A lot of people want to start a small business. But jumping into one without thinking about it is only going to cause you problems in the long run. Many small businesses fail in the first year and this is why. If you want to start a small business, take a steep back and think about these ten things before you do. They will help you set your business up for success and ensure that your entrepreneur journey is a good one!
Roger: Welcome to Local SEO Today. I’m Roger Murphy.
John: And I’m John Vuong.
Roger: We want to welcome you today to our segment. We want to talk to business owners or entrepreneurs that are thinking about or you know, starting a business and today John, the topic is 10 things to consider when starting your new business.
John: I think this is a great topic especially if you’ve always wanted to run your own company, be your own boss and see if you’re cut out to be a successful entrepreneur, right? So the first thing that we want to talk about is really figure out why you want to start your business, right? Figure out your, “Why,” ultimately. Is it for the money, is it really for time, is it your…
Roger: Cause you don’t have a boss to report to. So you’re your own boss.
John: Like there’s a lot of things you gotta uncover about yourself, right? And why you have left your full-time job to want to be an entrepreneur or you’re doing a side hustle and you’re wanting to see if this is gonna work out or not. So figure out why you’re doing this, ultimately and once you figure that out then you have a better reasoning on why you’re in business, right? And number two is look at your finances because ultimately if you’re an entrepreneur you’re probably not gonna you know, earn as much as to start off as much as when you were working a full-time job.
Roger: Exactly, I have seen a hundred times, times into the factor of 10 all through the years business owners or new entrepreneurs they’re undercapitalized and what that is John and to viewers, not having access to funds to get the business started properly and I’m not talking about having a fortune sitting, your disposal from the bank on the credit line but look at… It’s gonna take longer than expected to get the thing up and running. You’ve got to have an idea and a particular amount of funds you can use and access while you’re ramping up your business.
John: Yeah and I mean as an entrepreneur myself I started…There were two ways you can either buy a business, fund it through loans and grants and figure out what…If you can borrow money or you start from the ground up but you bootstrap, right? And you figure out where you should invest money and spend money and where you should and you realize that really quickly, right? But really figure out like why you’re doing it and then how are you going to fund this venture because those first six months or year or a couple years, you’re probably not gonna pay yourself, right? And be prepared for that so depending on your life situation as well. Are you equipped to handle the demands, right? If you have a family is it the right time to put your family at risk?
Roger: So if you are already employed somewhere this is where in terms of…Ask yourself that question, can I afford to do this? And if you can’t because of cash flow, really consider it. Today, John, we use it all the time, it’s referred to as a side hustle. There’s lots of time between 5:00 in the afternoon and midnight every day where you can do something on the side to get it going and get it growing so don’t go cold turkey and cut off your entire you know, source of regular income to try and start this new business you got a balance that out and be smart.
John: Yeah, and this is a decision you have to make, right? As an entrepreneur, right?
Roger: One thing we should talk about too is not getting ahead of ourselves but the business that you’re getting into, is there a demand for it? Research the market and maybe you’re working for somebody already and you’re saying, “I can do this better. I see holes in the system of what they’re doing. Or they’re not providing as good as service. I think I can do this better.” Whatever that is but researching to make sure you’ve got a demand in this community.
John: Yeah, and that means either working for someone that’s actually offering that product or service, understanding how it’s run, understanding their customers or you doing that at a lower price point so that you can gain market traction and figure out if there’s an actual demand for that product or service you’re offering, right? And make sure there’s a margin. I mean at the beginning you’re probably just acquiring customers so don’t expect to make a lot of money, make sure you covering your expenses.
Roger: Yes, that’s nice so research the market, make sure there’s a need there and a demand for. What is going to be your competitive advantage and think about that to your point, John, you can’t just be cheaper. You’ve got to provide more, whatever that is. It’s gotta be more service, faster, better quality of you know, products or whatever you’re using. You’ve got to find something that goes above and beyond your competition.
John: And what’s your unique selling propositions, right? What makes you different than the other guy down the street or the other guy in your city or your neighbor?
Roger: Exactly, cause if you’re exactly the same, what’s the point? There is no point.
John: So they have much more experience than you, they’ve been doing it much longer, they know they have better processes, systems, they you know, they probably have better vendors as well for pricing, right? Yeah so you know, you starting off you gotta figure out what’s gonna make you different? Is it the service? Is it…Something that stands up, something that sets you apart.
