Starting a new business venture isn't easy. But SCORE mentors can help.
Entrepreneurism is on the rise across America. According to the United States Census Bureau, Americans registered 4.3 million new businesses in 2021 — a 24% increase from 2019.
A year later, this trend has continued, and it's not slowing down any time soon. In November 2021, Americans filed 432,034 business applications. The message here is clear: if you've ever wanted to be your own boss, 2022 is a great time to build your business.
Of course, starting a new business venture isn't easy. But SCORE mentors can help. We continue to get requests for help with starting a new business. I will share seven tips to help you build a great business idea into a thriving enterprise. These were done by Zoe Devitto who is a content marketing strategist for SaaS brands like FollowUpBoss, Mention, and others plus she is also a content partner with SCORE.
1. Be clear about your business purpose
Your business purpose is your "why," or the driving force behind your enterprise. Defining it is crucial, as understanding your purpose will help you make goal-aligned decisions when you face challenges.
To define your purpose, ask yourself these questions:
- What will your business give customers?
- What makes your business different from your competitors (i.e., your "Unique Selling Proposition" or "USP")?
- Who are your customers?
- What do you want your business's legacy to be?
- Why does the world need your business right now?
- What is your business's social responsibility, and how will you give back to your community?
Your business's purpose is personal to your enterprise — so your "why" won't look the same as other business owner's. But, of course, there's also no "correct" purpose. If your purpose drives you, it will serve you well.
2. Create a strong business plan
A business plan is a document that outlines your business's goals and how you will work towards them. Business plans generally include:
- An executive summary that outlines your small business ideas and visions
- A description of your business's structure and operational plan
- Research on your target audience, competitors, and industry
- Your management and staffing plans
- Your financial plan, including funding plans, sales forecasts, profit and loss projections, and cash flow projections
There are many easy ways to build a business plan. If you already know what you want to include in your plan, you could use a business plan template. Or, if you'd prefer a course, try our "Developing a Business Plan" course.
3. Get the legal processes sorted
Obtain a business license before opening your business to ensure you are operating legitimately. Depending on your plan, you might choose to register as a sole trader, partnership, Limited Liability Company (LLC), or as another structure (like an S Corporation).
Once you've registered as a business, educate yourself on your tax obligations, so you can work to meet them straight away. If you need guidance, consider consulting with a tax accountant.
You may also need to obtain a permit if your business undertakes an activity that a federal or state agency regulates. You can check what permits you need through the Small Business Administration's website.
4. Nail your marketing plan
Building a marketing plan when you first open your business can help you grow your business quickly, as it will help you attract customers, build brand awareness and make sales.
Consider including multiple forms of marketing within your plan, including email marketing, social media marketing, traditional marketing, Paid-Per-Click (PPC) marketing and content marketing. Diversifying your marketing efforts will help you reach a broader market, leverage online shopping and grow your brand's public image.
5. Create sales projections
Sales projections are crucial for new businesses, as they give you something concrete to work towards and mark your progress towards your goals. Outlining your sales projection is also crucial if you have investors, as you can use projections to demonstrate why your business ideas will deliver a strong Return-on-Investment (ROI).
For best results, create data-driven sales projections based on competitors' performance and market research. You should also adjust these projections depending on your initial sales performance.
6. Have a concrete financing plan
Unfortunately, inadequate financing causes many new businesses to collapse. To avoid potential financial troubles for your business, build a concrete financing plan that covers how you will manage your cash flow, debt repayments, insurance, investments and ongoing business costs.
Your financing plan should also account for changes in your performance, including:
- How you would handle a sudden drop in sales or revenue
- How you would handle an unexpected disaster
- How you will account for inflation or rising costs
- How you would keep your business afloat during a crisis like COVID-19 (as COVID-19 impacted 76.2% of US businesses)
If you need help building a financial plan, consider finding a virtual small business mentor with experience in your industry and consult a financial planner.
7. Take it one day at a time
Finally, don't forget to approach each day as a new opportunity for your business. Many small business owners struggle to attract customers, make sales and network effectively during the first few months. Don't let yourself get stuck in a negative mindset, and instead, focus on building a profitable business little by little every day.