Abhishek Sengupta

Entrepreneur | Author | Podcaster

Seven Points Before Starting A Business

Seven Points Before Starting A Business

Pic Courtesy - UnSplash

Starting a business is an exciting endeavor, but it requires careful planning and attention to be successful. Before venturing into entrepreneurship, ambitious business owners should consider many crucial factors to ensure a successful and long-term startup experience.

Before venturing into the entrepreneurial sector, here are seven critical factors every aspiring business owner should consider.

1. Enough Fund to Carry On the Business: One of the most prevalent reasons startups fail is a lack of capital. Before you start your firm, make sure you have enough money to cover startup fees, ongoing expenses, and any unexpected expenses for at least the first year.

Case Study: Uber

Uber, the worldwide ride-hailing behemoth, began with a basic concept but required substantial capital to grow. Uber initially raised $200,000 in seed capital before securing over $24 billion in total funding to support its growth and operations. This sufficient capital enabled Uber to develop globally and overcome hurdles in numerous markets.

Lesson Learned: Adequate finance is required to cover early startup costs, operating expenses, and unexpected obstacles. Entrepreneurs should carefully consider their financial requirements and acquire enough funding sources.

2. Personal Savings of the Founder: It is wise to have personal savings or a financial cushion to fall back on during the early phases of your firm, when revenue may be minimal. This can help you overcome the hurdles of business without jeopardizing your own finances.

Case Study: Spanx

Sara Blakely created Spanx, a women’s shapewear firm, with $5,000 of her personal savings in 2000. Blakely’s initial investment enabled her to develop the first batch of items, kicking off Spanx’s journey to become a billion-dollar corporation.

Lesson Learned: Using personal savings displays dedication and confidence in the company concept. Entrepreneurs should be willing to commit their own money to get their businesses off the ground.

3. Funds for Handling Exigency: In addition to your startup capital, set aside funds specifically for handling emergencies or unexpected expenses. Having a financial buffer can help you avoid setbacks and keep your business running smoothly.

Case Study: Airbnb

Airbnb faced a serious issue in 2020 owing to the COVID-19 epidemic, which had a significant influence on the travel industry. To handle the crisis, Airbnb took decisive action, borrowing $2 billion in debt and equity investment and lowering operational costs. This strategic strategy enabled Airbnb to withstand the storm and emerge stronger.

Lesson Learned:  It is critical to set away finances for unexpected obstacles or emergencies. A strong finance strategy can help businesses stay afloat in difficult times.

4. Necessary Business Assets: Determine the critical assets your company requires to function, such as equipment, inventory, or software. Make sure you have these in place before you launch to minimize delays or disruptions in your operations.

Case Study: Amazon

Amazon began as an online retailer and grew by investing in assets such as warehouses, logistics infrastructure, and technology. These investments helped Amazon to offer a diverse choice of products, shorten shipping times, and improve customer experience.

Lesson Learned: Identifying and acquiring critical business assets early on can improve operational efficiency and facilitate future growth.

5. Knowledge & Plan to Meet Breakeven: Understand the important indicators and milestones that your business must meet in order to break even. Create a clear plan for how you will get to this point, including sales predictions, price tactics, and cost-cutting initiatives.

Case Study: Tesla

Tesla, an electric vehicle manufacturer, prioritized innovation, cost reduction, and strategic collaborations in order to achieve profitability and breakeven. Despite confronting hurdles in its early years, Tesla’s dedication to its goal and a solid business model helped it become successful.

Lesson Learned: It is critical to have a well-defined strategy for breaking even and becoming profitable. Entrepreneurs should constantly analyze their business strategy and make the required changes to achieve their financial objectives.

6. Marketing & Sales Plan Ready: A robust marketing and sales strategy is vital for acquiring customers and increasing income. Define your target market, create marketing tactics, and set up sales channels to efficiently reach your consumers.

Case Study: Dollar Shave Club

Dollar Shave Club changed the razor market by introducing a subscription-based approach for razor blades. The company’s clever marketing efforts and targeted approach to customer acquisition allowed it to swiftly build a big customer base. Unilever then acquired Dollar Shave Club for $1 billion.

Lesson Learned: A well-thought-out marketing and sales strategy can successfully attract clients and propel business growth. Entrepreneurs should determine their target market and devise successful consumer outreach and engagement tactics.

7. Plan to Sustain Till Breakeven: It is critical to have a long-term financial strategy in place to support your organization until it hits break-even. This could involve measures for controlling financial flow, lowering spending, or obtaining extra funds if necessary.

Case Study: Warby Parker

Warby Parker, an eyewear startup, focused on long-term growth by carefully managing costs and investing in client acquisition. The company’s inexpensive price, direct-to-consumer format, and strong brand identity enabled it stay in business until it broke even.

Lesson Learned:  Sustainable expansion necessitates a systematic approach to managing money and operations. Entrepreneurs should prioritize cost-effective strategies and focus on establishing a solid basis for their firm.

Beginning a business involves meticulous planning and preparation. Entrepreneurs should evaluate their financial needs, get enough finance, and devise a clear strategy to break even and sustain their business. By examining these seven criteria, ambitious entrepreneurs can position themselves for success in the competitive startup landscape.