Things to Consider Before Starting a Business [Expert Roundup]Written by Mindaugas on October 02, 2019
“If only I was the boss” is a thought that may have crossed a lot of our minds at some point. Being an entrepreneur does sound enticing but as we all know – with great power, comes great responsibility. There are a few things you must consider before starting a business.
Having mentors, entrepreneurs, business moguls share their advice – their experience – before venturing down the entrepreneurial path can be incredibly helpful. Good news is that I have managed to accrue quite a hefty list of entrepreneurial advice from variety of industry experts just for you.
Continue reading to discover what things you must consider before starting a business. These people have walked down the same path you’re about to embark upon. Heed advice and learn from the ones who braved the waters first – start your entrepreneurial journey the right way.
Michael Roub, Managing partner at Inflection360
The starting of any business takes more time and energy than most people would ever anticipate. To survive the grind, an owner needs to have a strong passion for what they are building.
There will be frustrating days, even weeks, as you work from concept to reality and it will be easy to quit and move on to something else unless the motivation and belief is genuine.
Plus, owners who are passionate about their businesses are not just more likely to get the business off the ground, but they will be much more able to scale the business and attract others to come on board.
Passion drives motivation, vision and culture. When the owner lacks passion for the business, these three key pieces won’t come together successfully.
Passion alone won’t guarantee success, but it will be the necessary foundation to start a business.
Suzanne Brown, Marketing consultant at OKsuzi Marketing
The one thing that you must consider before starting a business is what problem you solve. Ultimately, that requires that you understand who you serve and that target audience’s pain points.
You must understand how you will solve that problem for that specific audience. And you must also consider your potential competitors and how your solution is different from what’s already out there.
It’s a simple question, but it is quite complex and integral to your business.
Zach Hendrix, Co-Founder of GreenPal
One critical thing people need to take into consideration when starting their new business is making sure they set it up under the right entity.
Let me explain…
We made a huge mistake when forming our company initially that ultimately cost us $20,000 in legal fees to correct.
When we formed the company in 2012 we did it simply as a Tennessee LLC.
Quick and easy and cheap we figured it was the best way to get our company up and rolling, however we did not realize is that an LLC is a no go for institutional investors.
Any outside investors such as private equity, angel investors, or venture capitalists will insist that your company be a Delaware C Corp.
This is because Delaware has an abundance of case law that is favorable to corporate structure, investors, and board members and is generally accepted as the standard by the investor community.
When we raised capital last summer we came to the table with our Tennessee LLC and almost got laughed out of the room.
We had to pay a specialist attorney to dissolve the old LLC and very carefully assign everything to the new proper entity which is a Delaware C Corp.
Darcy Cudmore, Social media guru at GenM
One thing everyone needs to think about before starting their own business is their marketing strategy. Things happen quickly in today’s world, and the online noise through different marketing channels is louder than ever.
Putting some major thought into your marketing efforts is important. What channels do you want to focus on? What is your message? What imagery will you be using?
On top of that, you’ll want to decide on a budget for your efforts and how big your team will be. For a small budget business, you will have to spend every penny accordingly and you’ll have to make some important decisions that could impact the success of your business.
You may want to pay for online tools that could potentially save you time and money. But what ones will make a positive impact? You may want to take on a student marketer rather than a full-time, risky salary. But where do you find a student marketer?
Marketing is now the most important part of any business. Having someone take the time to visit your website or come visit your shop is step one. Don’t skimp on your marketing efforts and don’t overlook it after putting so much time into building your business.
Charlotte Shaff, President of The Media Push
I learned my lesson after starting my PR business in 2005. I should have hired a CPA to help me with my budget and tax payments. Instead, I assumed once I got my business bank account and debit card I could put everything on it. And then because I was barely making it through each month, I’d practice a lot of “robbing Peter to pay Paul.”
I got behind on my credit card payments and paying vendors. And then I didn’t pay my taxes because I couldn’t catch up. I also gave away too much of my expertise for free. Some clients came to me with no budget but promised if I just got them some publicity they would be able to pay me. (they never did.)
