How to Start A Company: New Business Checklist Must-Haves
Dan Levenson April 13, 2017
There are almost 30 million small businesses in the United States—businesses which employ more than half of all American workers and create the vast majority of new jobs. Every month, 543,000 new businesses are created. That’s about 7 million every year!
Unfortunately, according to Bloomberg, about 80% of new small businesses fail within the first 18 months.
Some fail because they offer products or services consumers don’t want, or because competitors offer superior products for less money. Others fail because they don’t take the time to create a viable business plan, or because they don’t secure the financing or insurance they need to be sustainable.
How to Be One of the Winners
No single set of guidelines can ensure that a new business will succeed, but those that do succeed all have one thing in common: They take the time to create sound business plans that point them in the right direction and anticipate any problems that might crop up.
Here are 5 tips to maximize the chances that your small business will succeed over the long haul.
1. Ask the Right Questions
Before taking your new business to market, you should be able to answer key questions—the kinds of questions a bank might ask you if you attempted to obtain a small business loan or consumers might have when considering purchasing your products or services.
- Who are your target customers, and how will you make them aware of your new business?
- What potential problems could occur (such as running out of money or a new competitor entering the market), and how will you address these problems?
- How would you explain to prospective customers why your products or services are superior to those offered by your competitors?
2. Write a Detailed Business Plan
You wouldn’t drive across the country or try to land a new job without a sound plan. The same is true when it comes to starting your new business.
The Small Business Administration recommends that your business plan have these 8 key components:
- An executive summary;
- A description of your business (especially what differentiates it from other, similar businesses);
- A market analysis (who are your main competitors and your target customers?);
- The structure of your business (number of employees and key positions);
- A detailed description of the products and services you plan to offer;
- Your marketing/sales strategy; and
- Financial projections (including a detailed summary of costs, revenues and projected profits)
3. Get Your Financing in Shape
You shouldn’t start any business without first ensuring that you have the funds to keep it going. Carefully construct a list of everything you’ll need to effectively run your business, including:
- Number of employees and how much you intend to pay them
- Rental costs
- Necessary equipment costs
- Products or services you’ll need (e.g. bookkeeper, attorney, or accountant)
4. Insure Your New Business
Different kinds of businesses need different kinds of insurance—for example, businesses which maintain a fleet of vehicles will probably need commercial auto insurance—but there are some kinds of insurance every business should have, including general liability insurance, property insurance, and a business owner’s policy.
To find out what types of insurance are right for your business, work with a reputable insurance provider in your area.
5. Create a Sound Marketing Plan
If you have keen business skills but don’t know much about marketing or advertising, you might want to team up with an affordable marketing agency. You’ll need to decide the major components of your marketing plan, whether that includes direct mail, email marketing, or social media marketing. You’ll probably want to have a strong internet presence, including a well-designed website and a plan to drive traffic to that site.
Most new businesses fail, but many succeed. The difference between the winners and the losers comes down to due diligence. Take the time to do your homework, creating a detailed plan, anticipating potential problems, putting your finances in order, and making sure you’re properly insured.