Roger: Yeah, that’s it. Something else that should be mentioned if you’re considering getting into business, have a system, learning a system and that might be or maybe you’re already working in an industry that you want to move it on your own but banks love of systems when you go to the bank and you’re saying I’m gonna open up my own and I need a credit line or whatever it is they’re gonna say, “Show me your business plan.” They love business plans that show experience, show there’s cash flow, here’s what I anticipate and my costs are gonna be, here’s my marketing, here’s your profit margins, whatever it is if you learned that somewhere else that’s the best education you’ll ever get.
John: And do your due diligence, right? So figure out what they want and do it, right? A lot of business owners or entrepreneurs…They don’t understand what it takes to be an entrepreneur, right? They don’t understand business plans and how much due diligence you need to do the market research, figure out what the pricing is, figure out what the market actually entails, the population, the growth, the trends, what your competitors are actually doing, what’s gonna set you apart, how do you gonna be different, location wise and service offerings. There’s so much involved as a business owner.
Roger: So many things to consider. One thing also, John, just in terms of the finances I think you mentioned it already but think about this if you are getting, you’ve got the business plan you’ve given it to the bank, they’ve approved it for some sort of credit. The credit line you end up with is not your friend. It’s not free money. It is not there to be spent frivolously and I have watched and I’ve seen this over the years. Examples of young business entrepreneurs that once they’ve got their credit line they go get first thing, John, a $50,000 truck. Brand new truck, huge debt they’re saddled with for 7 years that’s not the smart move when you have no revenue coming in. Be very smart. You use that credit line very, very, very cautiously.
John: And I think the biggest thing people don’t spend enough of at the beginning is to market and advertise and get your name out there, right? Because you don’t have a client base, right? Especially, if you’re brand new, if you’re buying a public business or any established business it’s a little bit different because you’re loaning you know, you’re buying a business.
Roger: You’re buying a system that has cash flow that hopefully with your money and with any money you’ve gotten from the bank as credit or whatever. It can pay for itself and you can pay down that debt.
John: So you know, make sure you are knowledgeable, be educated, figure out what you want to do with the money that you borrowed from the bank, right? And be smart with the money.
Roger: Exactly, and know it to your point again, know that you’re not gonna be putting money in your pocket for months. You’re going to be working twice as hard for half the money, seven days a week but this is what entrepreneurship is all about and it gets better over time and it’s exciting in the early days but just know that it is not a nine-to-five job. John, when you started this company, your company, how many hours were you putting in a day?
John: Easily 16 hours, seven days a week from learning to understanding how to be an entrepreneur.
Roger: And acquiring customers.
Roger: And taking care of customers.
John: And collecting.
Roger: And collecting. Entrepreneurship is fantastic and it’s you know, it’s a needed service in society because people, consumers need entrepreneurs to provide goods and services.
John: So first when you’re looking at building a small business you have to figure out if you want to be a solopreneur? Do you want to be…Have a partnership or do you want to incorporate, right? So when I first started I was actually just with a business owner, solopreneur, right? So I didn’t know what my revenues were gonna be like, I didn’t know if this was gonna be it or not, right? But the whole intention is to incorporate, right? So that you’re protected over the years but figure out what your entity needs to be, especially if you’re just starting the journey.
Roger: Exactly and it should be mentioned that partnerships if you check even the most you know, marketing 101 in college or university, partnerships do not last. They will not last forever but it’s an important…The reason people partner is because they don’t have the capital to do it all themselves so if you have a hundred percent of the ownership of something that’s not succeeding versus 51 percent or 49 percent of something that is a success, that’s why you need partnerships but I know that you’ve gotta have it structured properly because there will be a day where you’ll be exiting from each other.
John: Or incorporating because end of the day you want to protect your personal assets to your business assets, right? In case, you never know what’s gonna happen so figure out what kind of entity you need to set up your small business.
Roger: Yeah, so lots consider, we’re just touching on few of the high points but if hopefully we’ve given you something just to consider, something to sit back and just really think about the why you’re getting into it, the efforts that are gonna be required, the homework, it’s like going back to school and I should mention John, even though you’re your own boss you don’t have to report to anyone. In fact you still will report somebody, it’s either gonna be Revenue Canada or your banker. So trust me you always have a boss. There’s always be somebody you know, talking.
John: And have fun, right? This is an entire journey about your life, right? And this is gonna be a commitment that you’re gonna put yourself through, either through learning or trial and error, learning from others, learning from the mistakes you’re gonna make and yes, it’s constant learning so stay open to continually learn because once you stop learning that’s when you probably aren’t going to be successful, right?
Roger: So John, thank you for today and I hope you enjoyed this segment of Things to Consider When you’re Starting a New Business.
John: Thank you.
Roger: Have a good day.