory. New business owners who start with excitement picturing this predictable growth pattern are more often than not disappointed. Too many new businesses start without a contingency plan for what to do in the event something goes wrong. What will you do if you have a slow few months, backtrack after six months, or if it takes a full year of losses before you’re profitable?
There is a chance you’ll be profitable straight away, but it’s also possible that you won’t be. Plan for that in advance.
If you’re a service-based business, what will you do if clients don’t pay you straight away? Is it going to create a cash flow problem?
Take some time to think through how things could not go as expected and decide how you’ll handle it ahead of time. In the event the worst happens, you won’t panic because you already know what to do.
2. Bookkeeping should start right away
Even if you are simply making a domain name purchase with no other planned expenses for another month, it’s important to start bookkeeping right away.
Small business owners often get so caught up in the product/service creation and sales process that the more mundane tasks like bookkeeping or looking into pre paid business cards often get left to the wayside. Small business owners wear many hats at the beginning of starting a business, but to be successful, money is the most important part. Understanding where it’s going and where it’s coming in (staying on top of expenses) will help you prioritize and keep a lean operation. Consult a small business accountant if you’re not sure how to do it, or if you simply haven’t got the time.
How much does it truly cost you to obtain a customer? What is the lifetime value of that customer once you’ve got them on board?
These questions are going to be crucial in running a successful operation and you need to know them inside and out.
3. There are many variable costs to consider
If you’re starting your business today, you’re already aware that you’ll have fixed costs to get going. Whether that’s the purchase of a new computer, a printer, a building you’ll lease, or an electric bill you’ll pay.
But have you considered some of the other costs you’ll face?
If you’re going to accept credit cards (which you absolutely should) you’ll pay anywhere from 2-4% of your gross revenue in average credit card processing fees for that privilege. You may also be subject to business license and registration fees, insurance premiums, and self-employment taxes. These types of payments and risks should be considered carefully so you know how much it really costs to get started.
4. You are not your target market
The best businesses solve a problem, and many entrepreneurs are inspired to solve a problem in their own lives. While this is a valid and popular way to find an idea, it doesn’t immediately mean it will be a success.
You are not your target market. There needs to be someone else out there who also believes it’s a problem and they need to believe it can be solved in the way you plan to. Validate your problem and your solution through target market research. Maybe your problem isn’t widespread enough to be a viable business. Maybe the solution you’ve created isn’t the best way to solve it.
Target market research is crucial to ensure your business idea has a market.
5. You don’t have to have it all figured out to get started
Many people are afraid to start a business because they don’t have the answers to all of the potential questions they could face. While there’s merit to doing research of course (if you’re reading this, you already know that), but there’s also a lot to be said for just digging in. You’ll figure out what you don’t yet know very quickly.
By starting with a lean and flexible operation and digging into the trenches, you’ll quickly see what works, what doesn’t, and where you should pivot or optimize for the best results. There are so many things ahead of you that even the most well-prepared entrepreneur can’t have it all figured out. And that’s ok. You’ll learn as you go, gain skills, make mistakes, and find your way much quicker if you get started. See what resources are available to you. Enlist the help of human resources software to help you manage your staff. Rome wasn’t built in a day and no one is a master of all areas when it comes to launching a business.
Starting a business is not for the faint of heart. There are many twists, turns, surprises, and exciting moments ahead. While it’s important to do research and understand what you’re really getting yourself into, it’s equally important to dig in and get your hands dirty.
A perfectly planned business simply does not exist. A business executed imperfectly is far better off than the not-yet-started one waiting on the sidelines. Don’t wait for that perfect moment or else you’ll never start.