Once I finally got smart about a CPA to handle my money, I was put on a strict budget, but it worked. I was able to focus on my work and let her handle the finances and charge what I was worth.
After a year she had a great plan for how I could save money, put money aside (and pay my biz taxes every quarter) and when a client was slow to pay the bill, she was the person to get them to pay or on a payment plan.
Jeffrey Deckman, Consultant, business coach
The number one thing I believe that is needed to start a business is a very strong belief in yourself that allows you to withstand the multitude of challenges you will face professionally, personally and spiritually as you embark upon such a powerful journey.
A strong belief in yourself also allows you to be open to the constructive criticism we all need to hear and accept in order to learn and grow. In my experience as an entrepreneur for over 30 years, and currently a consultant to other entrepreneurs, I have learned that what causes companies to fail is not enough money, but rather not enough time to learn what we need to learn to stay in business.
So if we lack the self-confidence to be able to hear what we don’t want to hear but need to hear, or to be able to withstand the multiple “undesired outcomes” we must face and over come then regardless of the money or talent we have access to we will ultimately collapse under the pressures and disappointments that we will surely meet on the path we have chosen.
A strong sense of self also serves as a protection against ever embracing a victim mentality; which is like kryptonite to any entrepreneur and which will surely take you out quicker that any competitor ever could!
Ron Stefanski, Digital marketing consultant
In my opinion, the one thing that people need to think about before starting their own business is how long it takes to be able to take a paycheck.
Most businesses fail in the first couple years, but if a business does succeed, my experience has shown me that it can take as long as two years before someone can cut themselves a paycheck. The reason it takes so long isn’t for lack of revenue, but it’s because businesses need money to grow – especially in the beginning stages – it’s better to reinvest profits as opposed to taking a paycheck.
It’s crucial for individuals to understand this before starting a business. Otherwise, they take a paycheck too early and the business will struggle to grow due to the lack of easily accessible financial resources.
Hannah Atlewell, Success and business coach
Consider if you have a passion for running a business or a passion for the job itself. When running a business, the vast majority of your time and energy will be spent on business functions, not on the job itself.
Therefore, if you just want to do that job, but not worry about marketing, business planning, admin and all the other aspects of running a small business, you would likely be better suited to doing the job for someone else or entering into business with another party who is excited to do all of those functions.
Brian Gill, Co-founder of Gillware
Before starting a business, one of the main considerations should include the hiring process. For me, hiring the first ten employees was incredibly easy. I had a wide portfolio of hard-working friends from engineering school and previous places I worked that I picked from.
We also happened to all be relatively young, early in our careers, and able to jump at risky opportunities. However, when that available talent pool was exhausted, I didn’t have the structure in place to ensure the next wave of talent was as good. So be careful with your hiring, take a lot more time, look at a lot more candidates, check a lot more references and don’t just make a hire out of desperation.
A bad hire is more painful than no hire. A mediocre hire can be the worst because someone just doing the minimum and taking up space on the payroll is preventing a good hire from being there for years.
Jacob Dayan, CEO and Co-founder of Community Tax
An emergency fund is essentially a safety net for your financial well-being, especially when starting a business. No matter the state of your finances, an emergency fund is always a good idea.
If you are a part of a family living off of only one income, or if you are self-employed, an emergency fund can protect you from financial disaster. The economy is unpredictable and sudden medical bills and car repairs pop up here and there, so you need to have a dedicated safety net of money to keep you from dipping into your savings or even falling into debt.
A good rule of thumb is to put away at least 6 months’ worth of expenses in the event that you need to sustain yourself or your family. Set up automatic transfers to this dedicated savings account so that you don’t have to manually transfer the money yourself, this way you won’t see the money and you won’t even miss it.
Chloe Brittain, Owner of Opal Transcription Services
As your business evolves, your product and service offerings may evolve along with it. If you think there’s any chance of this happening, be careful of choosing a business name that describes what you do too specifically.
It’s often better to go with something brandable that lends itself to a wider range of products or services.
When I started my business, I chose a partial-match domain simply because I saw a lot of other small businesses doing it. However, I’m now adding on some new services, which means I’m faced with the hassle of re-branding my site and business. This is something I wish I would have considered more carefully at first.
