Many of us desire to run a profitable business. We have been successful in life in our respective careers, in our endeavours. But now we crave more.
Running a business is not everyone's cup of tea. It requires attention, resources, and money. If anyone wants to run a business let alone a profitable one then the requirements are still the same. Today we shall explore how can we start a business.
Running a business is a thoughtful process. We, at Think Leaf Solutions, advise businesses on certain aspects which we shall share with you today.
Before starting any business you should be aware of what you shall be dealing in. It might be a product or a service that you intend to sell. Many businesses start with the idea of trading goods or providing services.
Many businesses start small buying and selling products that are already available in the market. This helps them to actually take a grasp of what is happening in the markets. Some businesses start with the intention to sell their services, for e.g., accounting and legal services. These firms sell to people who want their service. But then we are discussing the idea.
The trend which we have seen in the past couple of years is of start-ups growing up. Everybody who is starting a business is actually saying that you are starting a start-up. But there is a difference between a "business" and a "start-up".
The idea is the crux of the business if you are starting a start-up. If you have a novel idea which you think will be useful to people and they will be ready to pay for what you are offering then the idea is good to be given a shot at. Ideas are to be worked upon and not only thought and left.
Whenever you get an idea about the product or service which you feel might be beneficial to people at large and people would be ready to pay for it then you should actually go out and validate it.
The concept of idea validation is very important before you commit your resources to your business. Remember, that resources are always finite and we need to make the most useful use of them (or as you say the best use of them).
When you go to validate an idea then you actually go out and meet people with your product or your service. Remember, that your service or product is not supposed to be what you are going to offer. You can just go out and ask people about your thoughts on the product or service that you are going to sell.
When you ask people about their thoughts, they come up with feedback. This feedback will be positive or negative but it will be useful for you as an entrepreneur and a businessman.
When people actually like your idea then they will then ask them if they will be willing to pay for it. If they say yes then, you have an idea which might sell. The next thing is to come to know how many people will actually be interested in your service.
Students studying entrepreneurship actually go out on the streets and asked people what do they think of the idea. Kunal Bahl of Freecharge which is a company in India stood outside a mall with a questionnaire and asked people about the product and service. The feedback he got helped him build his product.
The idea which you have now is validated by people. It might be that 10 people might buy it or 100 or even 1 million might buy it but then you have to start with the first one.
You can read about the validation of an idea in our blog post - How to validate an idea?
Proof of Concept (POC)
Proof of concept or POC as it is called is the best product that you can take to the market. If you’re not going to raise any investment to start your start-up or your business then the proof of concept is the minimum version of your product or service that will be available to the consumer directly to use for the first time.
In the case of start-ups that actually take investments and venture capital funding, the proof of concept is what is shown to VCs and investors.
The POC is what your consumer will experience for the first time.
The POC is just a starting point. Even for Google as a search engine, the POC was something that could search the web more efficiently than the search engines that were there at that time. Google improved over a period of time to give the best search results.
Remember, the POC is just the starting point of the journey your product or service shall undertake to reach the final destination which will be your ideal product or service version.
Entity Type Selection
When you’re going to launch your business, entity selection shall play an important role in your journey. Many businesses start out small as a one-man show and they go for a proprietorship. Others start with a partnership among friends, colleagues, or known people. Partnerships are legally formed as a partnership firm or a Limited Liability Partnership (LLP). Some want to launch on a bigger scale and opt for a Limited Liability Company.
While selecting the entity type for your business many more things are to be kept in mind. Depending on where you are doing a business, that is as per the laws of the land, compliance and the regulations shall differ. With respect to compliance, the compliance cost will also be there to be borne by the business.
It is better to consult a professional advisor before zeroing out on the ideal type of organization or entity for your business. We shall be covering the entity selection process in detail in future posts too.
The backbone or the blood flow of the business – capital. The amount of capital shall determine your run in the initial phases as well as in the medium term. Many people do not have the capital that they envisage for running the business.
The capital calculation should be done before setting out to run your business. Of course, you can always bring in more capital to fund your operations and daily activities but then a prior study is advisable.
Many businesses struggle with capital when they face negligible sales or costs that they had not envisaged before. Contingency costs also tend to dent your cash flow and hence a proper study before starting out is advisable for the capital calculation.
So now you have your idea validated, your organization type decided, and the capital in place. Now you can launch your business. Please remember that there are many more steps in between such as hiring, allocation of office space, registering the organization, and opening of bank accounts to name a few. We shall try to cover these topics in detail in our future blog posts also through people from the respective domains and industries.
From day one you shall be entrusted with running the show - your business. You should have a set of processes in place to deal with different aspects. Many businesses are small in size with a team size of just under 10 people and managing is not a challenge but processes in place bring discipline to working as a team and aid growth.
Any business which has processes in place is bound to prosper than a business that has no process in place. You can have a process in place to onboard a new customer, to answer a query that has landed on your website, or you can even have a process to reach out to people which are your future customers.
The level of processes and their efficiency shall help you to grow.
In today’s world of technology, you can have your process is automated although this is not a compulsion. But remember that automation shall come at a cost although it will be a fractional of what it might take you to run it through humans.
During the early days of any business, automation is helpful but you should also consider the cost it will put on your balance sheet. Many start-ups and organizations avoid automation in the early days and focus on manual tasks and processes. This is also fine as the organization is working on budgets and to get a hands-on understanding of different aspects of the business.
Start a business with planning. Know your goals and achieve them with proper planning. Business is a good vehicle to earn income and achieve financial freedom.
Read our other posts to know about starting up a business, running your e-commerce store and growing your business.