It’s not the way anyone thought they would do it in their wildest dreams. When you are starting your own business in 2021, you will soon realize that running a successful business is not a cakewalk and can be tricky and one ought to know the basics of business.
What every successful entrepreneur needs are information and knowledge on the basics of business startups. You should know about business growth stages, S.W.O.T analysis, funding options, your market competition, product development, etc. before commencing a business. let’s look into it in detail.
In this post I have covered all the factors which make a business successful in a targeted time not based on luck sounds amazing, let’s look into it.
Entrepreneurship refers to the concept of developing and managing a business venture in order to gain profit by taking several risks in the corporate world.
It is the willingness to start a new business, it also plays a vital role in the economic development of the expanding Global world.
Top entrepreneurship characteristics
Types of entrepreneurship
- Small business entrepreneurship
-Includes small grocery, hairdresser, consultant.
-Enough Money to support a family.
-Employees local people or family members
- Scalable startup entrepreneurship
-Silicon Valley entrepreneurship.
-Want to change the world or Industries they have entered.
-Start with the end in mind.
-Hires the best and brightest.
- Large company entrepreneurship
-Have an infinite Life-cycle.
-Innovation is key.
-Aim: To compete with large companies or sell their products and services to large companies.
- Social entrepreneurship
-Creating products or services to solve social needs.
-Aim: to make the world a better place.
Stages of business growth
- Development stage :
-Set up a business plan that outlines everything about that business .
-Business plan to apply for financing or guideline to guide setting up of business.
- Startup stage :
-Setting up a company and getting started.
-Getting finances, Hiring staff and focusing on getting customers.
- Growth stage :
-It means the company’s growing revenue and client base..
Dealing with large amounts of sales.
Streamlining operation to meet deadlines.
Dealing with increased competition in the market.
- Expansion stage :
-Categorized by growth and increased distributional channel.
-Gaining bigger market share and large amounts of profit.
-Forced to expand due to demands.
Facing more competition.
Manage more stocks and orders .
Change operation to accommodate operations.
- Maturity stage :
-Reaches this stage my overcoming stage 1,2,3,4.
-Stable in market, profit and operations.
-Maintain and manage through financial stability any challenges.
(i) Why do you want to start a business? Is it for money, freedom, flexibility or do you wanna solve the problem?
(ii) What are your current skills?
(iii) Which industry do you have the most experience in?
(iv) What service or product do you want to develop?
(v) Funding, Will you take a loan or personal fund?
SWOT analysis definition : SWOT analysis (or SWOT matrix) is a strategic planning technique used to help a person or organization identify strengths, weaknesses, opportunities, and threats related to business competition or project planning.
S : STRENGTHS
– What do you do well?
For example : You are able to close sales and teach your team about it.
W : WEAKNESS
– Where do you need to improve?
For example : Struggle to stay objective when working with employees.
End up taking feedback very personally.
O : OPPORTUNITIES
– What are your goals? ( external goals)
For example : You want to take a course to upskill your business/weakness.
T : THREATS
– What obstacles do you face?
For example : Short course you want to take is too short to affect your weakness.
Type of companies under business
Sole trader :
- Easy to start.
- One person in charge of Business and decision.
- Full control.
- All the profit goes to the owner.
- Low costs.
- Very little regulations.
- Very little issue when applying for licenses.
NOTE: Subject to the country you are operating in.
Sole trader what 73% of all business in the US (weltman, 2019)
- Shared Investment.
- Both parties are 100% liable for debts of the company.
- General V/S Formal.
- General partner doesn’t require agreements.
- Partnership deed agreement can be oral or written in, what partner agreed to.
- Limited partnership needs formal agreement between the two partners/parties.
- Sharing resources is a part of the advantages.
- Inexpensive to start.
- Low costs.
- It is for tax purposes, a separate entity and considered a legal person.
- Profits generated by the corporation are taxed as the personal income of the company.
- Income distributed to shareholders as dividends is taxed against the personal income of owners.
- Limited liability for losses.
- Personal assets cannot be seized to pay company losses.
- Ownership types also have few disadvantages : These are expensive to set up and also the paperwork required is a lengthy process.
Limited liability company :
- Limited liability is a key feature.
- Profits are shared among the owners.
- Lengthy process -: Ownership is based on the country and region your operating in, agreement must be very complex.
- Costly -: It is very expensive to set up.
- 77% of small businesses rely on personal savings for their initial funds.
- A third of small businesses start with less than $5000.
