10 Steps To Starting A Business

Introduction

As a business coach, many people come to me with the idea of starting a business.  Most of these people ask for my help to write a formal business plan.

Contrary to what many aspiring entrepreneurs think, writing a business plan is not the first or most important step to take when starting a business. For most people-especially those who have never before started a business-this is actually one of the last things you want to do in the start-up and get-off-the-ground phase.

This report is specifically designed for individuals who have never started a business before yet have a burning desire to do so; but don’t know where to start. Here are 10 practical steps, learned from the school of hard knocks, that will help you avoid the most common pitfalls; allowing you to get started right.
NB: This report is intended for businesses that need little to no start-up capital.

Step 1 of Starting a Business – Read

Before you do anything else when starting a business, you need to ensure you read books on entrepreneurship. Look for books focused specifically for the area in which you would like to open your business.

Strike up conversations with successful entrepreneurs in all different types of industries to determine how their systems work, what problems they encountered and how they overcame them.

Investigate the industry you are wanting to enter. See what other people are doing and think of ways you can do it better. Also ensure you look into any government compliance required for your desired industry and make sure you can afford to cover any costs these compliance issues might require.

Step 2 of Starting a Business – Dream

Take time to create your business ‘visually’ before you attempt to create it physically. See it in it’s best, most perfect state, as a world-class operation. How does it look, feel, taste, smell, and sound?

Entrepreneurship is one of the hardest things you will ever do, and your business must invigorate and excite you constantly, otherwise you won’t last through the hard times.

Write these dreams, plans, goals, and brainstorms down and keep them handy for when you encounter hard times.

It helps to write down WHY you want to start the business as this will help keep you focused and motivated through all the hardships you will face.

Step 3 of Starting a Business – Research

Before you invest a lot of time and money in your dream, do adequate research to find out if your idea is financially viable and sustainable.

In this step, you want to ask and answer a lot of questions, such as:

  • Will the market support your idea? What evidence do you have to support this?
  • What discontentment exists that your idea solves?
  • Will it unleash an idea virus?
  • Who else is doing it, and how successful have they been?
  • What will you do differently?
  • Do you have a readily identifiable market?
  • Will market trends support the idea, or will the idea be obsolete in a few years?
  • Do you need funding? If so, how much and by when?
  • What technology can be leveraged in the business?
  • What skills do you lack necessary for the business?

Remember that hands-on experience can be the most useful form of research – you may want to implement your business on a small scale at this stage to see what the market tells you.

Step 4 of Starting a Business – Form an Entity & Ensure Legal Compliance

Once you have completed step 3 and convinced that your idea will work you can move on. However, if you are not convinced, you need to go back and make amendments to ensure your idea is marketable and go through the first 3 steps with the new changes to ensure the viability of your idea. Do not go on unless you are certain there is a market and financial viability for your business.

Once you get through step 3 and are convinced your business is workable, it is time to make your idea concrete and form a business entity. You need an entity for four reasons:

  1. To be legal;
  2. In order to maximize tax savings;
  3. To help decrease liability; and
  4. Ensure you maintain control.

Your basic business entity options in South Africa include:

  • A sole proprietorship;
  • A Company.

If you are not sure which option to start with, invest the money to meet with a Business Coach (see offer on last page of this document), an Attorney (contact TaxDomain info@taxdomain.co.za) or an Accountant to discuss the differences between them and choose the appropriate entity for your business.

In addition to setting up your entity, you must also ensure that you are legally compliant in all other areas. For example, if you have employees, you will probably need Worker’s Compensation Insurance, UIF, PAYE and SDL. A good business coach, attorney or accountant will help you safely navigate all the compliance and legal issues you will face.

Step 5 of Starting A Business- Generate Revenue

This step is absolutely critical. Too many inexperienced entrepreneurs try to do too much at once. Many are so concerned about things like image that they spend too much money, time, and effort on logo and branding work, marketing brochures, advertising, etc. While all of these things have an important place, they should be paid for BY the revenues generated through the business.

Now is the time to be extremely pragmatic about building your business. Do whatever it takes to generate revenues, even if it means door-to-door selling. No business, however inspiring, will ever be realized unless you can provide the time, energy and/or money to make it materialize.

Step 6 of Starting A Business – Create Financial Systems

Now that you have cash flow, it is imperative that you manage it wisely. Account for EVERY income and expenditure, no matter how trivial, and maintain impeccable records. This will help you determine concrete profit margins and highlight areas for improvement.  It is also required for Tax.

