6. Do not jump into anything without doing a study
A real entrepreneur does not decide the possible profitability of a business venture by ‘hunch’ alone. Yes, the best entrepreneurs have the best ‘hunches’. But even so, they make sure that their business idea undergoes thorough feasibility study first. A feasibility study serves many purposes. But first and foremost, it tells the entrepreneur if a business idea is likely to ‘fail’ or succeed’. A feasibility study also allows an entrepreneur to assume possible difficulties and possible solutions to problems. You can hire a professional to conduct a feasibility study for you if you are not familiar with the procedures.
7. Know the demography of your target customers
As an entrepreneur, you will be part of the so-called ‘supply’ chain. You will be supplying the ‘demands’ of your customers-to-be. Therefore, it is necessary that you know the demography of your target customers. For example, once you have identified that your target customers are women between the ages 16-30 that lives in the United States, you will then need to ask the following questions: How many are they? How many of them will want to avail your products/services? How many of them can afford your prices? How many of them have the means to pay (PayPal, credit card, etc.)? By obtaining this information, you will have a better idea how many people will likely buy from you.
8. Establish a contingency account
Before you start a business, you will need to conclude how much you will need for the startup costs. Once you have concluded how much money you will need, it is advisable that you add a ‘contingency’ budget to the total amount. Ideally, the contingency account is 5% to 10% of the established startup costs. For example, if you have concluded that you will need $10,000 to start your business, make sure that you start your business with at least $11,000 in capital.
9. Establish budget for initial months' expenses
In most cases, businesses are not expected to make income during its first few weeks to first few months of operation (could be up to a year or more in some industries). In some cases, the business may even incur losses in the beginning. As such, it is necessary that you allot a budget to cover your expenses during the ‘no income’ period. Examples of such expenses include utilities, rent expense, mortgage installments, salary expense, and others.
10. Know the characteristics of your target customers
What characteristics should you look for? These include age, gender, financial capability, and in the case of online marketers, internet usage as well. But more than anything else, you should want to know the interests of your target customers. To achieve such information, you may need to do a study. Use the information to attract the attention of your target customers (ex. Your target customers are teenage girls living in Japan. Your study revealed that teenage girls in Japan are currently into Gothic Lolita fashion. As an online seller of clothes, you decided to include Gothic Lolita dresses in your list of products in order to attract more Japanese teenagers.)
11. Establish a scope of service
You should set current boundaries. For example, are you planning to extend your services to all States? Or, you are planning to sell only in select States? And if you are an online seller of clothes, will you be selling all clothes for everyone? Or, are you planning to sell only women’s clothes, men’s clothes, children’s clothes, formal wear, casual wear, etc.? Of course, you may extend your scope of service in the future.
12. Make a list of external stakeholders
What are stakeholders? These are groups, organizations, firms, and individuals that your business will have a connection to during its course of operation. These include suppliers, service providers, creditors, and others. Before you start a business, you should make a list of your stakeholders first. Contact them and make an agreement with them. If you will be selling computer accessories for example, you should contact several suppliers first. Discuss things with them. Can they supply you continuously? Are they willing to give you discounts?
You may also want to make a list of lending firms so you know where to get additional funds when you need it.
13. Establish a well-planned organizational chart
Are you going to hire people to be a part of your business? If so, you will need to make an organizational chart. This will define the flow of command and authority among your employees (who’s on top and who’s below). It must be clear who makes the decisions, who reports to whom, who follows who, and such. This will avoid confusion.
14. Deliberate on the requirements for each job position
Now that you have an organizational chart, the next step is to set a list of qualifications for each job position. For example, what qualifications do you think your webpage administrator should have? Should he be knowledgeable in Wordpress? Should he have an experience in sales? Make sure that each job position is handled by a qualified person. This is important if you want your business to succeed.
15. Decide on modes of receiving payment
How should your customers pay you? When choosing a mode of payment, you have to make sure that your choice is available and accessible to your target customers. For example, it may not be feasible to offer PayPal only as a mode of payment if half of your target customers have no access to PayPal. In which case, you may need to offer multiple payment methods.
16. Establish a business growth projection
You may want to start small in the beginning. Also, you may have set some limits in your scope of service (refer to tip #11). However, you must also make plans for future growth. If you are starting as a seller of adults’ clothes for example, you may want to make plans for selling children’s clothes too in the future. Try to imagine what your business will be like after a year, after three years, after five years, and after ten years.
17. Know the law
The law has provisions on how entrepreneurs should run their business. Make sure that you are aware of these laws. For example, you may have to register for tax returns and request for permits. And because these laws differ from country to country, state to state, region to region, and city to city, you may need to research about your locality’s laws. And if you will be selling products to different countries, you have to know that it is illegal to sell some items in some countries. Make sure that you know what these countries and what these products are.
18. Plan an effective entry to the market
When you enter the market, make sure that you are noticed. Unless you are noticed, your business may not get customers. How do you do this? In an online setting, online merchants usually use the following methods: Press Release submissions, Social Media advertisement, sponsored advertisement, Search Engine Optimization (SEO), email marketing, popups, and others.