Is Starting a Business in 2020 on Your Mind?
The food was delicious and the quality time with friends and family was fantastic during the holiday season. But something has been weighing heavily on your mind. Is it time to make starting a business in 2020 your New Year’s resolution?
Starting a business can give you a fresh start with extra cash flow and more time to spend with your family and doing what you love.
But how do you start building your business and then transition it into a sole proprietorship or incorporation? There are 3 main things you need to become a small business owner.
Read on to learn more.
Step 1: Do you have a good idea?
A good idea is the first step to becoming a business owner. But how do you know if your idea is a good one?
There are 3 components a business idea needs to be successful:
1. Market research. Do your homework and answer these questions:
- Is the product or service you’ve come up with something that is needed by people?
- Who will purchase the product or service?
- Who are your competitors?
2. Understand your value proposition.
Do you know what makes your product or service unique? Will it be easy to sell? Is it something that isn’t already flooding the market to potential customers and has long term benefits for growth?
Answering these questions are important and will help determine the success of your business. If you can’t get through all the marketing static, you will not be able to sell your product or service.
3. What happens when you become successful?
What does the long term growth look like as you shift from a one-person operation to a team? Make sure you have this right to prevent falling into the failed business category.
Step 2: How Much Money Do You Need?
When you transition from being a full time employee to becoming your own boss, you will need to consider the amount of money you need to live. You may have to decrease your spending for a short period of time until your business becomes profitable. You must also consider how will you finance your new business. Does it require you to purchase materials? Develop a product? Maybe there are additional costs for learning.
Here are a few ideas you might want to consider:
1. Increase your line of credit and credit card balances for extra cash flow.
2. Look into any angel investing.
3. Check out this article. It’s a great resource and will help you with the financial aspects of starting up a business:
Step 3: Who is Going to Be On Your Team?
The third thing you must consider when starting a business is determining who will be on your team.
Is it just you? Do you have a partner?
This is very important to identify. If there is more than one person there will be some additional work and discussions covering business policies, written responsibilities and the type of business structure you will move forward with.
If there is more than one person on your team you will need to discuss and create a written agreement that includes:
- Responsibilities and expectations
- Business goals and a business plan
- Cash injections into the business by each person and if it needs to be paid back as well as how each person gets paid
- Splitting of earnings from the business
- Exiting agreement (when one partner wants to leave the business)
- Who has access to the bank and when it is acceptable to take out the money
The journey of starting a new business is exciting. Proper planning will help you be more successful!