Start-ups are the new engine of economic growth worldwide. In fact, in the United States, they account for almost all the new enterprises. However, beginning a new venture is a big challenge. In fact, many entrepreneurs fail to make it. If you are planning on establishing a new venture it is critical to do proper preplanning and due diligence prior to embarking on your venture.
5 Key steps to establishing a business
The 5 steps are essential to starting a new venture. In fact, they increase the chances of success in your new venture.
i. Understand your motivation for the undertaking
ii. Select a suitable venture
iii. Conduct a feasibility study of the business
iv. Review the start up needs
v. Develop a business plan
These steps are the bedrock of business success. Many entrepreneurs fail because of avoiding or ignoring the basic steps. Moreover, they fail to develop the business and marketing plan. This is a fatal mistake. So make sure to develop a sound business plan. Furthermore, you must understand the market and the benefits of your products or services over the competition.
Besides, evaluate the demand for your products or services and possible market disruptions. And, review your assets including business skills. Also, be confident and comfortable discussing your idea. Lastly, keep in mind that networking is vital for the success of the business.
Start-up costs, what are they?
The creation of a business plan is critical to starting a new venture. In fact, it is the detailed road map of your new venture. Also, a plan must evaluate the various start up costs for your venture.
Business start-up costs are the expenses you will incur during the process of beginning your new venture. These costs depend on the type of businesses. Different businesses have different start-up expenses. Remember that underestimating these expenses may falsely boost the expected net profit. This will not stand you in good stead.
Common start-up expenses include:
Conducting proper research of the business is vital for success. This includes analyzing the industry and consumer makeup prior to the launch your venture.
Equipment & supplies
All types of businesses must use some kind of equipment and supplies. Determine if it’s better to lease or buy the equipment and supplies. Your initial capital will influence this decision.
The new venture cannot market itself. Marketing the new business is critical; advertising and promotion efforts will attract clients.
These expenses relate to software, information systems, and the costs of a website. Determine if outsourcing these functions will save money.
These costs relate to employee wages, salaries, and benefits. Your employees are a critical resource. They need to be properly compensated. Moreover, you avoid undesirable results including negative publicity. This could have disastrous to your new venture.
Your new undertaking requires initial funds to run. For small business owners, the most the common source of capital is loans. This can include a small business or personal loan. A no credit check loans officially possible and will attract interest and fees. These are the costs of the debt.
License, permit fees and insurance
Most businesses must have licenses and permits including health inspections and authorization. Your new venture may also need insurance cover.
How to reduce start-up cost and grow your venture
Reducing your primary costs will improve your bottom line and help your business to grow. This is because by reducing the costs you increase your initial working capital. Besides, the funds can be used for other important operations. In fact, it is a matter of making smart choices.
Measures to help you reduce your start-up expenses
Create and stick to your financial plan
A budget is critical to your cost reduction effort. You must have a clear idea of your income and costs. So write down all the expenses and costs required to get started, all the realistic loans borrowed for longer period to function a startup . Then rank the expenses from critical to least important. Mark the less important expenses as deferred costs. Utilize the funds for other critical operations.
The costs are related to your place of business can be a burden. If you can change the situation, relocating to an alternative area can dramatically lower your business costs. Also, evaluate the possibility of sharing business space. Furthermore, this can also help you to network and expand your business relationships.
Negotiate prices and make deferred payments
Negotiation is a critical skill in entrepreneurship. Always negotiate prices with the vendors and suppliers when making purchases for your venture. Try to reduce the costs as much as possible. Also, implement a system of deferred payment for your venture. Negotiate with your suppliers to accept deferred payments.
Reduce your communication costs
This is the information and digital age. The internet is a great communication tool. It can help you reduce your communication costs. So use Skype to communicate with your customer and suppliers. Also, use free services like Gmail, yahoo, outlook, WhatsApp, etc to interact with your customers and suppliers. In fact, these are awesome communication tools, and these are free!
Your business will need staff. Employing full time staff can be expensive, especially in the beginning. Consider offering internships to fresh college graduates seeking to gain experience. In fact, by hiring them you get your work done at a much cheaper cost. Use the balance for other important operations.
Buy refurbished office furniture and equipment
Brand new office furniture and equipment is an immense expense. You can reduce expenses by opting for refurbished equipment and furniture. Often, there are as good as brand new ones. Besides, it’s offered by the manufacturer at a discounted price.
Start-ups are the new engine of economic growth worldwide. However, beginning a new venture is a big challenge. Reducing your initial costs will improve your financial position and enable your business to grow. In fact, by reducing the costs you will increase your initial working capital. Besides, you can use the funds for other business operations.