My accounting package of choice is miBooks (CLICK HERE), start with the 3 month free trial and build from there. Or, you can use a quality bookkeeping service from TaxDomain (http://www.taxdomain.co.za), which can help you with provisional taxes and yearly taxes in addition to keeping your records.

Tip – in South Africa, businesses who turn over under R1 million per year can register for Turnover Tax.

Step 7 of Starting A Business – Begin Writing an Operations Manual

An Operations Manual gives you the ability to leverage your efforts and duplicate yourself by providing simple, step-by-step directions that anyone can follow to perform any required task.

Systematizing your business is the most important thing you will ever do. You should start this process from day one. Systems, of course, will be refined over time, but it is critical that you get them down in writing and keep them updated.

You may also consider using a professional writer such as Heather Scrooby (author@heatherscrooby.com) to write your Operations Manual.

Step 8 of Starting A Business – Create Marketing Systems

Many new entrepreneurs want to immediately start spending money to advertise their business. They leap enthusiastically into placing adverts without knowing the costs and/or benefits of the advertising medium. Advertising can be costly and relatively ineffective if not done correctly. Start-ups should be obsessive about managing finances wisely, and very cautious about spending money without knowing the benefits.

Advertising to avoid at this stage includes things such as billboards, radio and TV ads, flyers, yellow page ads, etc. Your marketing should start with things such as direct selling of some kind (telemarketing, door-to-door sales etc.), customer referral programs, free (or carefully selected paid) business listings and carefully structured, highly targeted and meticulously measured paid campaigns through platforms such as Facebook Ads, Google Adwords etc.

This gives you time to further test and refine your business idea and delivery systems.

Once you find a medium that you have measured and know gets results, stick to it. Then create and document which marketing worked and which did not in your Operations Manual.

Advertising and Marketing is highly effective and can grow your business exponentially if you target the right audience and execute your marketing correctly.  To do this you need to focus on factors such as A/B split testing on Copy, Call-To-Actions’s (CTA) and Landing Pages.  If you do this correctly your advertising will be optimized for conversion and will bring in a good return on your investment,

It is easy to spend money on advertising. If you advertise to the wrong target group, give the wrong message do not provide any/an unoptimized Call-To-Action, you are just throwing your much needed finances away.

Take advantage of the offer at the end of this guide to ensure your marketing works for your business, not against it.

Step 9 of Starting A Business – Refine Systems, Replace Yourself & Document

In the first year or so, you will most likely be performing most, if not all, business tasks yourself. This gives you the opportunity to learn and work out and document all the necessary details. However, there will come a point when you will no longer be able to manage doing it all yourself. With a great Operations Manual in place, when you get to this point you can immediately begin hiring and training others to replace you. You must ensure you still oversee and refine your systems after you have hired staff.

It is important that you document and record every aspect of your business. For example, if your business does door-to-door sales, you must ensure all salesmen record how many doors they knock, how many people they got to talk to, which script they used with which client and the response, and how many people actually bought products and which products were bought.

Over time, the data you collect through these systems will prove to be invaluable as you seek to refine your sales scripts and systems. It will allow you to build on and expand what is working and remove the things that do not work.

Parento Principle

Without real and accurate numbers you will have no idea what is actually working and what is not. Have you heard of the Pareto Principle (also known as the 80/20 rule)? This principle states that, for many events, roughly 80% of the effects come from 20% of the causes. In terms of business this can be translated to 80% of turnover is generated by 20% of efforts. That is HUGE, and by correctly documenting and measuring certain aspects of your business you can determine which 20% of your efforts to focus on; Better yet you can then cut out the 80% that does not contribute much to your bottom line! This will not only help you fight overwhelm, but will also give you much more time to document and test other avenues to further build your bottom line and create even more success.

Determine what data is critical and should be recorded by taking advantage of the offer at the end of this document.  You will discover the 20% to focus on in order to make your business a success.  And you will get more time to focus on further innovation

Step 10 of Starting A Business – Write a Business Plan

The final step in the start-up process is the one that most people think they should start with. Here is why it should come last: if you want it to secure funding, investors will want to see a proven track record before they invest. If you write your business plan after you have done the first nine steps, you can do it right, with actual numbers, facts, and statistics rather than optimistic guesswork and assumptions. Even if you are not looking for funding, writing a business plan will give you an opportunity to reconnect and refine your dreams after wading through numerous trials.

Over and above doing a Business Plan we recommend doing a Business Model Canvas – https://en.wikipedia.org/wiki/Business_Model_Canvas This will not only help you solidify your business concepts, but will provide potential investors with additional critical information.

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