One of the most thrilling life experiences is starting your own business. A thousand “what ifs” are running through your mind, along with vision and adrenaline.
To be honest, one of the quickest ways to burn out, lose money, or worse, destroy a great idea before it has a chance to get traction is to dive in passionately without a solid foundation.
So, what to know before starting a business?
You’re already on the right track if you’ve been searching for “how to start a business” or “things to do before starting a business” on Google.
Advice appears on the internet: register your business, set up accounts, recruit workers, make a website, and so on. However, the fact that most individuals ignore is that if you don’t complete key steps before starting a small business, none of it matters.
This blog has highlighted two crucial things first before starting a business to help you determine the difference between jumping confidently and wandering aimlessly.
Step 1: Validate Your Business Idea Like Your Future Depends on It (Because It Does)
We’ve all experienced those “lightbulb” moments, the shower thoughts, the late-night ideas written on a napkin, or that creative spark you’re confident will be the next great thing. However, pause before quitting your job or investing all your savings in it.
The truth is that not every idea is a business. Business planning before starting up is the most crucial step, which involves understanding that your idea genuinely addresses a problem that people are interested in.
Why Idea Validation Matters
Consider this—you wouldn’t build a home without first checking whether the ground could sustain it, would you? Businesses are no different.
Asking the difficult questions first is more important when it comes to business planning before beginning than simply following a template:
- Who is going to buy this?
- Why should they give care?
- Is there a better or less expensive option available already?
- Do they simply find it “cool” or are they willing to pay for it?
Businesses believe that enthusiasm is a key factor in achieving success. However, passion without demand is only a pastime.
How to Validate Your Business Idea
Validation doesn’t have to take years or cost thousands of dollars. The best validation is actually quick, easy, and brutally honest.
The following useful small business planning tips are available to use right away:
- Talk to Your Target Audience
Don’t guess. Talk to 10 or, if needed, 20 potential customers of your service or product. Inquire about their problems, existing fixes, and if they would be willing to pay for what you are providing.
- Make an MVP (Minimum Viable Product)
This doesn’t involve building everything. For example, if you’re considering opening a bakery, try selling cupcakes from home or at local fairs before deciding on a location.
- Take a Smoke Test
Create a landing page based on your idea, launch a brief advertising campaign, and observe whether anyone registers or shows interest. The answer is yours if nobody clicks.
- Check the Competition
A small amount of competition is encouraging. No Competition? That may indicate that the market isn’t sustainable. Analyze your competitors’ actions and develop a unique strategy to differentiate yourself.
Keep in mind that crucial tasks before starting a business are not always related to paperwork or legislation. Making sure you’re not creating something that no one wants is the first step.
The worst part is that validation involves more than just confirming the viability of your idea. Sometimes you have to realize it’s not and change course before wasting time and money. Still, it’s a victory.
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Step 2: Build a Financial Safety Net (Because Optimism Doesn’t Pay the Bills)
The next stage is to have your finances ready after your idea has been validated. Furthermore, this extends beyond simply setting aside money for unforeseen expenses. To prevent your dream from becoming a nightmare, this is about creating a true financial safety net.
Why Financial Planning Comes First
Many businesses fail due to financial constraints, rather than poor ideas. They either overestimated revenues and expenses or simply did not have enough cash on hand to get through the challenging months.
Therefore, one of the most crucial things to do before launching a business is to make sure you have the financial runway to really give your idea a chance.
Before starting a small business, follow these crucial financial steps:
- Determine Your Initial Expenses
List every expense, including those “little costs” that mount up over time, like software subscriptions or packaging, as well as tools, inventory, marketing, websites, and legal fees.
- Build a Personal Expense Plan
This is where many business owners make mistakes. Months or even years may pass before your company settles the amount. Do you have enough money saved up for rent, groceries, bills, and personal responsibilities during that time?
- Make a Prediction of the Cash Flow
This is a component of pre-startup business planning. For the first 6 to 12 months, project the inflow and outflow of funds. Even a basic spreadsheet can be used.
- Examine the Possibilities for Funding
Savings, small business loans, grants, or investors. There is no one-size-fits-all approach, but you can be adaptable if you know what your options are.
- Keep Personal and Business Finances Apart
Create a business account. This keeps everything organized and professional, and your future self (and accountant) will appreciate it.
The Human Side of Money and Business
The human element comes into play here because starting a business is an emotionally charged undertaking.
Having a financial safety net in place allows you to rest easy. It helps you to make informed decisions instead of snap decisions.
When money is tight, desperation can lead to poor choices, such as accepting the wrong clients, cutting corners, or compromising quality. However, you behave with confidence instead of fear when you are financially ready.
When You Combine These Two Steps
You can create the ideal launchpad by validating your idea and establishing a financial safety net.
- You can avoid pursuing a dead-end idea by using validation.
- Planning your finances helps you avoid running out of gas in the middle of the trip.
You’re traveling quickly on a dangerous road without any protection if you don’t have idea validation and financial safety. You may still encounter difficulties with them, but you will persevere and keep moving forward.
Final Takeaway!
You can’t just plant a seed and hope it sprouts; you need to ensure you have sufficient sunlight and water (financial planning) and inspect the soil (validation).
Don’t ignore these two steps if you’re serious about starting your own business. Starting with them can help you avoid 90% of the common mistakes that lead to startup failure.
So, the next time you feel like presenting your great idea on social media, printing business cards, or building a website, stop and consider your options.
Consider this:
- Have I validated this idea?
- Can I make it work with my financial cushion?
You can also get expert startup guidance through Collett Thorpe’s books. Visit us now!
