Being financially independent by owning a business is a life goal for some of us. Since around 90% of new American billionaires are self-made, people associate entrepreneurship as successful and financially independent.
However, starting a business is not an easy task. You need to do a lot of preparation and research before deciding to invest your time, money, and attention into starting a business. So, how do you know when is the perfect time for you to become an entrepreneur?
In this article, we will look at eight essential steps and considerations that can help you determine if it’s the right time to start a business.
Finding the Target Audience
The first step of starting a business is to determine who your target audience is. Knowledge about your market characteristics can significantly affect your business’s performance. For example, it is reported that 34% of startup failures are caused by a lack of product-market fit.
Because of that, revolving your business around target audiences’ characteristics is important to establish a strong and stable venture. Some extensive and in-depth analysis methods are required to understand your potential market and customers successfully.
One of the easiest ways to estimate your target audience is to look at your competitors. Check out their social media and see who interacts with their posts.
Testing Your Ideas on the Market
Launching a full-scale product or service into the market can be nerve-wracking as it comes with a significant risk of failing. Therefore, it might be a good idea to test your ideas on your potential market by conducting small trials and experiments.
Products can be tested by giving out samples to a group of people that fits your target market demographics, then get their feedback. It is a good way to understand what needs to be improved based on your target market’s preferences.
On the other hand, marketing tools such as online content are easier to test since you don’t have to give it special treatment. After you publish your content, all you have to do is check its performance using tools such as Google Analytics.
Having a website can be a great platform for testing various ideas since you have complete control over the platform, and your audiences can access it easily. Check domain availability by using online domain name checker services when registering your site, and use a website builder to create a website with ease.
Discovering the Market Gap
A gap in the market is a demand for products and services that aren’t met. Your business’s main role would be to try and fulfill this demand. Successfully identifying the market gap is an essential step to creating an original business idea.
Since there might be many gaps in the market, the key is to find out which one you can utilize as the opportunity for your business. Make sure you have the required skills and know the methods to meet this demand. Don’t forget that your strategy should also be profitable.
One of the most straightforward ways to identify the market gap is by asking your potential customers’ opinions. Try to conduct surveys to learn your target market’s needs and demands.
Checking Your Time and Energy
Starting a business from scratch requires a lot of attention and a considerable amount of energy. To launch a business properly, you might need to give up other activities such as your day job that would potentially split your focus.
Consider your daily schedule before you decide to start a business. For example, launching a full-scale business might not be possible if you are a college student who needs to attend classes daily. It is also important to pay attention to your energy. Forcing yourself to work day and night might negatively impact your health in the long run.
However, it doesn’t mean you can’t complete smaller tasks to prepare your business while having other regular responsibilities. For example, coming up with a business name and designing a logo wouldn’t take much time and effort.
Know Your Personal Life Boundaries
During the early days of building your business, you may have to make some compromises to your personal life. For example, tasks such as meeting with potential investors, market research, and calculating financial projections can take a lot of time you usually use for leisure or other personal activities.
Understanding this possibility beforehand is a good way to avoid stress. Know your boundaries, so it is easier to create a time management schedule that fits your preferences.
Around 72% of entrepreneurs are directly or indirectly affected by mental health issues, showing you how important it is for you to manage your work-life balance properly.
Don’t hesitate to rest or take some time off if you feel exhausted. It is also important to dedicate time to talk with your friends and family to get more perspectives and maintain your mental health condition.
Calculating the Financial Resources
Before you start a business, understand that entrepreneurship doesn’t guarantee a stable income. This is especially true during the early stages of your business when you may still try to establish a customer base and brand characteristics.
Because of that, make sure you calculate your financial resources thoroughly. Consider various expenses required for operation, marketing, legal, and supplies. Some of these costs may only occur once, but most of them will be a part of your recurrent expenses.
We also recommend you prepare an emergency budget for your personal expenses. The rule of thumb is to have savings equal to at least six months of living expenses before focusing on your business full-time.
Evaluating Your Knowledge and Experience
You may require a specific set of skills and knowledge depending on what kind of business you want to run. Try to evaluate if you have the means to run your business correctly based on your knowledge and experience.
There are various forums and blogs available online where you can get more knowledge about starting a business. Establishing a network with other entrepreneurs through social platforms like LinkedIn is also important to exchange information and experience.
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Understanding the Post-COVID-19 Shift
COVID-19 has slowed down the economic growth in most parts of the world. As we are starting to recover from the pandemic, it might be time to start your business. However, it is important to know how to run your business in this post-COVID-19 environment.
In some places, businesses such as restaurants and physical stores are still not allowed to have customers with full capacity. Therefore, opening a restaurant business might not be the best idea for now.
As of June 2021, Statista reported around 42.5% of small businesses in the US felt moderate negative effects of COVID-19. Thus, you might want to analyze the growth of companies around you in this post-pandemic time. Try to also read more about how to properly run your business in this situation.
Running a business requires thorough preparation and a considerable amount of attention to detail. Before you start your journey of being an entrepreneur, there are several factors you need to know and understand regarding your future business.
In this article, we have looked at eight essential steps and factors to determine if it is the right time for you to start your small business, including:
Finding the target audience
Testing your ideas on the market
Discovering the market gap
Checking your time and energy
Deciding on your personal life boundaries
Calculating the financial resources
Evaluating your knowledge and experience
Understanding the post-COVID-19 shift
If you think you have fulfilled every factor listed in this article, then it might be a perfect time for you to start your small business. So, prepare all the necessary resources and get ready to invest time, money, and energy into this new journey of yours.
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