Stephen Connolly, Content writer at Pointer Brand Protection
One commonly neglected area for entrepreneurs starting new businesses is that of long-term intellectual property planning. Although many start ups have unique products, logos or inventions that have the power to disrupt their target market, just as many fail to protect them.
Putting in place the correct intellectual property registrations (trademarks, patents or copyright statements) will ensure that should your ideas will be legally protected if you should experience the kind of success that produces the unwanted attentions of people who are happy to cannibalize your hard work.
No business would start out without a sound economic plan for growth, so the same principle should apply to the intellectual property component of your idea, which may ultimately be the most valuable thing you own. Protect your ideas and plan for success.
Josh Hastings, Founder of Money Life Wax
Can you cut the mustard when things don’t go the way you want? Hands down, the number 1 thing anyone considering starting a business needs to be ready for is tough times. This does not mean your business idea will fail or you won’t be successful, it just simply means you need to be ready for things to not always go the way you envisioned them.
When starting a business, everything is going to work – in our heads, but unexpected things do happen. Having a plan is only half the battle. Developing grit and perseverance along the way is key. A way to help is to have high goals, but also have expectations that align with the amount of action you’re willing to take.
Chas Cooper, Founder of Rising Star Reviews
“How much do you really care… about the customers your business will help… and about the kinds of solutions you’ll be offering them?”
When you start a business, you commit to spending every waking hour thinking about how to help your customers. If you don’t really, truly care about the kinds of people you’ll be helping, it won’t be long before you burn out, feel unfulfilled, and question why you started the business.
And even if you care deeply about the kinds of people who will be your customers, if your solution doesn’t truly make their lives better, you’ll constantly feel powerless to deliver on your promises, and wonder why you ever thought it would be a good idea to start the business.
But when you authentically care about your customers, and you have a solution that materially helps solve their pain points, then your business will be one of the most rewarding experiences of your life.
Linda Formichelli, Owner of Hero’s Journey Content Studio
Know the business of your business.
If you want to start a business, that means you’re already a pro at your craft or have an amazing product. Where many new business owners trip up is in not understanding the business side of running a business. For example, you may be a great writer, coach, or consultant, or have created a product people love.
But when you’re starting out and working with a small budget, you also need to know the basics of marketing and sales, accounting, invoicing, and so on. You know, the “boring” stuff small business owners don’t realize they also have to do, and that are key to a successful business.
So before you get started, read some books or take a class to learn these skills.
Rob Wilson, Innovation speaker and copy writer
Desire is the most critical thing you need to have before starting a business. When you have a powerful desire to create a new business, amazing things happen. It’s like the planets line up in your favor. Suddenly, resources appear and become available for you.
There is a psychological reason this happens. It’s because your subconscious mind starts working 24/7 on all the components you need to get your new company off the ground. It’s ever on the alert, and almost magically you notice sources and solutions.
To help you understand this process, think about the last time you were in the market for a new car. You shopped all the makes and models until you finally decided on the one you want. Until then, you never noticed that car on the road, but once you made the commitment to desire something specific, you suddenly saw them everywhere. It’s even working when you’re asleep.
Albert Einstein worked on the solution (E=MC2) to his relativity theory for years, then it finally came to him in a dream. So, if you want this new business bad enough, your subconscious mind is going to work on it constantly until you achieve it.
John Kinskey, Founder of AccessDirect Inc.
Starting a business and getting to the point where you have enough profit to pay yourself will take time. The rule of thumb is to take your financial forecast and then cut the revenue in half and double the expenses. That is more realistically where you may end up. Thus, ensure you have the financial reserves or backing to see your plan through.
Tara Rylie, Founder of RylieCakes
Starting your own business requires not only grit,perseverance, and commitment but also the ability to learn on the fly.
Most jobs require you to know one skill set, starting your own business means you need to be able to learn new skill sets quickly when the need arises.
Before starting RylieCakes, I had opened my own bakery and learned very quickly that knowing how to bake was just the tip of the iceberg. Overtime I picked up plumbing skills, I watched YouTube videos to figure out how to replace parts in my equipment, and I became a wiz at the art of customer service.
