How To Build A Start-Up Business And Change Your Life – Now!
So you have the killer business idea that you know just has work and create a stellar start-up business that the sharks on TV’s Shark Tank would leap out of their pool to invest in. You have done your homework, you have the know-how in your area of business operation, you've looked at the basics of importing/exporting, you’ve located your target buyer profiles and your audience. It’s time to take that idea from start-up idea to start-up business. All you need to do now is to find ways to finance it, and this article will help you to plan and get your business idea up and running funded with cash even if you are a business novice.
But First the Bad News
A “start-up” has been defined as “an entrepreneurial venture which is typically a newly emerged, fast-growing business that aims to meet a marketplace need by developing a viable business model around an innovative product, service, process or a platform. A startup is usually a company designed to effectively develop and validate a scalable business model”.
You need to be aware that 99.7% of all businesses in the USA are small businesses, and 20% fail in their very first year of business. Most small business startups fail because they do not have the cash reserves to carry them through the tough period before the business starts making money:
82 percent experience fatal cash flow management problems
29% run out of cash
Moreover, the Bureau of Labor Statistics in the United States recorded business failures between 1995-2015, and here are the statistics that will make you pay attention :
Years in Business
Failure Rate
1 year 21.2%
2 years 32.1%
5 years 51.2%
10 years 66.6%
20 years 79.6%
Therefore, there is a 1 in 2 chance that a new business of any size will fail within just five years. The good news?
Now that you are aware of the risk, you must come up with a sustainable strategy to fund your start-up from the get-go.
What Are Possible Sources Of Start Up Business Funding?
You may just have to go back to basics to start-with:
1. Use You Own Money – this will seem scary, justifiably so given what we have already discussed. Consider what would happen if you lost it all, don’t play shoot-the-moon, keep some rainy day reserves. Maybe you have a nest-egg, you can remortgage your home, or selling valuable possessions like your Apple Watch with Rhinobrand accessories. Remember that most banks, investors and lending institutions do require you to commit to the business project by committing your own money to the business venture as well
2. Bank Loans – whilst on that subject, this very much depends upon your financial standing. Different institutions have different criteria, and many community banks and credit unions have special small start-up loan programs even for those with poor credit scores. Also the Small Business Administration (SBA) has resources that can match small businesses with suitable lenders
3. Family and Friends – they are more likely to want to help out and believe in what you are proposing – so tread carefully, and treat them with the same care and transparency as if you would if dealing with a prospective investor or bank at arms’ length. Make sure to give them all the details, forecasts and business plans that you would give to your bank, and make them aware of possible risks of losing their investment in you.
4. Investors – this can be really intimidating, especially if you have not been in business before. Approaching angel investors or private lenders will need you to do all the due diligence, forecast, planning and to have all your proposed organizational structure plan in place.
If you have never done a business plan before, you may need help in preparing an investor-ready business plan. As it is likely that you are bootstrapping your start-up expenses, and cannot afford to employ a CPA to assist you, then do it yourself. You can find help by going to the SCORE website, and be matched to a suitable business mentor, free of charge. SCORE have over 10,000 volunteers servicing over 1000 communities., and held 303,812 mentoring sessions in 2016!
Do Your Business Plan and Update It, Regularly
Whichever route you choose to finance your business, planning is essential, and so you should keep a business plan in mind and revise it regularly to suit the challenges that you will face when launching a new business and as it grows. It need to be prepared as of you were the investor in the business, and answer the difficult questions that would cause an investor to doubt success.
The basic elements of a business plan are
a) Management structure – what is your team and what are their roles? Organize your fledgling team of employees using management tools from Basicsafe.us. The sooner that employee procedures are established, the more efficient your business will operate right out of the gate.
b) Target Customers – do you understand what they are looking for, and how does your product or service solve their pain points?
c) Service or Product – lay out your offerings in in detail, and your customer/client base. Where do your customers hang out, what are they looking for, and how does your offering answer their needs?
d) Marketing - you need accurate market research about your customers (as you will see if you click here, it is possible to do some research even before you open a new business in a particular area) and your possible competitors, to include at least the following.
Target Ideal Customers
Market size - estimate the size of the potential market in terms of the number of people or businesses that may be interested in your product or service.
Market trends - for each product or service
Demographics – customers’ age range, race, sex, religion, income, marital status etc.
So you will have seen that whilst you need cash to start and scale your business, if you plan carefully, do not overreach with your goals, and keep a careful eye on your business plan, that seed of an idea can baulk the trend, and become that successful business that you could only once have dreamt about. See you on Shark Tank!