If you and three friends started four different companies in January 2017, only one of you will be in business by January 2020.
According to research, one out of your group of four would have already crashed and burned before July.
It’s the cut-throat world of entrepreneurship.
To help you start off on the right footing, we’ve compiled some 21 things to know before starting your business. Although businesses are different, with differing needs, most of these ideas apply to businesses across the board:
1. Who are your customers?
This list is not arranged in order, but if you have to know anything before starting your business, it’s who will be paying actual money for your service.
This process is called the customer discovery process. Use the understanding of your customers to develop your service.
Knowing your customers and making them a part of your development process will likely prompt them to become loyal to your brand and even recommend you.
2. How will you find and sell to them?
Knowing your customers is only the beginning. How will you find them? Where are they hanging out online or offline? This will determine where you set up your shop.
If you are selling to farmers in north central Nigeria, then you might want to consider an SMS marketing strategy over targeted emails.
If your customers are millennials on a University campus in Lagos, would you consider a kiosk on the campus or an online store over the 20th-floor office on Lagos Island?
3. What are you selling?
Very important to know the service you are selling. Know that you are not selling a product but a solution (to a problem faced by your customers).
Focus on building the best version of this solution in partnership with your customers who will pay actual money for it.
4. How will you market it?
Your great product is worth a little more than table salt if no one knows about it. Know from the word go how you will get your product into the consciousness of your target audience.
Often, you start with family and friends, word-of-mouth and go forward from there.
5. Who are your competitors?
Figure out who else is doing what you are planning to do. Know everything about them that is available in the public domain and build up on that. Don’t make the mistake they have or are making.
If there is an information you can’t find in the public domain, spend some time to interview these companies. The only rule is to be totally honest about your intentions.
6. What’s your USP?
Your competitor analysis will often set you up perfectly for this.
Your USP (Unique Selling Proposition) is the only reason a customer will leave other businesses to buy from you.
Your USP could be anything. Provide a better product than your biggest competitor, or make it available at a cheap price. Or brand it in a different way.
It’s often more beneficial to be different than to be better. Think of Apple and other consumer electronics manufacturers. Apple with its middling specs sells for a higher price than the most specced out ultrabook in the market. Difference.
7. What’s your business name?
In the early stages of your company, you can’t afford a brand overhaul, so you’ll be stuck with whatever name you choose at the beginning of your business.
Like your product, think long and hard about it. Choose a name you’ll be glad to be associated with 10 years down the line.
Is it available?
Check the availability of your name with the CAC, if you are in Nigeria. But that’s not the only brand real estate you should be concerned about. Is the name available on Twitter? Can you cop the domain name? Use namecheck.com to see the availability of these online real estates for your brand.
8. Who are your possible partners?
This goes beyond your value chain into other beneficial relationships for your business.
If you sell inventory software to small businesses, for instance, you could partner with a local business search engine. Offer your service at a discount and you’ll get access to a whole new pool of users if they recommend you.
9. What is the law saying about your business?
Before starting your business, speak with knowledgeable people about any special legal frameworks you need to fit your business into.
For example, if you are selling insurance services to small businesses, what licenses do you need to provide this service?
If you have a fruit bar at a corner store, what license do you need from the public health department?
Officials will often ask for these licenses and failure to produce them could lead your business being closed down early.
10. Who will mentor you?
Mentors are important to help you better understand the lay of the land. As a fresh entrepreneur still wet behind the ears, guidance from a mentor who’s been there and done that is invaluable.
Either speak with someone you admire or someone in your close circle who is very knowledgeable about businesses.
11. When do you start?
Put a time to when you start your business. That way, you don’t keep procrastinating. Truth is, you can’t have a perfect business right out of the gate.
Reid Hoffman, founder of LinkedIn said, entrepreneurship is like jumping off a cliff and building a plane on the way down.
12. How much do you need to live?
How much do you need to sustain yourself meaningfully? This will determine how much you pay yourself in the early stages of your company.
Although the noble idea is that you will plough every profit back into your business, understand that you need to eat, drink and keep a roof over your head.
It’s better to have a stipulated sum as salary from your business, that to simply dip into the business account anytime you need money.
13. What’s your exit strategy?
You need a serious exit strategy even before opening your doors. You need to structure your company around your exit strategy. Make your business sellable, transferable and self-sustaining, even without your everyday presence.
14. What are the copyright/patent issues around your product?
Never ignore copyright when starting a business. It will often come back to bite you in the butt.
Sarah Cook from raisingCEOkids.com told a harrowing tale of how unforgiving this error can be.
“Three months after we had started one of the businesses we had to completely scrap all the branding and build a totally new site, social media, EVERYTHING due to a legal issue regarding trademark.”
15. What’s your business plan?
Business plans are not fun to write. But they are sorely important.
They are not only useful when you want to get bank loans or get investors on board, doing this is an opportunity to scrutinize every aspect of your business, and ensure they make sense.
16. Who’s your banker?
As a business, you have different banking needs from when you are only a consumer. Shop around for a good bank with a respectable track record handling business accounts. Some could also offer valuable partnerships.
17. Who will manage your books?
Lots of tools these days make accounting easy and accessible. But while setting up, make sure to consult with a professional on the best way to set up your account.
This is important for your exit strategy and for future scaling opportunities.
18. How much do you really need to get started?
Entrepreneurs often under – or – overestimate how much they really need to start their business.
Opinion on the cost of starting up fall along two strong schools of thoughts. Some believe it’s never been cheaper to start a business, and on the opposing side, others believe you need to figure out how much you need to start a business, then quadruple it before starting.
Neither is wrong or right. Your type of business determines your cost of starting up.
You need to consider everything involved in starting your business and give a reasonable estimate. Consult with a mentor to have a realistic outlook on the cost.
19. How will you fund your business?
In addition to understanding how much you need to start your business, figure out where you will get your capital from. Often, family and friends should be your first port of call.
Then begin to consider a bank loan, investors or business grants. See more ways to raise money for your startup here.
20. Who’s on your team?
Some investors are more interested in your team than in your products. A good team will make a mediocre product, great. But a great product in the hands of a mediocre team will turn out mediocre. Will founders vest their equity? Consult with a startup lawyer to know the best practices around vesting and the proper documents to sign.
21. How will you handle taxes?
Know these before starting up. Governments are very touchy about taxes and scrimping on it could cost your oodles of money in fines.