Did you know over 99% of all businesses in the U.S. are started as small businesses? And, that only about 4% of small businesses are still in business at the 20-year mark? While the concept of starting a business of your own is admirable, exciting and full of promises ahead, the reality is it needs to become profitable and self-sustaining, as well. Take a look at the self-check survey in these 3 questions. From there, let's get into the heart of your business as we discuss the subject of profitability.
Questions to Consider When Starting a Business:
What is your concept for the business and who will be your customers?
Do you have enough funds to start the business and operate it for at least the first year?
Will you prepare a full business plan to cement your plans, while focusing on profitability?
We're not going to grade your answers (aren't you glad?), but keep them in mind as you continue reading. In the following 6 steps, consider how you will incorporate these steps to create your business plan and, following that, your plan of action.
Step 1: Create the Concept for Your Business
A concept is simply a concept, except when its value is determined by your effort. This means that you will want to seriously consider the concept for your business and then believe that it is a winning concept because you will spend your time, energy and funds defending it. Before you finalize your concept, answer the following questions to ensure you're heading down the right road for your business:
If you have validated that you have a product or service someone wants or needs, how many customers do you believe will want what you have? Try to estimate an actual number rather than thinking to yourself, "A lot of people would want or need this..."
Research the category of products or services you provide, study the city, regional or national market, and assess the total customer count.
Step 2: Can Your Company Create a Profit?
Now, take a look at the total number of potential customers and calculate the revenue your company may generate in one year, reduced by all the costs of production, shipping, marketing and overhead. Consider the revenue as less important than the net profit. You want to build a highly-profitable company rather than one built on high expectations.
Step 3: Start Building Your Business Plan
In order to start a profitable business, you'll want to use a business plan template such as this comprehensive guide. In the business plan, you'll define your mission and objectives, plan for funding, set marketing strategies, make an operational plan, and add other elements, as needed.
If funding will be needed, you can take your completed business plan to a lender or investor to offer as a comprehensive look at the viability of your business.
A business plan is like a roadmap for your business; you'll want to refer to it frequently and update it as needed. It is fluid and can be representative of several decisions you make along the way. It is also a historical record of your business.
Step 4: Prepare the Unique or Special Value Properties of Your Product or Service
Consider your competition and research their pricing models, customers, unique offerings or packages. Check out the marketing strategies used.
Prepare the positioning you'll use to sell the unique qualities of your own product or service, defining a quality that will overcome the sales efforts of your competition.
Step 5: Define Your Marketing Strategies
A profitable business is built on specific, achievable, and appropriate marketing strategies for the products or services offered. There are several avenues from which to choose in marketing, all of which will depend on your specific offering.
If your company will be selling a consumer product, you'll want to create a dynamic website, with SEO keywords, full product details and ordering information. Use social media callouts to engage directly with customers and make announcements.
If your company will provide services, including informational services, such as how to start a travel agency, your engaging website should include an owner's blog and a Q & A section for consumers. If selling the services online, ensure all links are working to tie directly to the ordering page.
If your company will sell products or services to other markets, you'll want to use trade-associations, industry events, relationships with other owners, and a variety of website updates to inform and engage your customers.
Step 6: Detail Your Operational Plans
With everything else in place, it is time to organize your business. Hire employees, purchase your location, equipment, furnishings and supplies, as needed. Ensure everyone is aware of their roles and responsibilities going forward. And, finally, look forward to creating a profitable company.
