Starting a business is daunting, to say the least. That fact is doubly true for those of us who have never stepped foot into the entrepreneurial realm. Now, you know you have a great idea. Maybe you already have a business plan. Or perhaps you have the next big product — that million-dollar idea. Regardless of your situation, the small business world has no shortage of perils. You’ll have to be cautious and stay smart to avoid pitfalls. So how do you overcome those obstacles that are sure to arise? Our advice: Be proactive.
Here at Leapin’ Lizard Labels, we know small business (after all, we are a small product label printing company ourselves). We’ve build Leapin’ Lizard from the ground up, just as you’re about to do with your own idea. Beyond that, we also collaborate with small businesses all the time. We work with local business owners here on the Front Range, and we work with small business owners across the county. We have a rare insight into building small businesses, both as a small business and interacting with our clients and their small businesses.
That’s why we have collected tips that we’re happy to share from one small business to another, to help you to get your new business off the ground. Here’s our words of wisdom for starting your business:
Build a Business Plan
It’s no big leap that our first piece of advice is to formulate a business plan. Your business should start with a plan. Determine your product(s), or service(s). Analyze the current market, and take a true evaluation of the possibility of success for your business. Create a financial plan. Know how much money you’ll need to invest. Know how much money you’ll need to borrow. Know how much money you can borrow if you need it.
You may be building a business plan for your own purposes, or you may be approaching investors with an opportunity. Regardless, take planning seriously. This is the founding concept of your business. And if this foundation can’t stand up on its own, it’s not even worth it to move on to step two — in this way, your business plan can serve as a litmus test for the validity of your business. Just be sure to have good humor, instead of hubris, if you have to nix your plan right off the bat. You can always go back to the drawing board.
It’s also important to note that your plan is liable to change at any point once you truly start building your business. So, be sure to build some leeway into your business plan — strive to expect the unexpected. What will happen if your printing machine poops out a month after its warranty expires? What if employee training takes twice as long as you expected?
It’s a wise choice to build in some “padding” in your timeline and budget. Expect things to take longer than you initially project. And plan on spending more than your initial projected investment. Where will your business be should Murphy’s Law take effect?
Find Your Niche
OK, this one is really a part of your business plan, but you’ll have to settle on a product or products, and/or a service or services, that you’ll be offering. What can you supply that has demand? What will provide you with profit? What’s your niche in the market? It’s a simple question, but it’s important to determine, conclusively, before you begin.
Personally, I’ve started a business where I was uncertain of my niche. I wanted to open one of those paint-and-sip studios — the ones where a painter hosts a painting party, beverages included — and at the same time, I wanted to run a cafe. So, I considered a paint-and-sip by night, and a cafe by day business plan. While there’s nothing wrong with a business that offers many products or services (take a chiropractor/massage/acupuncture wellness center, or a coffee shop that sells pastries, for instance), this business plan was overly complicated for my limitations (money, time, and space), so I had to run with the paint-and-sip studio alone. That was my niche, and I was successful thanks to my business plan and the recognition that I would have to take it one niche at a time (at least with that business).
The Right Location Counts
Once you’ve settled on your niche, it’s time to consider the location for your company. Location can vary widely depending on what you sell, to who, and how. You could, for example, sell snowshoes at a mountain resort (a location where snowshoes are in demand). Or you might rent out a warehouse to mass produce whatchamacallits. You may even be able to put that home office to use, and that’s a rent-free workspace!
When choosing a location, it’s important to consider your clients, the cost of rent or purchase, taxation, ease of access (whether that means easy transport of materials, or easy access for handicapped clients), and other factors that pertain specifically to your business. Be sure to figure your location expenses into your business plan.
Consider Insurance and Business Incorporation
Are you going to invest in small business insurance? Is it wise to file as a Limited Liability Corporation? Or does it make more sense to run your business as a Sole Proprietorship? You’ll have to weigh a few options at this point, but the idea in determining your business incorporation is simple: Protect yourself and your assets. Choose a business incorporation that makes sense for your product/service, your projected profits, and your financial vulnerability. Also, consider investing in insurance to protect yourself and your employees. And, as we just mentioned, you should tack on these costs when laying out your business plan.
