Embarking on your first entrepreneurial journey is both an incredibly exciting and rewarding process, however it is easy to get carried away with your big idea and neglect the somewhat ‘mundane’elements of a business which are paramount to the smooth running of the initial start-up phase. Whether a natural-born entrepreneur or novice; here are five tips that should be considered before beginning your venture.
Set up your finances correctly
It is often said that you have to spend money to make money. This rule is most relevant at the initial start-up phase of your business where investing before seeing any return will seem extremely costly. Varying funding options exist at this point, each tailored to the type and scale of the business you are setting up. Some start-up owners choose to use personal savings or loans from family and friends which are beneficial as they garner no interest fees.For businesses that require a substantial amount to get them off the ground,government grants, investment schemes or bank loans may be the best-suited funding methods to use, with certain loans offering exclusive support to first-time start-ups.
Managing your accounts will take up a lot of your time and energy and, if not fluent in this area of business, could create costly errors. Find a professional accountant versed in the type of business you are starting who will be able to help you better understand your business cash flow from the very beginning. As well as this, take advantage of some bank accounts which offer an initial phase of free banking, allowing you to prioritize other expenses at the most financially challenging stage of the process.
Estimate your monthly expenses for the first six to twelve months of business and be strict with yourself in abiding by this monthly budget. When starting up, it is advisable to avoid the use of credit cards which can rack up a great magnitude of debt however, if necessary, only charge what can be covered by your monthly budget. Nonetheless, it is wise to introduce credit cards to your business over time. When used responsibly, credit cards are one of the easiest and most reliable ways to build a strong credit history for your business which, in turn, can be the catalyst of getting financial backing in the future.
Although being highly skilled in your craft is of key importance, being an efficient and versatile owner is perhaps the most valuable asset you can offer your business in terms of keeping it afloat. As much as you will want to focus the majority of your time on the product or service that your company is actually centred around; it is crucial to recognise that your working days will be inundated by various other tasks such as marketing, administrating, billing and strategizing which are integral to the overall success of your business. It is important that you get a handle on these functions as a well-run business will contribute as much financial success as the product or service that you are selling.
Market and market some more
Marketing is arguably the most important business function that you must master– if people aren’t aware of your product or service then they simply can’t buy it. It is critical to understand how to capture consumer attention and convert this to leads and sales. You cannot rely on word of mouth exclusively however nor do you need to learn every marketing technique available – pick two or three strategies that operate well for your type of business and execute them effectively and consistently.
Price your product appropriately
In terms of pricing, know your market’s price tolerance but be cautious not to undersell your product or service at the same time. When starting out, there is a temptation to keep prices low in order to attract more customers, however by charging a little more, your product appears more premium. Further to this, you often have to spend money to make money and this rule will be most relevant at the costly initial start-up phase. It is therefore important that you are able to regain the money you have invested in your business during this phase through appropriate pricing.
With regards to starting a business, patience is not a virtue but a necessity. The first year of a start-up business can feel like an eternity and in order to get through it, it is essential to find a balance between ambition and perseverance. Be open to the reality that you must allow time for your business to develop instead of expecting an immediate return.