A new entrepreneur will encounter a million issues: legal setbacks, human resources, intellectual property, product development, marketing—the list is endless. Starting a business is a daunting venture. According to the U.S. Bureau of Labor Statistics, 56% of businesses that started it in 2014 made it to 2018—the rest failed.
If you are not sure what you are in for, you are trusting the destiny of your business to a coin toss. In order to avoid failure, you will have to learn a lot about entrepreneurship.
No one can guarantee you success, but, thanks to many successful entrepreneurs that came before us, you have a blueprint that can help you get there. If you want to be your own boss, here are a few lessons to starting a business you should learn.
The Name of Your Business Can Make It or Break It
The name of your business can have a huge impact on its success. You may have to deal with insurmountable business and legal hurdles if you choose the wrong name. To make sure that won’t happen:
- Don’t even consider hard-to-spell names.
- Conduct a thorough trademark search.
- Conduct a thorough Google search of your proposed name.
- Don’t go for a name that could limit the growth of your business.
- Get a “.com” domain name.
- Come up with 5 catchy names, then test them with potential clients or customers, partners, prospective employees...
- Make sure you and your team will be happy saying the name.
Come to Terms With the Fact That Raising Funds Is Hard
No matter how great an idea you have, getting financing for your business will be more time consuming and more difficult than you expect. If you want to get venture capitalist or angel investors on board, you will need to invest a lot of effort into persuading them.
It’s important to factor in the time delays involved, and you can rest assured there will be some. Requiring prospective venture capital or angel investors to sign a non-disclosure agreement so that they won’t steal your ideas is often just a waste of time.
Most investors will downright refuse it, so it’s usually counterproductive. Don’t put hurdles in your way—getting a meeting with an investor is hard enough as it is.
Don't Take Forever to Launch
You need to have a good product to start out with, so building one should be your priority. It should be different from what the competitors have to offer in an important and meaningful way. Everything else follows from this principle.
However, early customer feedback can really help you improve your product, so don’t wait forever to get it out to the market. Still, you need a viable product to start with.
If You Are Not a Strong Salesperson, You Need to Become One
You must become a strong salesperson if you want your business to thrive. You’ll have to “sell” your company not only to customers or clients but also to prospective investors, partners, and even employees.
If you are an introvert, you must become an extrovert. You must get feedback, refine your pitch, and then practice some more. You must be trustworthy, you must be positive, and, most importantly, you must show confidence.
A Great Website Will Take You Far
Don’t underestimate the importance of a good and functional website. It will be just as important as your brick and mortar establishment, if not more.
Building a great company site requires a lot of time and effort. A company’s website is often the first thing customers, investors, or partners check out, so you need to make sure it will leave a good impression on them. You will need to:
- Study competitor websites.
- Sketch a template for your website.
- Find around 5 websites you like and show them to your web developer to convey what you are trying to go for.
- Publish high-quality content (blog posts, guides, video tutorials, podcasts) that engages the users.
- Be sure your website is search engine optimized. This will make it easier for your target audience to find you and will boost your organic traffic.
- Make sure the website loads quickly.
- Optimize your website for mobile.
- So that your prospective customers or clients will have access to 24/7 customer service, use AI assistants on your website.
- Keep the site clean and simple; utilize white space.
- Make the navigation bars prominent.
Work on Your Elevator Pitch
So that you will be able to introduce your business in a compelling and concise way, you need to perfect your elevator pitch. Depending on whether you are pitching to partners, employees, customers, or investors, you can modify your elevator pitch. However, the basics should stay the same:
- Start out strong.
- Keep it under 60 seconds.
- Remember that practice makes perfect.
- Be enthusiastic in your delivery.
- Pitch the problem you are solving.
- Explain why your company is unique.
- Avoid using industry jargon.
- Invite the listener to participate. This will show that you are engaged and interested.
Learn How to Thoroughly Understand Budgets and Financial Statements
An entrepreneur that doesn’t know how to adjust spending may eventually run out of funds. You must always stay on top of your expenses. Establish a detailed month-by-month budget and review it often.
You will better understand investors if you make an effort to understand your financial statements. The questions prospective investors may ask include:
- What is the capitalization structure? How much equity and debt have you raised?
- What are your three-year projections?
- When will the business become profitable?
- What future debt or equity financing will be necessary?
- What factors can limit your growth?
- How much of a stock option pool are you setting aside for employees?
- What are your unit economics?
- What key metrics are you focusing on?
Don’t Keep Investors in the Dark
Keep your investors informed whenever you have good news or bad news. The updates don’t need to go into the nitty-gritty, but you need to make sure they include:
- Summary of the progress of the business.
- Strategic issues you are facing.
- Financials, including current cash position and monthly burn rate.
- Key metrics you are paying attention to.
- Request for advice.
In case you need to go back to your investors for additional financing, you don’t want them to be surprised. You need to constantly work on maintaining great relationships with investors. You want to leverage their networks.
Running a startup is challenging, but the rewards can be huge. If you want to reap those rewards, it’s important to do your homework. Start small and make an effort to learn from entrepreneurs who have a proven track record.
Michael has been working in marketing for almost a decade and has worked with a huge range of clients, which has made him knowledgeable on many different subjects. He has recently rediscovered a passion for writing and hopes to make it a daily habit. You can read more of Michael's work at Qeedle.