4 Things to Do Before Launching a New Business

Maybe you’ve toyed with the idea of launching a new business for years, or maybe you’re just frustrated with your job and dream of being your own boss. Maybe you even started a new business once (or a few times) but didn’t find enough success to stay in business for the long run. Well, there’s never been a better time than now to consider launching a new business.

If you want to give your business the best chances of success, there’s a lot you need to put in place now to give your business the best shot. There are lots of pieces that you need to move into place if you are going to launch and run a company that will stand the test of time. This is why it is important to come up with some of the key elements that are required to make sure your business hits the ground running. As you can see in the image below, failure rates for new small businesses aren’t something to write home about.

small business grow effectively
Image courtesy of Zippia

Sure, we’ve all heard the stories of successful companies built with just the ideas that would fit on a cocktail napkin (INC magazine is an example) or the young kid who saw a need and jumped in to fill it (Dell and Facebook are both examples of this). But, I could point to millions of other businesses that started with such a lack of planning and failed miserably, often taking owners and investors for millions of dollars when they failed spectacularly.

When it comes to launching a new business, you need to:

  1. Come up with a great idea. The best ideas are for products (both goods and services fall into this group), satisfy a need for a large enough group of consumers (either business to business or end users or both) that isn’t currently met, or one you can meet better.
  2. Take care of all the legal paperwork
  3. Build a solid, well-researched business plan
  4. Find a way to finance your business
  5. Begin implementing your operational plan by hiring employees, finding a location, establishing relationships with suppliers, setting up your operations, marketing to customers, etc.
  6. Rinse and repeat.

You’ll find many tips for starting a new business that you can use to help you plan. Here are five key things you need to do before launching.

Launching a new business: tips

1. Make sure you have a solid business idea

If you are serious about taking the right steps when launching your business, you need to have a solid idea to kick things off. You need to identify a gap in the market and make sure you have a working idea that can be fleshed out into a successful business model to serve customers facing that problem, who are willing to spend money to overcome the problem, and have the resources to spend that money. This is actually more difficult than you might think.

For instance, you might consider adding something to an existing product or taking something away from it. Making something mobile by using batteries rather than a cord can offer a major advantage in the marketplace. Consolidating several devices into a single device can also work. De-resourcing a product also offers advantages, as we find with companies like AirBnB that own none of their own properties.

Ensure you don’t just tweak something. For instance, a mobile delivery app that allows users to easily split a check doesn’t offer a sufficient benefit to overcome the brand recognition for Grubhub or similar products. You want to build a product that’s also hard to replicate. We call these types of impediments that make it more difficult to build a business, barriers to entry. The higher the barriers the more you keep out competition and the longer they stay out.

barriers to entry
Image courtesy of Investopedia

2. Take care of legal issues

Perhaps the most important starting element in launching a business after a viable business idea is taking care of all the legal issues. Among these issues are:

  • Determining the business structure that works for the type of business you want to launch. You must choose between a sole proprietorship, partnership, C corporation, S corporation, and non-profit. You should consult an attorney or accountant because these choices have serious implications for tax rates and liability. You can change this down the road depending on the changing needs of your business.
  • Applying for a business license and tax ID unless you plan to form a sole proprietorship, in which case you can use your Social Security number.
  • Familiarize yourself with prevailing laws that govern your business to ensure you comply and avoid fines or other penalties.
  • Protect your intellectual property with a patent attorney, if necessary.

You also need to choose a name for your business. There are legal and trademark issues associated with this, so discuss them with your attorney. You want a name that reflects your core business, is easy to remember, is easy to pronounce, is unique, is associated with positive characteristics for your target market, and allows you to purchase a domain name closely related to the chosen name. A name generator might help to create a list of ideas you can filter through using a focus group or an informal opinion poll among your target market.

3. Develop a business plan

You need a thorough business plan built on a significant amount of research to outline the steps needed in launching a new business. You can’t rely on opinions in developing this plan as it takes hard data to estimate aspects of the plan. This business plan consists of a:

  • summary of the mission, goals, and values of the organization.
  • description of the products offered and the business model.
  • marketing plan that establishes core elements such as messaging, branding characteristics, target market(s), budgets, goals, and resources needed.
  • competitive analysis that details the sustainable advantage you offer over the competition.
  • operational plan detailing how the business will operate, who you need to make it work, resources necessary, and a timeline.
  • financial projects, especially a statement of cash flow, as more businesses fail due to cash shortfalls than any other issue.

    improve cash flow
    Image courtesy of SCORE

4. Financing options

Unfortunately, I’ve seen too many folks interested in launching a new business who start with this element. However, without a sound business plan and the other steps completed, it’s nearly impossible to find the money necessary to get started. Most folks think about getting a loan or finding venture capital. However, these are costly financing options in the long run that might handicap your opportunities for success. Instead, think about starting with a small pot of money (maybe from your savings or from friends and family). Leverage this money by renting instead of buying, hiring an agency or gig workers instead of employees, and keeping your job until the company makes enough money to replace your income.

5. Implement your business plan

Implement your business plan by using the tools of project management to ensure you stay within budget and that your timelines mesh to allow you to begin operations when planned. Carefully consider the critical path to ensure you stay on schedule and prioritize elements of the plan related to that path.

critical path
Image courtesy of Indeed

Ensure you have the top talent to help you implement your plan.

Conclusion

So, now you know the five tips needed before you consider launching a new business. Good luck and let me know how it goes.

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