Ready to dive into the world of entrepreneurship? I know you are, as leaving the corporate world behind in favour of your own business marks the first steps towards charting your own destiny.
However, before you do jump, know that laying a rock-solid foundation will support your efforts going forward.
Ensure you have the following four fundamentals in place and you’ll be ready to face the challenges which lay ahead in your entrepreneurial journey.
Knowing your ‘why’
What prompts us to swim against the current of a traditional career? Many say they seek control over their time and financial freedom, but when pressed for details, all they can muster are platitudes like, “so I can set my own hours” or “I want to make bank whilst I drool on my pillow”.
Business can be tough at times – when the rowing gets tough, you’ll need a compelling reason to keep going or you’ll be tempted to throw in the towel.
Go deeper: why do you want to set your own hours? If you want to spend more time with your kids or have the ability to take a personal day without begging your boss for one, you’re on the right track.
Having a business plan in place
Have an idea for a mobile app you think will take the world by storm? If you have ambitions to develop a product or service for scores of customers, I strongly advise creating a business plan first.
As much as I admire entrepreneurs who bootstrap, those who have their sights set on being the next Steve Jobs need to raise capital from those who have heaps of it.
Venture capitalists, angel investors, and bank loan managers are unlikely to be moved by passionate pleas which aren’t backed up by data.
In order to get funded, investors need to be satisfied they’ll likely see a return on their investment, and loan managers need to be assured they’ll get their money back.
A business plan provides an easy-to-read road map which shows them how you plan to take your product or service from an abstract concept to a market leader.
Containing everything from the problem you’re solving to in-depth analysis of your market and competitors, this document will make it easier for your business to get funded.
Knowing your customers/market
When we get a great idea for a business, our egos can occasionally get the better of us. Thousands of dollars and unsold units later, a hard lesson is learned – the customer is (almost) always right. Before you spend months and untold sums of money acting on a hunch, test it out first.
Find out where your niche hangs out and craft a survey which will determine whether there is enough interest in your product/service to proceed.
If things look good, move to the next step by launching a test run of your product/service. Open up a pop-up store (or an e-commerce space if you’re online) – after a month or so, you’ll have a better idea what your target market thinks of your concept, as you will have asked them to actually open their wallet.
Taking care of all legal details before opening
Next to taxes, dealing with legal obligations is one of the least loved chores entrepreneurs have to handle. It may be a time-consuming endeavour to fill out piles of forms, but not completing these tasks can expose your company to fines or shut down orders.
By securing a tax ID number, filing for permits with the health department (vital if you are selling food), and checking other legal boxes before flipping over your ‘open’ sign for the first time, you’ll be protecting your business from the bad press a run-in with the authorities can generate.
Are your finances healthy enough to keep your business afloat?
Cash flow is the lifeblood of any business. However, months of work is often required before your company can generate its first dime.
Many entrepreneurs leave their day job to focus on business development. This can be risky, though; if they don’t have long enough cash runway saved up, they may end up burning through their savings before their concept has a chance to take off.
If you haven’t amassed a year’s worth of expenses, I recommend staying in your current job to maintain financial stability whilst you build your start up on the side. Either negotiate a shift to part-time hours or squeeze productivity out of every free hour you currently have.
If you choose the latter route, make use of meal prep, maid, and laundry services to eliminate time-consuming domestic tasks. Also, efficient use of weekends are crucial whilst building a business on the side, so be sure to plot out how you will use this massive block of free time before Friday afternoon arrives.
Keep at it, no matter what
Lastly, but most importantly: don’t ever give up. Take the rough with the smooth. Stick at it and you will be rewarded.
Remember, you’ve got this.