The Do’s And Dont’s When Starting Up A New Business

Starting up a new business is often a herculean task, especially for someone who is new to the world of entrepreneurship. This is not a simple DIY effort, considering the time, effort and money this commercial initiative demands. Established players often handle new businesses in a seemingly effortless manner, replete with casual confidence, but there is more to it that what meets the eye of the normal person. Entrepreneurs and sole individuals on their maiden start-up businesses will have to pay more attention to finer nuances of getting a new venture off the ground.

Let us focus on how to get a new business on track:

• A clear concept and a comprehensive understanding of the industry-specific practices and norms, funding requirements, market trends, competitors, customers, and suppliers are an absolute must to go it on your own. How exactly to go about garnering the basics?

Moonlighting or exploring the sector by means of part-time jobs is the best way to get the required details, and validate one’s interest and commitment before taking the plunge. The process not only helps retain the financial security of a regular job, but entails valuable experience and industry-specific contacts for the real task. It is wise to stick to familiar territory (field, subject, industry or service) rather than battle with an entirely new set of offerings. Do not compete with the present employer while testing the waters! And do not quit a regular job until the new venture promises a rewarding experience.

• Team work often yields great results, with the skill-set of the combined workforce usually delivering the intended outcome in a much efficient and speedy manner. Creating a family business, partnering with friends or ex-colleagues are deal options to harness the power of team work, as the strength of the team is derived from a long-term understanding and trust among individual members.

• Assess demand and competition to get a grip of reality. Concepts are literally dreams, unless they materialise in its true sense. It is important for product manufacturers to pilot their production processes and test the products initially prior to proceeding with the venture.

• A comprehensive business plan is a must to acquire financial assistance from lenders or angel investors. The plan should be neatly structured and must cover all aspects of the new business, which would usually comprise of a concise business description, potential customers, financial projections supported by solid numbers, details on key management, progress line as well as the repayment plan. Do create an impressive business plan on these lines.

• Carefully evaluate all funding options before garnering funds for the new venture. Financial services such as invoice factoring, invoice discounting, asset-based lending and protection against bad debts are being offered by several financial companies such as abnamro commercial finance. Do not ever risk all assets. Plan for liabilities well ahead of time. Never sign a personal guarantee, as that may result in bankruptcy if the business fails to take off or does not work out as desired. There are still other financial sources that can be tapped.

• Consider outsourcing or sub-contracting a part of the job to trusted trade counterparts if the plan is to expand an existing business.
• New businesses often take a while to find their place in the market before embarking on their growth trajectories. It is important to tackle one step at a time, carefully analysing each single decision and not giving into over-enthusiasm that is often the characteristic of a novice.

Franchising may not really be a profitable option. However, if one is considering extending the business arm of an established brand through the franchise model, then some homework needs to be done before making the decision.

While the new venture offers an opportunity to test one’s business acumen in the real world, the process is certainly not a bed of roses. One should be able to tackle all aspects from bookkeeping to marketing in order to gain an understanding of the entire chain of activities and later apply the learning to managing the business as it expands. Return on investments may not be instant but the joy and thrill of going it alone would compensate for delay in monetising the efforts.