#10 Things To Know Before Starting a Business
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Everyone experiences problems and obstacles in various aspects of life. The majority sees them as unavoidable, while there are a select few who see them as an opportunity in disguise. The ones who see the opportunity in the problems they encounter are who we call Entrepreneurs. Starting a business requires a lot of work and a lot of hustle. For a business to be successful, it must solve a problem, fulfil a need or offer something the market wants. Generating a business idea is a great starting point, but an idea doesn't become a business without consumers willing to buy it.
Here are 10 things that you must know before starting a business.
1. Are You Solving a Problem or Finding a Problem for a Solution?
There are moments in life when you get the “Oh!” moment or the “Light bulb” moment. It’s when you realise that you have encountered a solution to a problem you have been facing for long or a problem that you know someone has been facing. Did you get that moment? Did it excite you to the point that you couldn’t stop thinking about it and how your solution could change the lives of many?
Wait for that “Oh!” moment, because if you haven’t got it, you have not really solved a problem that might excite you. A solution may or may not be scalable but that is not important. As long as you are excited about it and it makes you happy, there is no reason to not pursue it.
2. Are You up for the Challenge?
Starting a business is not going to be easy. The initial months and sometimes years of starting a business can be full of struggles. You will have to give it all of your attention and time. You need to be prepared to sacrifice your life as it is and dedicate it fully to the success of the company. The time you get to spend with family, friends and relatives will be cut short and the time you spend with your employees and co-founders at your office will become your life. The success of your company will be directly proportional to the time you are willing to invest in the company. You need to ask yourself if you are ready to give up the luxurious and comfortable life and hustle. Starting a business is not for the weak hearted.
3. Partners Who Share Your Vision, the Founding Team
Whoever said that starting a business is like raising a child, said it right. You will experience a love-hate relationship with your business where there will be moments of love and excitement, and also moments where you will question yourself, the idea and whether you can do this yourself. There will also be moments where the company will not perform and the vision that you had might seem blurred and impossible. These are the moments when you need someone trustworthy, someone with enough skin in the game to motivate you and assure you that together you will be able to achieve what you have set out for. Ensure that you have a co-founder(s), or family members who are by your side to help you in such times. In case your solution requires a good team to build it and cannot be initiated with just you and your co-founder(s) then invest a good amount of time finding the right team to help you build the prototype.
4. Talk, talk, talk and Network
What may seem like a solution to you and your co-founder(s) may not really be a solution. Or what might seem like something people will accept may not have buyers in the market. In order to ensure that what you are getting into will get you returns and also make it worth your time, talk to people. Talk to the potential buyers of your solution and make sure you talk to a lot of potential buyers. This helps to identify areas of the solution that may need some fine tuning. You may also learn new possibilities and additions to your solution which can add more value to it. In case you get negative feedback from all your potential buyers then don’t feel upset but consider yourself lucky. You should also talk to investors in case you feel your idea can be highly scalable and achieve great heights with the added fuel. They will be able to give you great insight and a whole new perspective about your idea and its viability. All these people you talk to and network with will be able to help you in one way or the other so never shy away from networking.
5. Advisors and Mentors
One can never be a master of all traits. You can be good at one thing and there is nothing wrong about it. Even if you are, there will be people who have done what you are planning to do and will be able to guide you in the right direction. This will help you avoid mistakes that they have already made. Reaching out to seasoned entrepreneurs, technologists, or anyone who knows certain areas of business much better than you can help you grow faster and save yourself from mistakes that can be fatal for the business. Very few understand that a small mistake in a business today can become a costly one tomorrow. Identify people in your network who have experience in the line of business you are planning to enter and request them to become your future company’s advisors.
6. Business Plan
Now that your idea is in place, team and advisors identified, it is very important that you identify the path you intend to follow. Although it is known that in start-ups you have to be agile and adaptive, but having a plan helps create a direction. It helps set targets that you wish to achieve in your business. You may not need a very detailed business plan to begin with, but a basic business plan identifying growth targets and the team expectations will save you the time to do the same while running the show in the future. A business plan before starting a business also gives you an insight into your future expenses and required funds. You wouldn’t want to end up spending more of your savings than you intended to. Knowing your finances and planned expenditures upfront help you draft timelines for raising funds and reaching out to investors.
7. Financial Planning and Backing
There has been a steady rise in investments in the Indian Start-up ecosystem, but not all businesses are investable. You should know well in advance what funds your business will require and whether you are willing to back it up. There are various options available, such as bank loan, funding from Friends and Families, Venture Debt, VC, etc. but in case you do not get the funding from the market that you expected, are you willing to back up your venture? You should also be prepared in advance in case you do not get any follow on investment or your expenses turn out to be more than projected. While a great entrepreneur is always willing to take the risk by investing in the business, but prepare yourself well in advance to not over-invest and shut shop. It is always a smart move to shut shop than lose more money.
8.Company Structure and Legalities
Starting a business requires a company formation. Identifying the right company structure is important to safeguard yourself from the future troubles of shifting structures, penalties and heavy consultation fees. Once you have a set of advisors, mentors and people from various businesses in your network, to ensure that you spend time with them identifying the right structure for your company and also the right CA, Company Secretary and a Law firm to help you draft the structure around it. Do not shy away from spending money on employee agreements, founder’s agreements, ESOP Structures, terms sheets, Shareholder Agreements etc if these are applicable to you prior to starting of your business. If not handled properly, these can cause huge losses and misunderstandings while running the business.
9. Choosing the Right Location
Sometimes it helps your sales to work from a location that has a majority of your potential buyers. It helps not only in reaching out to them but also providing service to them. At the initial stages of business saving, every penny is important. Choosing the right location can help you save money in your operations after your start and also help scale faster. Sometimes choosing a location near your family also helps as the comfort of home and support of the fan
10. Don’t Shy away From Version One
While building the prototype of the solution and your business, do not shy away from Version One. It is said that Version one is better than version none and that if you aren’t embarrassed with the first version of your product then you have launched too late. You may and mostly you will feel embarrassed with the first product that you have created. Do not let this stop you from launching your business and reaching out to your potential buyers. Go out, show the world the solution that you have and iterate.