Thousands of new businesses are launched each year, but many do not survive in the long term. For example, 60% of new businesses fail in the first 3 years, even though they may start out strong.
There are many different reasons why a business may close prematurely – some of which are beyond the control of the business owner. For example, many businesses folded as a natural consequence of the COVID-19 pandemic. However, sometimes, the primary reason why a business closes is due to a lack of forward planning before starting a business.
That is, the business owner has an excellent idea for a company and immediately launches it – without doing any further research or bothering to learn about the logistics of running a business. This can only lead to disaster further down the line.
With that in mind,
Here are five things you need to do before starting a business from scratch to stay on the path to long-term success;
1. Find a gap in the market.
Researching the market ahead of time is one of the easiest ways to ensure you’re on track for success before starting a business. After all, this can help you to identify a gap in the market that your competitors are not currently catering to – meaning it’ll be easier than ever to win over new customers and hit the ground running.
Failure to identify your niche could mean that you enter a marketplace that is already overcrowded. This means there’ll be little to no demand for new brands within this niche, and you’ll struggle to sell products or services. It will also make it harder to stand out from the crowd, as you’re not bringing anything new to the table.
2. Choose your company name.
Once you’ve found your niche and have carried out some simple market research, it’s time to start thinking about your company/brand name. You must get this right – for many reasons before starting a business. Firstly, your brand name is your brand’s identity – and it’s not something you can really afford to change when you grow bored or tired of it. Beyond this, “the first thing a customer interacts with is a name, so it has to convey the right message; it has to wow the audience.”
As such, this is a task that you must take seriously. Choose a brand name that is short, snappy, and memorable – while also ensuring that it accurately reflects your products and services too!
3. Deal with the legalities.
There are many legalities that come alongside running a business, and you must ensure that you adhere to them from the word ‘go.’ After all, violations of regulations and guidance could mean that your company is closed before it even has the chance to take off.
For example, you should ensure that you use a reliable federal tax ID filing service to get your tax ID and code. This way, you can keep all of your business finances in order so that you’ve nothing to worry about come tax season. This can also help you to better understand how business taxes work, giving you greater peace of mind moving forward.
4. Put together a business plan.
According to a recent report, a staggering two-thirds of businesses do not have a business plan in place. This means that two-thirds of business owners are leaving their success to chance, as opposed to having a plan in place that will facilitate growth and expansion.
Simply put, if you want your business to go far, you need a business plan. After all, your plan can help you to transform your simple idea into a great business by giving you a framework to follow day-in-day-out. That is, you can use this as a guide to determine what work needs to be done and when so that you can reach your long and short-term goals. Without a plan, you’d be moving forward without a real sense of direction, which means important tasks could be neglected.
5. Be prepared to put the work in.
Most entrepreneurs, by their very nature, are ambitious – it’s part of the reason why they chose to open up their own businesses in the first place. However, many underestimate just how much work running a company can be, and it’s important that you have an understanding of this ahead of time. If you want your company to succeed, you will need to put the work in before starting a business. For example, you may need to be prepared to work longer hours than you are used to when your business is in its infancy.