There truly is great freedom in being your own boss with the complete agency over your business decisions. However, the reality of entrepreneurship includes a lot of struggle and does not always provide the highest level of independence. The key to a successful business foundation is to realize these pitfalls as well as the potentials in order to create a suitable framework. While your final business plan will include many things, keeping the following in mind is non-negotiable.
Basic steps towards a successful business
At rent24 we understand the complexity when considering how to start a business. For this reason, we’d like to focus on the basic steps and due diligence required for an entrepreneur to set up a successful business. Unlike what many motivational speakers may have you believe, planning for failure is absolutely necessary.
1. Take care of legal provisions
It is very important to have a comprehensive understanding of the legal environment in which your business will be operating. It is necessary to keep a lawyer on hand as you grow your business and take larger financial risks. In fact, one of the overlooked issues for many (especially young) entrepreneurs is the prospect of their business going bankrupt. A good lawyer will guide you on the best way to mitigate the risks which you are personally liable for in case your business collapses. This will most likely involve choosing the most appropriate corporate structure under which to register your business. Failure of one business venture need not spell the end of your entrepreneurial journey, however, the lack of legal due diligence often will.
Further legal aspects to consider:
- The business friendliness of the country in which you will work.
- The paperwork needed by the local jurisdiction.
- Another significant legal issue is that of intellectual property. It is important to ensure that you have the copyright to all logos, names, and products you create for your business.
2. Ensure that your books are in order
Proper accounting practices are a core requirement of setting up a business. Not only is this necessary to comply with regulations in many countries, but it is also only by having comprehensive information regarding your business’ overall financial health that you can make a business plan of any kind. Comprehensive financial accounts will be demanded by all potential and actual investors in your business and will be the core of your business planning efforts.
Proper accounting will ensure that there are no funds left accounted for and that your business has contingency plans for every situation. These could be the challenges posed by volatile exchange rates, tax compliance in each jurisdiction you operate in and deciding whether or not you will require external partners for issues such as payment acquisition and payroll management.
3. Fundraising. loans, friends, partners, seed funding
Every entrepreneur must have a well-defined fundraising strategy when starting a business. Such a strategy will not only help guide you make future management decisions but is also important to have when trying to raise funds in the future. Bankers, investors and even friends and family who consider investing in your venture will need to know whether you truly understand how much capital you require and what kinds of returns to expect on their investment.
It is advised for founders to invest at least some of their own money into their venture. Investors will be understandably skeptical to fund a business whose founder has not done so themselves. You can then explore other options such as taking out a bank loan (though try to limit personal liability) and approaching other potential investors such as venture capital firms and angel investors. Increasingly it is also possible to crowdfund various projects, which opens up the possibility of having many people invest in your business.
4. Decide on a branding strategy
It is important to ensure that you have consciously built a brand whose values you and, more importantly, your customers can stand behind. This includes doing market research to ensure that you know your target audience and have an awareness of their worldviews.
Businesses should develop a purpose for their brand as defined in a vision statement, and a more focused mission statement to go along with that. Naming your business will be the most obvious starting point when developing the brand, but consideration must be given to every detail of your brand, from the logo to the color scheme chosen for your website.
Once a business understands the type of message it wants to relay to the world it is important to set up mechanisms for ensuring uniformity across all communications channels. To this end, the development of a content style guide can prove invaluable.
Digitalization is a contested term but generally refers to the implementation of technological tools and skills in the workplace. It can include basic digitization such as the migration of paper-based records to a digital format but has the potential to go far beyond that.
Many people may be skeptical as to the universal importance of digitalization to starting a successful business, especially if you are not involved with setting up an online business. However, even for a very traditional brick-and-mortar business, the modern economy presents challenges that can only be overcome if the business has been sufficiently digitized and is constantly pursuing digitalization.
For example, advances in financial technology (fintech) have enabled any kind of business to reap the economic benefits of the digital transformation the global economy is undergoing. This can be through the use of online loan marketplaces to implementing the most modern payment acquisition systems. By embracing digitalization and having an online presence, businesses can also capitalize on modern fundraising methods such as crowdfunding or conducting a security token offering to enable a greater number of people to invest in your business. Businesses of the future will have to embrace digitalization, so it is a must for every new founder to keep this in mind.
Acting on the basis of a proper plan will lead to success
Ultimately, it is important to understand that having a strong fundraising strategy or complete regulatory compliance alone will not help you succeed in setting up a business. It is important to keep each aspect of the business in mind when making important decisions. For example, picking the name of your business will require you to keep both marketing and legal considerations in mind. It is only by taking care of every basic aspect of a venture that an entrepreneur can successfully set up a business. Just remember that at the end of the day all the planning in the world will be of no avail if it is not accompanied by decisive action.
Author: Aline Dörfert, Senior Content Manager rent24