According to the U.S. Census Bureau, just under 5 million new businesses were launched between January 2021 and November 2021—an increase of 55% compared to the same period in 2019. Most of these new companies are being launched by first-time entrepreneurs. A recent survey released by Digital.com reveals that 32% of Americans planning to start a business this year have never launched one previously. Guidant Financial and the Small Business Trends Alliance in its 2021 Small Business Trends report that boomers account for 41% of small business owners (currently between ages 57 and 75) and Generation X for 46% (41 to 56 years old). So here are some thoughts for first-time entrepreneurs to think about when considering starting a business.
- Start with the end game and work backward. A lot of entrepreneurs just work on what’s in front of them and worry about the future when the future arrives. But if you don’t have a plan for the future, you usually waste a lot of time and money due to “unforeseen” problems that future business planning could identify.
- The Sales & Marketing strategy is your plan for reaching, engaging, and converting target prospects into profitable customers. It guides Marketing & Sales in their daily activities, helping them clarify shared objectives and how to achieve them. The Sales & Marketing strategy is the next most important thing after the overall business plan.
- Don’t play the incumbent’s game. Yes, it’s easier to find initial traction when you target a known market with a known offering. If you’re going after an incumbent, don’t play the game on their terms…don’t speak to the problems they solve…don’t target their customer champions and personas…don’t use their vernacular and language…don’t measure your product’s benefits with their metrics. Instead, tie your own strengths and weaknesses directly to the customer’s outcome wanted, and show how you can increase it.
- Build a customer bridge from the old to the new. If you’re going to develop a new market, your customers are going to need help moving from the old market to the new market. There are three components to building that bridge.
- Education…few sales happen without some education. Once your prospects understand what it is you’re truly offering, the sale becomes exponentially easier. So build a marketing strategy around prospect education.
- Onboarding…if you’re first into a market, your customers are not going to have the built-in expertise to get the most out of your product/service. Onboarding becomes a critical tool to point where they can take full advantage. This includes customer focus on the front end and managed fulfillment on the back end that are integrated together to optimize customer acquisition and retention.
- Evolution…in every new market, you’re going to have traditionalists. My own startup experience found at least one customer who pays to do things the old way using the new product/service. Consider these folks dinosaurs who don’t want to evolve. You can still serve these customers, just don’t change your offering to do it. Build shortcuts, hire temps, whatever it takes to get to revenue without going backward.
- Listen to your customers since they define the market rules, not you. You may be on the forefront of innovation with your product/service, but the ultimate success of its fit in the new market depends on a balance of how your customers adopt the product/service and how your business feeds that adoption. Customers will tell you what they want if you listen, so make sure you’re listening.
- Funding allows business owners to pay for the equipment, materials, space, staff and services needed to open and run an organization. All businesses require some money to get started, but the amount required varies depending on the industry and type of business. How much funding you receive and the method that you use to secure it has major effects on how you operate and structure your business because you are putting your company in debt before it has begun to make a profit. In order to ensure that your business is successful in the long term, carefully consider how much funding you need and where you will find it.
I would be remiss if I didn’t point out two of the more common small business mistakes and how to steer clear of them:
- Trying to do everything yourself — If you are a micromanager or a perfectionist, then take note. The greatest mistake entrepreneurs make is to believe they can do it all by themselves. Starting a business could initially mean handling many tasks on your own. But eventually, you must learn to delegate and hire people that will help you grow the business. Like anyone, you have strengths and weaknesses. As a small business owner, it is up to you to leverage your strengths and surround yourself with people who can supplement your weak areas.
- Being irresponsible with cash flow — To shield your business from cash-flow issues, maintain an account balance equal to at least three to six months of operating expenses. That way, even if you experience unexpected cash flow issues, you have reserves in place to protect yourself.
For more thoughts on business startups view the free video entitled Roadmap For Starting Your Business and read a free sample of the new book “Small Business Thoughts Real-Time Strategic Planning“.
Copyright ©John Trenary 2022