Developing Your Business Idea and Funding Your Startup
At one point or another, everyone has considered the idea of starting a business, but few have the courage to actually follow through with it. Even fewer have the necessary knowledge and tools to form, maintain and grow a successful business. The risks and investments involved — as well as the relatively low rate of success for many startups — tend to make the majority of people give up on the idea as a passing fancy and remain within the safe rat race.
But if your entrepreneurial spirit is stronger than the average bear, and starting your own business is more than just a fun idea, you may be one of the few who can follow through and succeed. Unfortunately, you may have no idea where or how to start the process. Whether you already have a great business idea or you just know that this is the path for you, there are some basic steps that any prospective business owner should take in order to get started on the right foot.
Developing a Business Idea
Most people already have at least a general business plan before making the decision to start one. You may know that you want to work with animals, or you hope to open a coffee shop in a busy area, or you simply want to meet an unmet market need that could lead to a successful business. No matter where you are in the process of developing your idea, you need to ensure that it is something that can realistically be profitable and ideally something you are passionate about and knowledgeable about.
According to the U.S. Small Business Administration, there are over 28 million small to midsize businesses currently in the United States, making up 99.7 of all American companies. While this is obviously a promising statistic for small businesses, it can also be intimidating if you are not sure if your business can stand out from the crowd. No matter your product, service, industry, or location, there is certainly going to be a high level of competition, and you need to develop a business model which is realistic and beneficial.
Identifying a Market
No matter how certain you are about the product or service you plan to sell, you first need to ensure there is a market for it. You could make the most amazing, delicious, perfect wine in existence, but your business will fail if you’re trying to sell it in a dry county. Similarly, you can start a successful business without a well-developed product in mind, if you begin by meeting a currently unmet consumer need or filling a market gap.
Whether you already have a concrete business idea, or you simply plan to identify and fill a market gap, you can ensure there is a market for your business by asking a few simple questions.
- Is there currently a need for my product/service? (Consumer need)
- If so, who needs it? (Your market)
- Are there any other businesses currently filling the need? (Your competitors)
- If so, can your business sufficiently stand out from the competition? (What makes your company special)
Funding Your Startup
Once you have developed a realistic business idea and ensured there is a need for it, you may begin to think of ways to fund your new company. Small business funding is no simple matter, and this is often the most difficult element of starting a business. Especially if this is your first business, securing the necessary funds could take quite a while and a lot of effort.
If the business is something you truly believe in, you may want to use your own money for the largest part of the funding, but be careful. If the business fails or takes a long time to turn a profit (as almost all new businesses do), you could find yourself in a deep personal financial hole quickly.
A few of the most popular and successful funding options for new businesses include:
- SBA loans
- Venture capitalists
- Angel investors
- Personal loans
We hope you enjoyed the above post in cooperation with Socialnomics!