- The average small business requires about $10,000 of startup capital.
Various funding options of business startups are as follow:
It Means using your own funds or asking friends and family, then move to investor as the company grows, It has low racing cost.
It means one can get funds from more than one person at the same time. Crowdfunding exists in mainly two types, reward-based crowdfunding and equity-based crowdfunding. In the former, small firms could pre-sell a product or service to start a business whereas in the latter, backers buys certain amount of shares of a firm in exchange of money. As for reward-based crowdfunding, project creators would set a funding target and deadline. Anyone who is interested can pledge on the projects. step to raise crowdfunding :
- Join a crowdfunding site.
- list your company.
- Add your description, goals, profit forecasts, and why you need funds.
- Consumers read information and pledge to buy products and give donations.
NOTE : Funding is very competitive and you need to make sure that you have a good campaign and angle to attract the funders.
These are groups or individuals with surplus funds who are looking to invest in a startup company.
For example : Google, Yahoo, Alibaba made use of these funding types.
NOTE : They look for up to 30% equity in your company.
Angel Investors VS Venture Capitalists
Angel Investors are wealthy individuals who invest in growing startups and companies in exchange of ownership in equity.
Venture Capitalists are firms, organizations, Hedge fund owners who invest other people’s money(which they hold) into companies and in startups only when they show compelling growth.
For example : Lightspeed venture partners, Greylock partners.
Business Incubators & Accelerators
- Early stage businesses should look for this.
- These programs help startups to find their fields and get started.
- Incubators are like a parent to a child who nurture the business providing shelters, tools and also give a network for business training.
- Accelerators do more or less the same thing.
- Incubators help, assist, nurture the business to work while the accelerator helps you to run and take a giant leap.
- The program usually runs for 4 to 8 months.
- There needs to be a commitment to fund the owner in order to gain access to this program.
For example : companies like Airbnb.
- Most entrepreneurs think of it as a primary funding option.
- It offers two types of loans, capital loans and funding.
- Capital loan : It is the loan required to run the business for one complete cycle of revenue and getting operations of a company going.
- Funding : it is the normal route of providing a business plan and the other business details in order to get funding.
Support owners who can’t get access to bank loans. For owners that don’t need traditional Bank requirements can get a loan regardless of credit rating.
Note: Learn more about Funding here.
Know Your Market
How to select your product or service :
- Select market or industry :- Based on interest and experience.
- Market research : It can be done by acquiring research done by major brands and industry or done by conducting your own research.
NOTE : Conducting your own research can be very costly.
- Identify Windows of opportunity based on market needs : Based on research, needs can be outlined and strategies can be made to meet those needs.
- Develop product or service to meet those needs : develop a product to meet the needs as per market research, market research can be used to establish pricing plan for the market.
Identify your target market
NOTE : You use it as a guide to select your target market.
- Define your ideal customer : Owners are able to think about the needs of the customer, It allows them to better understand the market and needs of those in the market.
- Demographic approach : Based on market research, It gives a clear idea of target audience from segmentation, Target market is developed on various demographics. It includes race, age, income & occupation.
- Psychographics approach : Personality values behavior and hobbies form part of this approach.
- Geographical approach : Regional based information is linked to this approach, this means which customer you can access and how accessible supplies are. For example : setting up a coffee shop in a mall.
Product development strategy as follow :
Design elements :
- What are the colours of the product?
- How clear is the service to the consumer?
- Think about the branding that is associated with the product.
- How staff is branded when they are delivering the service.
- Do these design elements convey the message the company wants to send?
- Add outsource manufacturing to companies or to countries which offer better prices or you can manufacture yourself.
- Pricing and Quality : you need to be sure the product is inline with price and quality consumers are willing to pay.
- Skill based product : It means a particular skill is needed to manufacture your product.
- It has to be in line with your design and branding.
- Packages need to convey what the company and product is.
- How easy your product or service is to use and to understand.
Online services :
- E-Commerce platforms have to include your branding and customer experience.
NOTE : It needs to be developed in various ways that add value to the customer experience.
- Product or design won’t work unless you select the correct customer.
Well, Alas! Before jumping in on any category of traditional business, A person must have the knowledge of basics of business on how to start a business. Without proper research about the changes in the business sector niches one could face terrible losses and might have to wind up the business/company they started. we are not suggesting that one shouldn’t take risk; as risk and profit both of them goes together in the same way in business. But, one should take calculated risks in order to avoid the terrible situations they could face in the future. Feel free to contact us for any related query.