Make sure you complete these steps before you venture into entrepreneurship.
Even though we live in an unpredictable world, that hasn’t stopped people from starting businesses. In fact, after the shake-ups that happened due to COVID-19 lockdowns, more people than ever are creating their own business opportunities.
The common problems many people run into are that they either aren’t sure where to start their own business or they get in over their heads too quickly. This is very easy to do when you are starting a business! What initially may seem like a simple task quickly becomes convoluted, time-consuming, and expensive.
In order to help you get started on the right foot when becoming an entrepreneur, we’ve come up with a few pointers. You may have the next big idea—but, you’ll need the behind-the-scenes prep to make sure your business will reach as many people as possible and begin generating profits.
If you find yourself ready to start a business for the first time, you will definitely want to keep reading to make sure all of your bases are covered.
1. Take Out a Life Insurance Policy
Starting a business is a big financial risk, so you need to make sure you have the right coverage.
If you are interested in starting a business—but you do not yet have life insurance coverage—this is your sign to start searching for policies. Starting a business is financially risky and will require you to take on some debts before your business becomes fully profitable.
In the case that you would pass away before your own business is lucrative, all of your outstanding debts and business responsibilities will be transferred to your remaining loved ones. No one wants to burden their family with the cost of their business—which is why all soon-to-be entrepreneurs need life insurance.
Many people will avoid getting life insurance because they feel that they do not need it or that it is too difficult to get while they are trying to start a business. If you are worried that getting life insurance will take too long, you should opt for life insurance without a medical exam.
No medical exam life insurance expedites the approval process by not requiring you to undergo a medical exam. Since it can be difficult to schedule and nerve-wracking to attend for some, many people who are starting their own business are opting for no medical exam life insurance to get coverage as quickly and easily as possible.
You will still have to submit health records and fill out the health questionnaire so the insurer can get a good idea of your health status, but overall the process is much easier than getting a traditional insurance policy.
2. Write Your Own Business Plan
Transform your big idea into a step-by-step actionable business plan. Behind every successful business is a detailed business plan.
If you are getting ready to start your own business, there is a good chance you already have your “big idea.” By your big idea, we mean the product or service that was the impetus for you to consider starting your business. While it is great to have big ideas, you will need to break them down into smaller steps in order to launch your business properly.
The best way to do this is by creating a business plan. As you are writing your own business plan, there is a good chance that you will approach some roadblocks. This is good! It is always better to identify any potential issues that will come up as you start your business before you confront them down the line.
As you are writing your own business plan, you will want to keep potential investors in mind. Often, the first thing a potential investor will ask you for is your detailed business plan. In your business plan, you should clearly outline your product/service, how it is made/provided, a little bit about your experience, and how you intend to make a profit.
When you are able to provide all of this important information in a well-organized document, investors will begin to take notice.
3. Identify the Structure and Get The Proper Documentation
Get the right documentation in place before you launch your own business. One of the most important steps in starting a business is choosing the structure.
Once you have your business plan ready to go, the next step is to choose the structure of your business. There are several business types to choose from. At this stage, it is very important to choose the structure that speaks to your own business as you won’t be able to change the structure in the future.
The most common structure types are:
All of these business structures have different legal and tax considerations associated with them. If you are not an expert on different types of businesses, we highly recommend hiring an attorney or an accountant to advise you on the best path for you to get started.
Once you’ve made your decision on the structure of your business, then you can start assembling the proper legal and tax documentation. Depending on where you intend to start your business, you will need to assemble different documents to properly pay taxes and establish your company name.
You can do this by contacting your local municipality. Once again if you are feeling in over your head when it comes to paperwork and legal documentation, you can always hire an expert to help you get started.
4. Conduct Market Research
Identifying your competition will help you find ways to make your business stand out. Strategize to outperform your competitors.
Now that you have all of the legal documentation in place, the next step is to assess your competition. Depending on the type of business you are starting, you will need to look into different areas for your competitors.
If you are starting a brick-and-mortar storefront, you will need to look at the surrounding storefronts as well as other similar businesses in the area. If you are starting an online store, then you will need to do a bit more work when it comes to research.
Instead of competing with those in your local community—like if you were to open a physical storefront—you will be competing against every other similar business on the Google search results page.
By conducting market research to identify your competitors, you can pinpoint what sets your business apart from the crowd. Once you have conducted research and identified your unique value proposition (UVP), you can start outlining a marketing strategy.
5. Secure Investors
The last step we are going to be discussing is the process of securing investors and financing your business launch. Give your investors as much information as possible about your financing.
In order to get your business off the ground, you are likely going to need some additional financing. As we discussed in the business plan section of the article, potential investors will want to see your business plan to assess whether or not your business is a worthwhile investment.
As you begin to finalize agreements with potential investors, they will want to see even more information about your business. At this stage, it is important to communicate with investors how much they will need to invest upfront and how much money they will require for the business in the future.
The more detail you can give about your financial plan to get started, the more likely you will be to convince potential investors to work with you. You may also want to offer partial ownership of the company in order to entice investors. At this stage, it is also important to disclose if you are taking out any loans to finance your business.
Once you have investors secured, you are ready to launch your own business! The next steps you need to take care to establish your store—whether it be online or in-person and begin selling your product or service.
Becoming an entrepreneur is a big risk, but for many, it ultimately pays off. There is no better feeling than seeing your big idea turn into a lucrative business!
I am Adeyemi Adetilewa, a media consultant, entrepreneur, husband, and father. Founder and Editor-In-Chief of Ideas Plus Business Magazine, online business resources for entrepreneurs. I help brands share unique and impactful stories through the use of public relations, advertising, and online marketing. My work has been featured on the Huffington Post, Thrive Global, Addicted2Success, Hackernoon, The Good Men Project, and other publications.