[This article was written by Dawn Castell.]
Starting a business is no easy feat. In fact, according to the BLS, 20 percent of startups fail in the first year. By the fifth year, a whopping 50 percent of small businesses have gone belly up. These statistics, however, are not meant to discourage you, but to serve as a reality check on what odds you’re up against when starting a business. To help you overcome those odds, here are six tips on how to set up a thriving business in this new decade.
Find a Niche You’re Good At and Are Passionate About
These two requirements should go hand in hand. You can’t start a business that you don’t know anything about as this leads to more mistakes. At the same time, a passion project will only get you so far until your bank account runs dry. Pick a business that you have some basic knowledge of and are passionate about.
Figure Out if There is Market Demand
Sure, you could be passionate and good at the business you chose to open, but without customers, the entity is as good as dead. You’ll need people to sell the product/service to. Figure out if your business serves a purpose or if it’s solving a problem that no one cares about or needs solving. You can test the business idea by talking to family and friends about it. You can also start polls and take surveys on social media platforms. Another way to broadly gauge market demand for your business idea is to search for the keywords on Google Trends, a tool that tells you how many people have searched for that keyword over a period of time.
Figure Out Costs
The next step in your business viability plan should be to figure out how much it will cost. You’ll want to give yourself months worth of financial cushion to account for unplanned delays and hiccups. According to the U.S. SBA, most small businesses require an average of $3,000 to operate. This number will wildly vary, of course, depending on the nature of your business. For instance, a retail storefront will obviously cost more to start compared to a home-based logo creator business.
Go Out and Get Funding
Now that you’ve figured out the costs, it’s time to get the money for your business. Banks are the traditional source of funding for businesses, but in 2020, the options are significantly more varied. Banks are ideal if you have good credit standing and if your business is categorized as low-risk, such as a food-related business. Other options include crowdfunding platforms, such as Kickstarter, and peer-to-peer lending services, like Lending Club. It’s important to exhaust your options as you don’t want to sign up for a contract that charges extremely high interest rates or sets an unreasonable repayment structure.
File For Business Incorporation
Registering your business is the first official step to starting one. In the U.S., SBA.gov is the website that handles business registrations and all things related to it. Depending on your type of business, either Sole Proprietor, Partnership, non-profit, or LLC, you may need to register with federal and state agencies for respective tax IDs and licenses. The requirements to file may also vary based on where you are filing from.
Now that you have a business on paper, you’ll want to let as many people as you can know about its existence. People don’t know about your business yet, and it’s your job to fix that. Start spreading flyers and business cards in your neighborhood, attend conventions and conferences, be active on social media and online forums.
A thriving business is built under a stable foundation that takes time and meticulous planning and research to accomplish. Follow these steps to the letter and avoid taking shortcuts no matter how tempting it is. You’ll save yourself a lot of headache and expenses later on.