Do you want to start a business but don't even know where to start? Here are some tips to learn how to start a business from scratch. Like all things a bit complex in life, it seems complicated, but if you reduce it in a series of small decisions and arm yourself with perseverance, you will see how each step can be overcome without too many difficulties.
1º- What customer need do I want to cover?
Call it a business idea or a new business concept, the purpose is the same and you have to be very clear from the beginning. A business, a company, has to add value to its customers, meeting needs in exchange for paying a price. If your idea does not respond to a real need, it is useless.
We have talked many times about the business idea, and how it can be valued. We always repeat that the essential thing is that you contribute an improvement, no matter how small, on what already exists. It is not necessary to invent a product like the iPad to succeed, just improving a little what already exists may be enough, but you have to make sure that there is a sufficient market for your project.
2º- How much is the client willing to pay for my product or service?
This point is very important. In the first place, because in many cases the client, although they positively value the contribution of your concept, is not willing to pay for it. On the other hand, if the client is willing to pay something, the normal thing is that he does not want to pay as much as you would like. On pricing policy, I refer you to the article we wrote a while ago about selling high or low.
3º- How much does it cost me to produce?
Once you have a more concrete idea of the potential market and the price that you could put on your services and products, a very important aspect remains: How much does it cost you to produce them? Obviously, if you create a company it is to earn money, therefore it is essential that you estimate the variable costs and fixed expenses of your project, to have a first idea of the profitability. If you see that it costs you much more than you could sell, in principle your idea has little future, but do not be discouraged, it is possible that approaching it in another way can be profitable.
When you want to know how to start a company from scratch, you first have to be clear about your priorities. Entrepreneurs often sin on greatness, wanting to start with a large and well-located premises, several employees, new machinery, etc. Large-scale approaches make it very difficult for a project to be viable, because do not hesitate: the expenses will always be higher than what you have been able to estimate and the income will be lower. It is better to start with humility and less expense.
4th- Am I qualified for this business project?
One of the great causes of failure of a business is that the promoter of the project is not qualified to lead it. That is why it is important to ask yourself frankly if you really have the ability to turn the idea into success. One of the most important aspects is to know the sector where you are going to work. The illusion and interest in your project, although they are necessary, are not enough.
Let's imagine that you have always worked in a bank and your dream is to set up a chain of pet stores, because you love pets. As much as you are excited, if you do not have the knowledge of the sector or the contacts, it will not be impossible to succeed, but you will have it very, very difficult. In this case, it is better to associate with one or more people who will give you the look you lack. To return to the example of pet stores, if you read the interview we did some time ago with Javier Osa from Kiwoko, you will see how the partners have profiles that are completed.
5º- The Business Plan
Once you have more defined your idea and your first estimates make you think that it is viable, the real work begins with the business plan. You have to study very in detail the commercial and financial aspects of your project. Answer important questions such as What do you sell? What is your clientele? What are your competitors? It is important to be very specific.
In the business plan you will also define how you are going to work, with what means, with what staff, in what place, etc. It's like a dress rehearsal for your company, with all the relevant aspects. If you choke, you can ask for outside help.
6th- The legal form
The next question, when you consider how to start a business from scratch, has to do with the legal form. Once you have your project well defined, you will have to decide how you are going to formalize it.
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Aug 7 20215 mins