What’s the laid down formula to starting your own business successfully? What exact steps can be taken to enhance your chances of success when starting your own business? Why do some small businesses survive the startup phase and others don’t? Well, I suggest you read on as I provide the answers you seek.
“A successful business is created before there’s a business.” – Rich Dad
The business quote above was brought to my notice by my mentor, “Robert Kiyosaki” in the book “Rich Dad's Before You Quit Your Job: 10 Real-Life Lessons Every Entrepreneur Should Know About Building a Multimillion-Dollar Business.” So based on this quote, I am not going to share with you the exact steps to starting your own business successfully. Rather, I want to reveal to you the exact behind the scene secrets to starting your own business successfully.
"Starting a business is like building a ship and embarking on a voyage, armed with a plan, a map and a team. You have to sail with uncertainty against storms and unpredictable weather. If your ship sinks, it's either you quit or you swim back to shore, build a new ship and sail again." – Ajaero Tony Martins
This behind the scene secret is the ultimate reason why some small businesses survive the first five years and over 90 percent of others do not. Instead of telling you the often repeated formula of starting a business, I want to share with you six exact pre-startup steps to starting your own business (that’s before the business is even started).
“Starting a business is like jumping out of an airplane without a parachute. In mid air, the entrepreneur begins building a parachute and hopes it opens before hitting the ground.” – Rich Dad
Ignorance of these seven pre-startup steps is the sole reason why most brilliant ideas end up in the venture capitalists trash bin. So if you want to make sure your business idea escapes the VCs trash bin, then take a deep breathe and read on as I reveal to you six pre-startup steps to starting your own business from scratch.
Before I proceed, I want to assume that you already have a proposed business at heart which you intend starting. If so, then let's move on.
Six Easy Steps to Starting Your Own Business Successfully
1. You must study the market of your business
This is a very important task you must undertake before starting your own business. It is not optional; it’s a must. You must survey the market to know its size, level of demand, nature and other market factors that may affect your intending business. You must also know the market share your business is going to compete for. What’s the essence of starting your own business when there’s no demand or market for your proposed product?
“It's really hard to design products by focus groups. A lot of times, people don't know what they want until you show it to them.” – Steve Jobs
2. You must estimate the competition
Carrying out a competitors' analysis is very vital to your business survival. Before starting your own business, you must examine your competitor’s strength, weakness, market share and so on. You must also research the competition level to know how fierce it is. You also need to know the success rate and liquidation rate of companies established in the industry of your choice.
“Therefore I say: know the enemy and know yourself; in a hundred battles, you will never be defeated. When you are ignorant of the enemy but you know yourself, your chance of winning or losing is equal. If you are ignorant of both your enemy and yourself, you are sure to be defeated in every battle.” – Sun Tzu
3. You must study the economic environment of your business location
Before starting your own business, please endeavor to check the economic system of your business locality. Also analyze the government's fiscal and monetary policies, political situation, demographics and psychographics; it’s important to know how these factors will affect your business positively or negatively.
“You are a product of your environment. So choose the environment that will best develop you toward your objective. Analyze your life in terms of its environment. Are the things around you helping you towards success? Or are they holding you back? – W. Clement Stone
Six Easy Steps to Starting Your Own Business Successfully
4. You must evaluate the capital required to start your own business
I don't need to stress much on this point. But before starting your own business, it’s in your business interest to estimate your capital and budget flow to avoid financial problems when you launch your business. You must also determine how you intend to raise the capital needed to start your own business.
Are you going to start the business with your own money? Or do you intend raising capital from family and friends, angels, private investors and VCs. All these must be laid to rest before you start your own business. With respect to raising capital for starting your own business, I will recommend you read “Rich Dad's Advisors: OPM: How to Attract Other People's Money for Your Investments–The Ultimate Leverage.” It will give you an added advantage in the game of raising capital.
5. You must write a standard business plan
"A business idea is just another idea. But an idea backed by a strong feasibility, a thorough business plan and a smart business team is no longer an idea. It's now a solid business opportunity worth pursuing." – Ajaero Tony Martins
This is also a vital necessity to the startup success of your proposed business because a business plan is like a map containing strategies and charts of how you intend to build your business. It is also a critical requirement when seeking a bank loan or venture capital for your business. To get more insights on how to come up with an excellent business plan, I will suggest you read the following resources.
Business Plan Outline: How to Write a Business Plan That Attracts Investors
A Complete Sample Business Plan Format and Outline You Can Use As a Guide
6. You must estimate your Return on Investment
You might not consider this necessary but it very important. Before starting your own business, you must know your expected profit, reward and even the risk involved with starting a business. Even banks and venture capitalist ask for financial projections when you approach them for start up capital. That should tell show you the significance or importance attached to an ROI. Knowing your risk to reward ratio before starting your own business is a sign of high financial intelligence so don’t ignore it.
As a final note, these are my six exact pre-startup steps to starting your own business successfully. If you can carry out this analysis before starting your own business, you stand a better chance of building a successful business than those that didn't. Lastly, I will advice you read the following articles.
5 Reasons Why You Must Conduct Feasibility Study before Starting a business
How to Carryout Feasibility Study on Any Business Idea
PS: Are you interested in starting your own business? Do you want to build a successful business from scratch? If your answer is yes, then I will recommend you read the book: “Rich Dad's Before You Quit Your Job: 10 Real-Life Lessons Every Entrepreneur Should Know About Building a Multimillion-Dollar Business.” It will go a long way to increase your chance of success.