Many people dream of owning a business, but actually starting one takes considerable time and effort. According to the Chamber of Commerce, approximately 400,000 small businesses are created each year, and only about 50% of them survive past the five-year mark.
To increase the odds that your business will succeed, proper planning is essential. Here are 10 key considerations when starting a new business.
1. Demand for the Service or Product
Your business has to provide a product or service, and for the business to be successful, there has to be a demand for the product or service.
Gauging the demand for your service or product will require some research, but it will help you determine whether your venture is viable – and prove its viability to investors. For more information on how to gauge the demand, check out this article from Business2Community and this article from Finance & Commerce.
Pricing is tricky. If you go too high, you can lose potential customers, but going too low can also cause problems by making people think your product is cheap or low quality. You need to find the sweet spot. For ideas on how to figure out your ideal price, see Examples of High and Low Pricing Strategies from Chron.
Your business will have competition. You need to understand your competition, including their strengths and weaknesses. This will help you figure out what you can offer to customers. Check out 10 Tips on How to Research Your Competition from Inc.
4. Marketing and Advertising
You need to get word out about your business, and marketing and advertising can help you do that. These days, you have a lot of options: social media and content marketing, billboards, online ads, television commercials, radio commercials, flyers, and more.
When selecting your strategies, you need to consider your budget as well as your audience. Check out HubSpot’s Ultimate List of Types of Marketing for ideas.
Location can make or break a business. The ideal location will depend on what type of business you’re running. For example, do you need foot traffic? Or is it more important to keep overhead low with an inexpensive location? For more considerations, read Entrepreneur’s 10 Things to Consider When Choosing a Location for Your Business.
6. Business Structure
Businesses can be created using different structures, including sole proprietorships, partnerships, corporations, and limited liability companies. Each structure has its disadvantages and advantages. Read the Small Business Administration’s guide to choosing a business structure for more details.
Small business owners take on a lot of work themselves, but sometimes they need help. If you’re planning to hire employees, you will need to consider taxes, payroll, wage and hour laws, antidiscrimination laws, and other legal issues. See the Small Business Administration’s guide to hiring and managing employees to get started.
8. SWOT Analysis
As the business owner, you should have a great deal of confidence in your business – but you’re not exactly impartial. An unbiased assessment can help you form a realistic view of your business and what it will take to succeed.
One way to do this is with a SWOT analysis. SWOT stands for Strengths, Weaknesses, Opportunities and Threats. See Investopedia’s page on SWOT for more details.
9. Disaster Plan
Approximately 40 to 60% of small businesses never reopen after a disaster, according to FEMA. Good disaster planning can help you beat the odds. You should have emergency and business continuity plans for a wide range of possible events, including cyberattacks, technological failures, fires, storms, illness, and burst pipes. Get started on your plans by reading the Small Business Association’s page on preparing for emergencies.
Every business needs insurance. Common policy types include commercial property, auto, liability, cyber liability, errors and omissions, disability, and workers’ compensation insurance. Small businesses may be able to get many of their coverage needs through a business owner’s policy, but additional policy types will likely be needed.
Heffernan offers tailor-made insurance packages for small business.