If you have the right blend of marketing knowledge, work ethic, and talent, it’s possible to start a business with very little money. It is this blend that will enable you to secure startup funding, that will keep you going in the first few difficult months, and that will give you a loyal client base. Here are the first three things you need to do as you start your new business:
Identify the Right Market
You should preferably present your products and services to a fast-growing, youthful market. Collect as much information as you can to outline your prospective market, for example, the development time needed to get your product off the ground, and your competitors’ strengths and limitations. A specialized market research company should be able to help you with this.
Marketing to the right audience is critical to your success. If your target market does not know about your product and how it works, how will they buy it? Marketing is usually divided into four categories:
- Product – what’s to be sold
- Price – cost per unit
- Promotion – how will your target market know your product exists? How can you persuade them to purchase it?
- Place – where will your product be available?
Create a Business Plan
Before you even approach lenders to finance your startup, you need a business plan. Since it details precisely how much money you need, where it’s going to go, and how long it will take you to earn it back, a business plan is a vital part of the funding puzzle. Even if you submit a short summary to your lender, you should have the complete business plan ready in case they ask for it.
Even if you’re not going to the bank, you should still prepare a business plan. Be sure to understand – and document – what makes your business unique. Identify your niche – for example, don’t just put food services – say exactly what type of food service you plan to get into (hot dog stand, wedding catering, or Mexican restaurant).
A good business plan can help you work out how much capital you need to launch your business, and how much income and profit it’s expected to produce in the future. Take the time to work out your plan in numbers and words (or hire someone to do it for you) so that you can figure out for yourself where you want your business to go and how you’re going to get there.
Different businesses will have different needs, and there’s no uniform “startup” fee for any business. Consider these expenses: supplies, licensing and permits, office space, equipment, operating equipment, associations, subscriptions, memberships, employees, contractors, and legal fees. Startup funding can come from angel investors, friends and family, crowdfunding, venture capitalists, bank loans, and government grants/loans.
Angel investors are the funding source of choice for people with startups too small to attract the attention of venture capitalists. As the recession mustered strength in 2008, these angels spent $19.2 billion on more than 55,000 enterprises, although that was down from $26 billion in the previous year. Venture capitalists, by contrast, made only 440 speculations on startups in 2008, putting most of their capital in the latter stages of a company’s growth in deals that averaged $7.5 million.
If you opt to go the traditional route, Lendio can help you to quickly view and compare your borrowing options. There you can select the loan types you’re interested in, review the terms and rates of each product, and choose the ones you’re interested in. Once you complete Lendio’s online application, you will receive multiple offers from lenders as they compete for your business.
You should know that the odds of flourishing as a startup rise exponentially if you take the time to prepare. By identifying your market, creating a business plan, and securing financing, you will be well on your way to establishing yourself in your preferred niche. You’ll make your share of unique mistakes as a startup, but we hope these guidelines will get you started on the right track.