You can find lots of advice online from experienced and novice entrepreneurs, from the owners of large companies to those who have found success in a small niche. Some suggest starting a business by testing your idea, others by finding an investor or opening a current account. Some suggest quitting your day job and devoting yourself entirely to your business. There are lots of tips out there, but how realistic are they?
In this article we present our version.
The first place to start is with planning, of course. But if it were that simple, everyone would already be a businessman, or at least a successful investor. Successful planning requires assumptions, both objective and subjective. What exactly should be included in this «gentleman’s kit»?
Well, to start planning your business, you need the following:
- Firstly, you have to have a desire. It should not just be a random stray thought of ‘why not’ or ‘well, we can try’. It should be an idea that can be embraced in spite of the potential problems, the change in lifestyle, the inconvenience, the irregularity of the schedule, the reduction in permanent income (since almost all money and savings will probably have to be put into circulation), and so on.
- Secondly, to have a sufficient theoretical basis. This is a very important point. Note that very often many experienced businessmen recommend that you do something you enjoy, such as a hobby. But there is a double situation here. It is clear that you can make money doing almost anything. But you need a detailed understanding of the subject. That’s why businesses based on hobbies usually fail — it’s just that the potential owner of the business has already been an old hand at it. The other side of the coin is that if you don’t have enough knowledge of the subject, you’ll get the planning wrong, with too many possible miscalculations. And it is precisely because of the lack of theory and practice that the future businessman has a recommendation — ‘try to start’. Here, ‘try’ means hitting the bumps and gaining the invaluable experience you lack to plan properly. But it makes more sense to fill in the knowledge gaps before you start investing in your business, rather than during the process. So if you realise that you don’t know or understand something, look into the problem: get some specialised training, get a job in a competitor’s company and find out how they solved such a problem, work in a team to gain experience, etc.
- Third, choose a niche consciously and sensibly. When people say they need a business idea, they are lying. There are plenty of business ideas out there. Not even that — there are VERY many. But which one to start with? Buy a plotter and make money from advertising? Develop your own web service? Create a cool game? Open a shop? Which one should you choose? Until you decide, you will go through, try, get frustrated and just lose precious resources (time and money). And if you try without much interest and without full immersion in the subject (going back to the ‘second’ point), the startup is very likely to fail. Our material on this topic — Top reasons why new business projects fail. To choose a potential niche, brainstorm: analyse your skills, interests, knowledge and narrow down those areas of income that are close to you in spirit and mechanics.
- Fourthly, you need to be aware of your own abilities and potential. Obviously, you can see the speck in someone else’s eye, but you can’t see the log in your own. But here you have to be as impartial as possible. Trying to start a business with big assumptions from the ‘this will do’ and ‘we’ll sort it out later somehow’ series is a direct route to fiasco. Almost all forecasts, even the least optimistic, are wrong by 30-50% of the plan. So build in a margin of safety. For example, if you originally planned to achieve payback in six months, you will most likely not achieve that in reality for at least a year. And you need to have a Plan B in case you need to find new investments for the whole period. Otherwise, you will end up with a broken trough.
- Fifth, before planning, study the niche and your competitors. Soberly assess whether you have any prospects of making money, where you will get customers, what level of income you can achieve in one month, two months, six months… Can your competitors crush you if you start taking some of their clients? What competitive advantages can you offer that will make clients come to you? These are just some of the questions you should be asking yourself. If you are planning to develop a large business — order a profile study: a professional and independent (impartial) analyst will look at the existing situation from the outside and outline everything in great detail. Some studies are really expensive. But if you don’t know and consider all the details, including the market situation, you can lose much more in the long run.
- Fifthly, be prepared for problems. And in everything: in planning, risk assessment, choosing promotion mechanisms, calculating the cost of production and the resulting margin, estimating the labour fund, and more. Everyone makes mistakes. Even businessmen with extensive experience in a niche they are familiar with can fail, because the situation can change suddenly and for no apparent reason: an epidemic, natural and man-made disasters, foreign and domestic policy, changes in legislation, and so on. It’s not so much about having a safety margin as it is about realising that it is you who will have to solve such problems. Because subordinates and employees in general can only have personal problems, and only the business owner’s business problems are his personal problems. If you panic in an unforeseen situation, everything can fall apart. You don’t have to throw up your hands. A mistake is not something extraordinary, it is normal and almost commonplace. You have to accept it and do your best to correct it or minimise the consequences.
This is roughly the baggage you need to start planning your business.
And then everything else is standard, as in any management theory:
- Planning (about goal planning and strategic planning), including risks (about risk management), resources (about resource management), time (about managing project duration), organisational structure and even investor expectations (about managing stakeholder expectations).
- Team building — hiring specialists (material on how to select staff correctly, how to fire those who do not want to leave).
- Provision — finding investors, renting an office, equipping workstations, hosting, etc.
- Setting tasks so that they lead to the set objectives of your company’s existence (about setting goals and objectives, SMART tasks).
- The implementation itself (this is very individual).
- Quality and time control (about task control).
- Analysis of the results (performance evaluation criteria).
These are the classic 7 pillars of any management system. They work in any methodology (top 10 management methodologies).
Help with niche analysis
If the doubts and torments that you will have to go through when diving into the opening of your personal business are purely individual (here no one can help), then at least for the evaluation of the niche there are tools available.
The simplest and most accessible approach is to analyse demand using search engine statistics. Yes, this method does not work for all types of businesses and certainly not for all topics. But it can work for the most common models.
The idea is simple:
- You look at the analysis of search queries for the main or related to your topic keywords (phrases), it is logical to do this with reference to the regions or even cities you need.
- At the output you get an approximate level of interest of the public (taking into account that the search engines are not the whole of your public, but only a part of it, but this is at least some statistics) — this is indicated by the statistics of word input in the search. To make the results as up to date as possible, you can cover several different periods, look at the dynamics with seasonality, remove occurrences of queries that do not apply to you, etc.
- The number of queries can be related to the approximate number of potential customers in the niche.
- The same queries can be used to study the sites of the main competitors. To do this, it is enough to enter the chosen keywords in search engines and study the sites offered in the top 10 results.
- You can find a lot of useful information for starting your own business on competitors’ websites: terms and conditions (working rules, delivery, timetables, location of offices or shops), current prices and much more.
- You can calculate the approximate turnover of the business based on the approximate number of transactions and the estimated margin level. Net profit is relatively easy to calculate: you subtract from the average price of a product or service, obtained by analysing competitors, the actual cost of production, calculated in practice on the basis of the prices of products purchased, production and other, including all possible associated costs.
Tools for effective planning
As you may have gathered from the above, the key to everything is a proper plan. A detailed one that takes into account all the nuances and risks, includes investments and expenses, prioritises, etc.
To make sure you don’t miss anything, you need to write everything down. But it is one thing to use a notebook, which is only suitable for current (operational) tasks, and quite another to use a huge amount of business data. Each item in the plan runs the risk of turning into an independent list of tasks with deadlines and responsibilities.
That’s why it’s essential to use specialised scheduling software. The ideal situation is when the software is not only used for planning, but also for managing a business that is already running: delegating tasks, automatic deadline control, sending notifications and reminders, discussion, scheduling meetings, storing history, ready-made report formats, etc.
These are called BPM systems. They can work offline (installed on employees’ PCs) or online (in cloud/SaaS format). Due to the peculiarities of the architecture, only online systems can have applications for mobile devices that organically fit into a single integrated service for setting and controlling tasks. The Projecto solution belongs to such a class of software.