Build From the Ground Up
Entrepreneurs often bite off more than they can chew. It’s tempting to consider building a restaurant franchise, but you have to build a successful restaurant first. Don’t plan too far ahead, and don’t get caught in the weeds with delusions of grandeur. Build a simple, modest, doable business plan, and take things one step at a time. It’s likely that you’ll have to pivot or change directions entirely while you’re building your business, so start small and work with what you’ve got. Again, humility goes a long way while hubris can put your foot in your mouth.
Hire Smart
Your employees are your business. They are the face of your business, and they may be part of the only human interaction that your clients have as they purchase your goods or services. So hire smart. Hire people who are well trained, or train them well. Hire people who are professional, reliable, and kind. Your staff will have a surprisingly big impact on the success of your business.
Stay Ahead of the Competition
OK, you’re off the ground. Now how do you stay ahead of your competitors? How do you remain on the cutting edge? There’s no simple, straightforward answer for this one, since every business and its competitors are unique. However, these general tips can apply for most of us:
Highlight your business’ strengths, and cut the fat. Ask yourself, “What sets me apart from my competitors? What do I do better? What do they do better?” Enhance that which you’re already doing right, and fix what you’re doing wrong.
Project… As in project into the future. Know where your business is going; predict changes; constantly analyze the market; know waxing and waning supplies and demands; stay on your toes. If you know what’s coming, be it an obstacle or opportunity, you’ll be the one behind the steering wheel, not your competitors. Some business owners prefer to keep their business plan as a living document, so that they can constantly adapt for the future while competitors can be lazy.
Know that business is a numbers game. At the end of the day, your profits define your business’ success, just as it does for your competitors. Keep an accurate account of your current financial standings, collect data on various performance aspects of your business, and know the numbers. In their article entitled 4 Ways to Pull Ahead of Your Competitors in Business, Entrepreneur notes that you should keep tabs on the following data points, at the very least:
- “ACV (Average Customer Value). This refers to how much money the average customer spends with you over a given period of time.
- CPA (cost per acquisition). This is your cost every time you acquire a new client.
- ROI (return on investment) on marketing campaigns.
- Break even. This is the volume of sales you need to cover the cost of making sales.”
Also, consider keeping track of lost inventory costs (whether that’s due to theft, expiration dates, products broken in transit, etc.). And be sure to keep a keen eye on employee costs. If you have an employee who is costing you more than they’re making, it’s time to look for new talent. You really can’t have enough information when it comes to the data analysis portion of your business.
Earn repeat customers. Your customers have a surprising amount of influence on your business. Happy customers advertise for your company for free via word of mouth. Displeased customers complain, they leave bad reviews, and they give their hard-earned dollars to your competitors. Do your utmost to keep your clients at or near 100 percent satisfaction. Invest in customer support. Offer discounts. Provide satisfaction guarantees. Back your products with a warranty. Open the door with a smile. And train your employees to do the same. Regardless of your product or service, you’re irrevocably tied to the people business too.
Be the best. Along the same lines, you simply want to be better than the others. Make a better product. Provide a better service. And if you can’t do those, make your product or service far more affordable than others’. Think about the Pepsi Challenge: Customers simply pick the better option (although Coke still wins for me).
Stay on Top of Bills and Taxes
This one is a bit of a no brainer, but we’ll mention it anyway. It’s crucial to stay on top of your taxes and bills. After all, an oversight might not just be expensive, it can cost you your business. Make sure that you pay your bills (rent, wages, equipment costs, inventory) on time, or you might not have a product, a place to sell it, or the staff and equipment to produce it. Pay your taxes on time too, or expect an audit and penalties — plus, it’s always a smart idea to be in the government’s good graces. Like the unpaid bill, back taxes can cost you your business.
Start With Your Cash — Borrow If You Have To
While you may be tempted to take out a loan to cover all of your business expenses, it may be better to refrain. Investing your own cash can lead to greater rewards down the road. However, you’ll have to take that advice with a grain of salt, since it means higher risk for your business’ greatest investor — you. Weigh your tolerance for risk against your drive to earn returns to determine the best balance between borrowing and investing in your new business.
Well, we wish you the best with your new business venture. We hope that our advice aids your success. And, as always, if you should need custom product labels for that startup of yours, we’ll be here
