Starting a small business can either be the best lesson in the world, or it could be the biggest success you’ve ever seen.
There are dozens of considerations that need to be taken when starting out, but I’ll list a couple of the most important ones as some are simply common sense.
Expect To Fail
Now, this isn’t coming out of nowhere, and neither is this a pep talk of some kind. 90% of all startups fail miserably when initiating, pitching or simply trying to maintain their business model. You must anticipate failure, or else it's going to hit you like a truck. By anticipating it, you’ll be ready for it, and have a mentality of learning from the experience and gaining at least something valuable, rather than losing it all.
That’s what many have from their first startup. They weren’t ready for the failure during the pitching stage, so the moment it failed they abandoned it. Now, the very same project is being launched somewhere else.
You must be ready to learn from the mistakes and take criticism as feedback.
Make Your First Batch Free
In order to grow, you absolutely need to somehow make your product stand out from the rest of the competition. But in the beginning, while you’re new or your product is a bit unique, it’s always important to add that additional incentive to your customer base to try you out.
That is one of the methods that online gaming companies use to drive more participation from new customers and then convert them to paying users in the future. They offer free versions of new games they are provided by their software companies.
They manage to popularize these games through free methods and then drive much more brand awareness and loyalty.
The reason why this is a great example is that it’s both a product as well as a service, and it’s very easy to study. Just understanding the value even a little bit is enough for you to implement it within your own business as well.
Do Market Research
Before you even consider to start working on the project, you must be at least 75% sure that there will be somewhere in your vicinity who will buy your product, or pay for your service. If it’s something you enjoy very much and see it as the next best thing since sliced bread, I’m afraid not everybody thinks like that. You may think it’s useful and will help everybody, but again, not everybody might think that.
Let me give you an example. I love eating peanut butter and pickle sandwiches, I completely adore them, they’re my favorite snack in the world. But you don’t see me making a franchise out of them. Why? Because every time I talk to somebody about it, they immediately think I’m crazy, and completely dismiss that the sandwich may actually be tasty. If I had started franchising them, I’d have been broke in a week.
Plus, you don’t have to do all of the market research yourself. There are dozens of marketing companies that will do it for you, all you need to do is have a little bit of capital and simply convey your business idea, they’ll find a way.
Always Review The Performance
There needs to be at least some kind of framework that you will use to measure the success of your business. It could be the number of sales you're generating, or it could be the number of people you're able to reach.
In most cases, small companies go for sales and set quotas for every month or even every week. Usually, it works like a charm but could become extremely stressful in the process. Furthermore, finances are always a tricky thing to deal with during a business. For example, if a deal is guaranteed to bring in let's say $1000, it doesn't mean that you're getting paid $1000, you'll have to calculate the profit and base your results on that rather than simply looking at the revenue.
Many a startup has failed due to looking at revenue exclusively, only to find out that they had been losing money all along. Don't use the weighted forecasting method unless you have a clear understanding of what your profit margin is.
You Can’t Do It Alone
There is absolutely no way you can do the small business on your own. Maybe you can create it and maintain it for a little while, but you desperately need partners or at least some employees. Many startups think that one person is enough to handle everything because they usually don’t want to split the income or don’t want to split the credit. But think about it, would you prefer a business with a partner or no business at all? Every single industry requires a large pool of manpower because our world runs on volume, productivity, and multitasking. There’s only so much you can do alone.
Furthermore, you’ll both hold each other accountable to what you do with the business, which creates this healthy rivalry on who can outperform who. It definitely helped me when I was starting out first.
Employees Come First
No matter what you’ve read, heard or watched your employees are the catalysts of your business.
No, not the customer. There’s no such thing as a good customer, but there are more than enough bad and good employees. If the employee is treated unfairly by your customer, it is up to you to protect them.
Not every person is serviceable, you know? People like to ask for more than they’ve paid for, so when you see a customer harassing your employee, it’s not healthy to simply give the customer what he or she wants and leave your employee humiliated.
No, you fire that customer out of your shop or restaurant or whatever you have and move on to service the next one. If this keeps happening, then you start asking questions to the employee and reviewing his or her performance.
Remember, a single day with 1 less customer is alright, that could be a loss of around $20 to $50 depending on your business. But the demoralization of your employee for the whole week because of that experience is going to cost you thousands. The employee is KING, not the customer.
There’s Always Someone Who Does It Better
At this point, it’s not about being the best anymore. Sure you can strive for it and it’s commendable. But if you wait for the moment until you’re good, you’ll never be able to start off. Don’t be afraid to make mistakes, the guy who’s better at it than you are made to where he is now just like that.
And remember, there’s always a bigger fish in the competitive world of business. No matter how good your opponent may be, no matter how much money he or she is making compared to you, there’s always a way to overtake them.
That’s how most startups fail actually. They chase perfection before they start, and others chase perfection as they go. The latter are the ones that always succeed even if they’re much worse than they’re competitors.
Such an example can be seen in the financial industry. In fact, it can be seen in all sectors of finances. Banks started out before even realizing they were banks, and brokerages started out without having a single back-up plan. Even websites that dedicate their whole platform were started by people who didn't know anything about finances but learned along the way. There are multiple cases where even the founders themselves didn't know of a way out from a sticky situation and had to rely on instinct and guesses, as the predicaments they had to face simply left them dumbfounded.
But what they did learn, was how to react to such situations. A few mishaps here and there helped them understand what worked and what didn't. Not being experts in the industry didn't stop them from starting out, and that start was what initiated their development into what they are now. If that's not enticing enough, then there may not be anything better.
The one who screams the loudest, or makes the most will get the most attention. And the digital world we have now, demands attention.
Don’t Make A Plan B
Whatever you do, don’t have a plan B. I know it sounds like the worst advice you’ve ever gotten, but you need to know that it gives you a false sense of hope.
You go from thinking “I need to make this happen”, to thinking “Meh, it’s okay if I fail, I still have that other plan”.
You see, it destroys commitment, and over time it drains you from interest towards that project. The grass keeps getting greener on the other side of your Plan B, so you get more and more convincing to yourself that, maybe you should switch?
I’ve seen many of my friends do the same thing, only to have their previous project succeed thanks to somebody else only a year later when they hadn’t even begun working on Plan B.
Less is more, don’t try to touch every point in your business model, choose a specific segment and focus on it with 110%. Better be an expert at something than Ok-ish at something else.
