Entrepreneurship

7 Things You Need to Know Before Starting A Business

  • As a new business owner, there are many challenges ahead of you. Fortunately, you can plot out the strategic blueprint of your business by identifying 7 aspects that will ensure the success of your business venture. It’s important to know what to identify and how to implement these 7 essential elements.

    What is your cash flow situation like?

    Cash flow is by far the most important determinant of a business’s success or failure. When you have adequate cash flow, you can grease the wheels of your business to keep it running. Without cash flow, your business is dead in the water. This relationship must be understood from the get-go. Your business strategy must communicate your cash flow requirements for your daily undertakings.

    How are you managing your human resources component?

    In the days of old, companies would hire as many employees as were needed to get the job done. That works to a degree today, but with a spin. Today, companies are not employing people, they are hiring freelancers and partnering with other entrepreneurs to get the job done. This is because income is uncertain, and costs are rising. Follow the trend and avoid huge fixed expenses by subbing out work as opposed to hiring employees. In the startup phase of the business, cash flow is king and too many employees are a drain on your resources.

    Make sure you have a backup plan, do you?

    Nobody wants to go into a new business venture with failure in mind, but we must be prepared for it. Naturally, risk-averse people are unlikely to start up a new business, and if they do they will be conservative in their approach. Risk-seeking individuals tend to go big or go home, and they either sink or swim in the process. It is important to maintain perspective when you start a new business, because some things fail despite our best intentions. That’s why it’s important to have a backup plan in the event of failure.

    What is crucial to your businesses daily operation?

    Everyone is in business for reason. Typically, that reason is to make money. However, it’s important to focus on the core responsibilities of the business. Activities that are important but not critical should not be the focal point at this juncture. For example, is your business primarily engaged in product delivery, service delivery or consumer liaisons? Whatever the critical daily operations of your business are – these are your priority.

    How best should you manage your startup and fixed operation costs?

    Many newbies tend to think that the best option for starting a new business is to purchase equipment, machinery, vehicles, and office space up front. This is a wasted exercise given the uncertainty that lies ahead. The better option is renting, in the infancy stages of your business’s growth and development. The less money you pour in, the more cash flow you will have. You always have the opportunity to buy, but that is a capital-intensive activity which should be avoided in the startup phase.

    Do you have the ability to think beyond the realms of possibility?

    Starting a new business may or may not be easy for entrepreneurs. It’s not only having the wherewithal to get the equipment, vehicles, furniture, office space, and business cards. It’s about the daily management, operations and interactions with suppliers and customers. Sometimes, out-of-the-box thinking is required. If you have launched a new product and nobody is taking the bait, you may be required to adopt a different marketing strategy to hit home. Remember, you are managing scarce resources every day. Your time, expertise and finances are on the line – don’t be afraid to do whatever it takes to safeguard the integrity of your assets, well-being and business success.

    How good is your credit?

    This question is possibly one of the most important questions you should ask yourself before you start a new business. As a business owner, you will need access to lines of credit. This means you will need to understand what is a good credit score. A good credit score on the FICO rating is any number higher than 700. The top number for a great credit score is 850, but any number in between will likely offer you the best lines of credit at the most favorable interest rates. Credit is imperative to the daily, weekly, and monthly functioning of your business. Suppliers will extend you credit, and you may be able to extend credit to buyers if your business has sufficient cash flow.

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