How simple is the answer to the question: What do I need to start a business?
On one hand, the answer is very simple. On the other hand, it’s extremely complex. On the simple side, you just need an idea. On the complex side, you need to test whether the idea makes sense, and then most critically, you need to implement. Successful implementation of any business idea can be very difficult.
There’s a saying in poker that all you need is a “chip and a chair” to play. I suppose the startup equivalent would be that you just need an idea and the will to implement it.
In reality, though, both the poker and startup scenarios are more complicated than this. Sure, you can start with these couple of basic items, but your probability of success will be very low.
In poker, as in starting up a business, you’ll likely do far better if you have some knowledge of how the game is played. You’ll probably do better still if you’ve been playing the game for a while and understand all the nuances. In both instances, it might help to read up on the game as much as possible and get advice from others who’ve “seen this movie before”.
Here’s a list of five things that are absolute prerequisites to starting a business.
What do I need to start a business #1:
You need to be offering something that solves a problem or challenge for your target market. To increase your odds of success, it should be solving a problem(s) that matters to the target market, and better yet is creating a current state of urgency that the prospect is willing to pay you to resolve, ASAP.
What do I need to start a business #2:
You need to believe, based on solid evidence, that the market will pay a price for your product or service that will allow you to deliver it profitably. In order to do this, you need to understand what the market is doing to solve this pressing problem currently, and what they’re paying to do so. Will you be able to charge more or less? Why? You will also need to understand what it will cost you to deliver the product or service. That knowledge, along with pricing estimate, will allow you to calculate the estimated profitability of delivering your solution to the target market.
What do I need to start a business #3:
You need to perform a break-even analysis to understand how much of your product or service you will need to sell in order for your business to reach the break-even point. You then need to reality-check this estimate against the size of the potential market, in order understand whether the market share you’ll need to capture just to break even, is within the realm of reason. If not, then you’re likely barking up the wrong tree, as the saying goes, and you’ll need to look at another product or service, and potentially, another market altogether.
What do I need to start a business #4:
You need to have a good sense of how you will market your product or service. Develop a marketing plan. Be creative in building a product/service offering that you can differentiate. It’s a crowded market out there. There are likely many competitors who, even if they’re offering something that’s not exactly what you’re proposing, are providing a substitute that attempts to satisfy the current needs of the target market. You will need to be creative and consistent in your marketing and sales pitch and you will need to be able to deliver on what you promise to the market.
What do I need to start a business #5:
Finally, for now, you need to understand that starting and building a business is a marathon, not a sprint. You must be committed for the long haul. Don’t go into this thinking you’re going to make a quick buck then jump out. Those situations, though often highly publicized when they happen, are quite rare. As most successful entrepreneurs I know like to say, “I’m a ten-year (or longer) overnight success”.
There are many other things you need to consider when you start a business, but the five above will help you avoid making errors that will be fatal to your business before you even get out of the starting gate. For a more comprehensive list of issues to consider, take a look at this business startup checklist.
Image by photogrammer7 from Pixabay