Before anyone begins their own business, I always ask them if they’re willing to wear whatever hat it takes to get the job done because when it’s your business, every problem is yours to solve.
Jeff Arnett, CEO of Arnett Security Credentials
Hope for the Best, Prepare for the Worst
While it may not be something fun to think about, when starting a business, it is crucial to consider the effects of complete failure. Everyone thinks about how wonderful having a successful business will be, but less commonly considered is the possibility of the venture flopping completely.
Before putting all of your eggs in a single basket, make sure you will still be able to make ends meet even if the business is a bust. You should only put as much as you are willing to lose into a new financial endeavor.
Matt MacDougall, Founder of RocketWeb
“Can I do this without outside funding?”
If you see a path for starting your business without investors, go for it! Bootstrapping your business helps you focus on what is necessary.
Extra dollar bills can make you chubby at a time when you should be lean and mean. And when you’ve had some success on your own dime, setting the future direction of the business is all up to you.
Todd Skezas, Founder of VaporAuthority
One thing every budding entrepreneur must consider before starting a business is the level of personal sacrifice that goes into creating and operating a profitable business. I believe personal dedication is the single most important element of successful entrepreneurship no matter the venture or industry.
Much of the general public has not experienced the trials and tribulations of starting and running a business, and automatically assume that individual business owners don’t have to work as hard since they are their own boss.
It’s true as an owner of my own business, I don’t answer to anyone, but there is an incredible amount of responsibility, risk, and commitment required for day-to-day operations. When considering starting your own business you must be prepared to wear a lot of hats and ready to jump into any role during the day. Small business owners are constantly performing multiple jobs and racing against a clock that is always short on time to complete necessary tasks.
When you start your own business you never truly detach from work the way you a 9-5 employee can. You’re constantly prepared to drop everything and deal with any issues regarding your business.
As the sole proprietor of a business, the stress from every aspect of the business falls on your shoulders. Successful time management is also key since personal and financial costs are associated with every decision made.
Finding balance between running the business and having a personal life is the hardest task of all.
Paige Arnof-Fenn, Founder and CEO of Mavens and Moguls
When real customers are willing to pay real money for your product or service, you have a real business. Start with the fundamentals: Who are you and why should anyone care? If you’re not passionate about what you’re doing, then why should anyone else be?
There’s a lot of noise in every category, so if you don’t have a unique story to tell and a new approach or idea that excites you, then go no further. Every great business is built on a great story so start telling yours to potential customers and see if they buy what you’re selling.
Testing should always be done with real customers, not with family and friends (who may only tell you what they think you want to hear so they don’t hurt your feelings). Market research will take risk out of the decision if you let the data drive you instead of emotions.
Kurt Van Keppel, Co-Founder of XIKAR
The single most important thing to consider before starting a business is the outcome. Imagine in detail your successful business 20 years hence. What big goals will it have accomplished? Whose lives will it have improved and how did it do that?
Then put yourself in that place in time to look backwards and determine what it will take to get there. What strategies to make it unique and competitive do you imagine you’ll need to pursue? Who are your clients and how will you reach them? What management systems and processes will you have to develop to ensure consistent quality of service to your customers? Who will you need to help you achieve the goal? How big will your business become?
All of the above outlines the basics of your business plan. In this case, you start with the end in mind and therefore can much more easily build the entire plan, including financials. And perhaps this answers the question most new entrepreneurs think is first: how much financing will I need (and it’s corollary), what kind of financing should I seek? And that leads to the most important first answer: only as much, and of the kind that you will need to get there!
Megan Close Zavala, CEO of Turn the Page Book Coaching
The #1 thing that everyone needs to think about and consider before starting their own business is who their target audience is/will be.
We all know what made us fall in love with a business idea, or particular career field, but the only way to be really successful is to find your niche (and essentially the people willing to pay you for your idea).
I love to work with authors who write in all genres, but I know that the majority of my clientele are between the ages of 25 and 45, are professionals, and are usually first-time authors.
