What To Know Before Starting A Business
So you are considering starting your own business? Awesome! Maybe you’re tired of working for the man, maybe you feel undervalued, or maybe you want to turn your side hustle into a real business. We are in the “Great Resignation”, so it makes sense, right? Wrong. Regardless of your dreams being substantial or not, there is a lot that goes into a business and we are going to help you make sure you know what you’re getting into first.
My husband and I own and operate a few different companies in a variety of industries. Years ago when we initially opened our first business, we thought we knew plenty. The business was in an industry we had years of extensive experience and it was in a market we understood very well. We knew our competitors, big and small and prepared financially for the investment. At the time, we decided that my husband should leave the workforce to be the primary leader of our new venture while I continued to work my high-level corporate career. However, it was double-duty for both of us 24/7. After the company was stabilized for a few years, we decided to expand and open another company. Then another… And another. Each company was unique from its profitability to marketing strategy, and had vastly different experiences in the overall development process and time spent.
By the time we were opening our fourth business, we had two young children at home and I was still working for another company. Despite the comforts, great benefits and consistently awesome pay, we made the choice for me to retire my career. It was a dream come true to be home more and remove a time-consuming obligation. What’s the point of good money if you can never spend it anyway? Unfortunately, we quickly realized that our fourth company was way more expensive and much less enjoyable than any other business we’ve started. The business was created because we knew it was profitable, we lined up people to manage it before launching and thought it would be simple while helping out a family member. We were wrong. Money isn’t everything and we started it for the wrong reasons. The first year of any new business is the hardest and we weren’t even three months in before we were already designing our next venture and looking to sell this one off. Thankfully, we can always see the positives in any situation. We quickly learned to refine our requirements before starting our next journey and want to share these 6 key insights to help others.
One - Identify The Why
People are quitting their jobs left and right thinking that they should simply start a business, and some of them have great motives like wanting to work for themselves, wanting to control their time better, spend more time with their family, or make more money. The reasons can go on and on and some of them are good, but there is nothing “simple” about it. A new business takes a ton of hard work and a lot of time. When you are starting out, you don’t usually have a lot of capital to hire a team for each department, let alone have standard working hours. Owning your own business is a round-the-clock job. You are the company, it’s your reputation and you have to devote yourself to making it work. There are numerous days where we have to decide to turn our phones off and disconnect from the world. There are times where we have to say our marriage, time together or kids' attention is more important. But there are also countless days where we are balancing so much that we can only afford 3 hours of sleep each night.
Two - Identify The What
What is this new business you want to start? Does it sell a product or service? If you are thinking you want to start a business for the sole purpose of having a good idea or creating passive income, think again. Whether you are improving a product or process, or developing something brand new, there will always be competition, continuous dedication and engaging consumer interest to manage. You should also consider if this is something you want to keep small or expand into an empire. Whatever it is, make sure you are open minded, adaptable and continuously expand your knowledge for your business.
Three - Determine The Need
So you figured out the what and why, but do you know if there is a market for your company? The most important thing you can do before launching your idea is research. Will you hold the monopoly or compete with hundreds of others out there? Figure out if you can stand apart from the competition and make sure you know your targeted demographics - especially as the economy is endlessly changing.
Four - Evaluate The Passion
Whatever the idea is, are you passionate about it? If you want to make money, great. We’ll save the greed conversation for another day, but nobody owns a business without the intent to make money. The true difference in a businesses success can be narrowed down by the motivation behind the ownership. Do you care about what you’re doing? Are you invested in a positive customer experience? We have liquidated assets or restructured business plans before, but the only company we have ever chosen to eliminate was the one we had zero passion for. If you don’t love what you want to do or are only doing it for the money, it’s much easier to sell the idea to someone who does.
Five - Understand The Requirements
Clearly investing your time is a huge factor, but have you considered the operational and legal requirements? You should always have a legal entity to operate within - and we highly recommend using Legalzoom for a quick and easy registration - but what needs do you have for insurance, licenses, permits, etc? What state or federal obligations do you have to register for? Outline the logistics to owning a company, investigate the obligations or standards for product or service, and determine how you will handle each one. When funding a startup, it’s likely that you will not be able to hire your entire operations team upfront. Gain the knowledge and expect to manage the daily operations of process development, customer service, risk management, accounting and bookkeeping, marketing and advertising, reputation management, human resources and so much more!
Six - Prepare For The Risks
Starting a new business is a lot like having a new baby. Not only do you have to invest in its development and dedicate serious time, but you have to finance it too. And like any investment, owning your own business is a big risk. Pro tip: Risks can be drastically reduced by experience or following the right guide (click here to find your guide). Even if you grow and build confidence in delegating to a team, as the owner you are on the hook for every aspect. Were the legal documents filled out properly? Did you save enough money for contingencies? Did you manage the production and lead the team down the right path? Was your business plan realistic? There will always be unexpecteds but without the security of a typical job with steady pay, you have to prepare yourself to adapt as your business situation changes.
Our newest company (Sophisticated Standards) is one of our biggest passions, which is largely why we believe in its success. We have such extensive plans for where we want it to go, the areas we want to expand into and the lives we can impact all because we are invested in our clientele and have a passion for what we do. But without nurturing our “baby” and answering the questions outlined above, success would not be possible.
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