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Many people dream of becoming entrepreneurs — it’s hard to complain about a micromanaging supervisor when you’re the boss. However, getting started in business isn’t an easy task. If it were, everyone would work for themselves.
Approximately 20% of new businesses fail within the first two years of opening their doors and 45% after five. Bad business planning, rapid expansion, inflexibility and lack of funding top the reasons that newborn enterprises sink. You want to avoid these pitfalls.
What’s the most difficult part of starting your own business? This guide shows you what you should know before hanging out your shingle.
1. Establishing Your Reputation
The entrepreneurial guru Lee Iacocca once said, “Business, after all, is nothing but a bunch of human relationships.” You must develop a reputation in your prospective client’s minds that you are trustworthy, reliable and worthy of their hard-earned dollars.
Fortunately, thanks to technology, you have more ways to do so than ever. It’s crucial to be on the web these days if for nothing else than credibility — people want to see an official-looking site pop up on Google when they search for your name.
Likewise, develop a social media presence and keep your eyes on reviews. According to consumers, businesses that reply to such postings are 1.7 times more trustworthy than those that do not. Many customers might reach out to you with problems on Twitter posts, for example — ensure you or your team are ready to respond to their needs.
Furthermore, get visible in your community. Do you have the opportunity to sponsor a local school sports team or help out at a charitable event? Please do so — in a recent Harris poll, 82% of consumers said they would spend more at a business that reflected their values.
2. Acquiring Necessary Capital
The bottom line: you need money to fund your enterprise. Unless you have a trust fund or wealthy parents to catch you if you fall, becoming an entrepreneur means flying without a safety net. It’s why many first-time business owners with little-to-no capital continue working their day jobs until they establish a steady enough income stream to take off independently.
However, burning the candle at both ends cuts into the necessary time you need to grow your enterprise. Fortunately, you have other means of acquiring startup capital. Consider these avenues:
- Small business loans: Your local small business association is your first stop. The SBA extends loans and grants to those looking to start an enterprise. They also offer counseling and advice to help you succeed.
- Find investors: Investor equity gets you capital funding. A well-written business plan is your best “hook.”
- Federal, state and local grants: Depending on the nature of your business, the powers that be may deem it essential to your local economy. If so, they could have seed money you don’t have to repay.
- Credit cards and personal loans: These often feature high interest rates, but they are an option if you’re in a pinch.
- Crowdfunding: Sites like GoFundMe, Kickstarter and Patreon can help you raise money to start your enterprise.
3. Finding Sufficient Time
If you’re one of the many small business owners who can’t afford to quit their day job, your next challenge is to find sufficient time to build your dreams. After all, your boss isn’t likely to provide PTO to work on your endeavors or reduce your workload to reflect your increased crunch.
Make your planner your best friend. Sit down each Sunday night and chart your week, including work, what you need to do for your business, meals and exercise. Remember, you are your biggest asset, so allow time for necessary health maintenance. It will make you more productive when you are at your desk.
4. Developing Your Target Market
Many new businesses fail because they adhere too rigidly to their founder’s mission instead of asking their target audience what they want. Performing regular market research is crucial to providing the goods and services customers demand. Ask the following questions in emails and social media surveys:
- What do you like about our competitors? Why?
- How much money do you typically spend on X?
- What do you wish we could do that we currently do not?
- What’s your biggest frustration about X?
5. Keeping Your Records Organized
Running a business means careful recordkeeping. Fortunately, you have a world of apps today that can keep you on track.
Your most important records are income and expenses to measure profitability and prepare for tax time. Being an entrepreneur means the buck stops with you — the IRS can come after personal assets regardless of business structure if you don’t pay.
The Most Difficult Part of Starting Your Own Business
Being an entrepreneur isn’t easy. If it were, more people would kick their boss to the curb. It helps to prepare before you hang out your shingle.
Now that you know the most difficult part of starting your own business, you can avoid pitfalls and improve your chance for success.
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