Knowing this (which does take a lot of research) allows me to focus my marketing and advertising efforts, offer tailored services, and so on. I see so many business people trying to please everyone, and that ends up costing them a lot of time and money.
Scott Fish, CMO of Off Road
When a business is new and fresh, it’s exciting. It won’t take long before you realize that not only do you need to be doing the work of your business, but will need to be working on your business too. This means marketing, finance, client service, planning, long term strategy, etc.
It’s important for a business owner to look at the things that need to get done and make some decisions around the things that they like to do, may be good at doing, and conversely, the things that they don’t like or don’t have the skills to do properly.
Looking inward and being honest with yourself around these areas of your business is important – it will help you understand where you may need to hire someone to help you grow your business.
Nick Haschka, Founder and COO of Credit Parent
The most important thing to think about when starting a business is, how long will I give myself to do this? It will force you to think about what level of success is required and over what time frame in order to make it worth your while.
Often new business success takes longer than anticipated to materialize, and success does not come easily. You need to have both the patience and financial runway and resources to afford yourself the time needed to make a new venture work.
If you lack either one, you may end up putting yourself in a tough spot.
Esther Sauri, Marketing specialist at Linkilaw
If starting a business with someone, what everyone has to think about and consider is if the co-founder is someone they really see themselves working with in the long term and they are on the same page on what they can and cannot expect from one another.
Sometimes co-founders are friends, family or old colleagues and people think they already know them very well. However, working under pressure is not easy and will discover new sides of them.
For this, it is essential to set all obligations from the start, by having a deep and honest conversation, in order to create a stronger foundation of trust and lead to a greater probability of a successful working relationship.
Victor Cardamone, President and CEO of Mise Design Group
Every food service operation needs to create and develop some sort of budget, or financial operating plan for their business and the products it will create. In the case of a restaurant, bakery or catering business, this starts with a costing analysis of the menu offerings.
Creating a costing analysis of a menu will tell you exactly what your costs are to create any specific items or dish, so you know what you need to sell it for, to make the appropriate profit on it. Once this is known, you can take this information and use it to create a sales and expense forecast based on your anticipated volume.
The reason the restaurant and food service industry experience the largest amount of start-up failures is that many people fail to go through this process, and simply follow their passion for their craft. What new chefs learn very quickly in the industry is that for any restaurant to be successful; yes you need to be skilled at your craft, but you also need to know and understand your numbers associated with it, otherwise you may very well find yourself with a great product, but one that doesn’t make enough profit to sustain your business.
Jason Lavis, Marketing director at NATRESPRO
My answer might be a little darker than others, but this question needs to be asked by all aspiring entrepreneurs. The question is, are you prepared to gamble your health, family, finances and even your sanity?
We tend to idolize successful entrepreneurs and see them as celebrities, on a par with pop and sports stars. We also know that nine out of ten new businesses fail, and almost all businesses fail eventually. These failures contain individuals who have lost everything while pursuing their business dreams.
It’s easy for an entrepreneurial endeavor to resemble something like a casino addiction: continued failure, and the spoiling of the rest of their life. Reasons include sunk time and capital that are hard to walk away from, ego and social image, and the ‘winners never quit’ mantra.
This possibility is the main thing that people should consider.
Deborah Sweeney, CEO of MyCorporation.com
I believe one of the most important things entrepreneurs should consider before starting a business is deciding which entity to incorporate the business as. There are a number of options available including limited liability companies (LLCs), corporations, partnerships, sole proprietorship, and benefit corporations, among others.
In order to decide which entity is the best fit for your business, you’ll have to consider a variety of factors. These may range from how you want to run the business to the future of the business. If, for example, you know you want to keep the company more independent and not necessarily expand to global chains, you may consider an LLC formation. This entity is flexible for smaller companies and also provides you with liability protection. This kind of protection separates your personal and professional assets and ensures your personal assets are not impacted in the event of an unforeseen circumstance, such as a lawsuit.
Deciding ahead of time which entity is the best fit for your business will help serve as its foundation to be built upon so the business may grow.
Sean Pour, Co-founder of SellMax
Are you willing to put the rest of your life on hold for a few years? When you start a business everything else in your life is going to take a back seat. It can be stressful on relationships, family, mental health and your physical health.
Starting a business is not an easy feat. If you want the best opportunity of succeeding it will be a central part of your life. You will be thinking about it all day. If you can’t see that being you, then starting a business might not be the best option.
Saranya Ramanathan, Finance blogger at OneFineWallet
As an online business owner, the one thing I took for granted was the time factor. You could be working full-time and hoping to start a business on the side, or a mom looking for a part-time business idea.
Regardless of the situation, make sure you are aware of the amount of time you would need to contribute to growing your business. Failing to do so, could either result in burnout or disappointment. Neither of which is good for making you successful.
The best thing to do is to set aside time right at the start for laying the foundation, get help from freelancers when you need an extra hand or outsource your work if needed.
Shawn Breyer, Owner of Breyer Home Buyers
Keep Your Main Job Starting Out
When starting a business, it takes time to build momentum. Someone starting a business from scratch should consider keeping their job and build the business on the side. This way, they can continue generating money outside of their business. This allows them to accomplish two things.
First, they can reinvest all of the profits from the business back into it so that it can more easily scale. When someone is starting out, trying to fund and balance personal life expenses with business expenses is a slippery slope.
The added benefit is that during the first couple of years of the business, income is a roller coaster. With a main stream of income, business owners can more easily weather the storm while most businesses will fail during these turbulent first couple of years.
Laura Spawn, CEO and Co-founder of Virtual Vocations
Aspiring entrepreneurs absolutely should ask themselves whether they’re the type of person who thrives under pressure or comes unraveled when the stakes get high.
Are you someone who does better with a scheduled job that you can “shut off” when you’re done with your shift? Can you handle the commitment—and complete lifestyle change—that comes with of owning a business and always being “on” and under some type of pressure?
Even if you enjoy owning a business, it is a continual pressure to manage and be responsible for a company; there have been plenty of times when I’ve wished I could be done working at 5 p.m. and not think about my job again until the next day. But it just doesn’t happen when you own a business.
John Hill, Founder of Adapted Growth
My best business advice is to work with the end in mind. The startup and small business community is filled with unicorn stories and advice on how to scale, but it sometimes bigger is not better.
If you enjoy the work that you do and servicing your clients, you should really focus on staying small so that you can do the work that you really love. Once you get above a certain size, you are not doing the work you loved in the beginning, you are managing teams of people so they can do that work.
Some people really need to have that attachment to the work and the clients, others don’t. Build the business that you want to run day in and day out.
Cristina Dolan, CEO and founder of Insidechains
The most critical part of starting a business is understanding the customer and their need for the product or service that will be sold.
As consumer behaviors change, and digital transformation enables new business models, entrepreneurs can’t assume they can just launch a product or service and capture market share and revenue.
Pricing a product or service is critical for success, but it can’t be done properly without understanding the customer. Marketing and converting leads into sales can be very expensive, especially if the target customer and their needs are not well understood.
Success starts and ends with the customer.
Alexandra Marin, Director of design at Code Crew LLC.
As an entrepreneur, it’s really hard to pick just one thing since so many key factors need to be considered when you decide to move forward with starting a business. That said, from my personal experience, the most important thing to consider when starting a business is finances.
Sure, you can have the best idea in the world, a go-to-market strategy, and everything in-between. However, if you don’t consider the fact that your business will very likely not be profitable for a while, (especially if you’re not open to outside funding) you absolutely need to have enough financial resources to not just inject capital into the business, but also ensure that you can still afford to live.
At the end of the day, you need to know that your business is receiving not just your time, but has enough cash flow to sustain itself while you’re building it.
Oftentimes, that cash flow will be coming directly out of your pocket, so you need to make sure that you can afford not just the ability to keep paying rent, but also keep paying contractors, service providers, lawyers, and everything in-between while you ramp up.
Most small businesses fail not due to a bad idea, but improperly-tracked cash flows – don’t become one of them.
Want to share your input on things an aspiring entrepreneur should think about before starting their venture? Leave a comment bellow.