how to start business from scratch
Many people are interested in starting their business , but many factors stop them, such as lack of knowledge in business and administration, lack of financial resources, or psychological factors such as fear of failure. In this article we will give you practical tips on how to start business from scratch .
1. Read about business
Before anything, even before thinking about the business idea , you should soak up everything related to business.The career of Business Administration, for example, takes approximately 4 years to be completed.
If you are not familiarized with topics such as Sales, Plans, Costs, Organization, etc., you have a lot of work to do. You can start by reading business magazines, and continue with a book of and with business courses to be able to start business from scratch.
2. Analyze your strengths and weaknesses
Another advice before starting a business from scratch , is to determine what your strengths and weaknesses are.
A very used analysis when starting a business is the SWOT analysis , for its acronym stands for Strengths, Opportunities, Weaknesses and Threats. In this matrix, you will write:
Strengths : what it is good at, what it has experience, what resources it has, what special abilities it has, what it has learned in its life.
Weaknesses : be honest and define your fears, in what has failed, lack of experience, knowledge or resources.
Opportunities : we’ll see it in point 3
Threats : we will see in point 4
Why do this? It seems logical and obvious, that someone uses their strengths when starting a business , but the reality is that this does not happen. For example, I receive many comments and emails from people who ask me which business is more profitable. The reality is that any idea can be profitable, if it is based on its strengths, not on its weaknesses.
An example: the person who studied Architecture, and wants to start a food business with 0 experience. A food business can be profitable, but the fact of basing it on a weakness (or experience) considerably limits the opportunity to succeed.
3. Know how to look for opportunities
Business opportunities go before the business idea … Always. That is, the good entrepreneur does not try to start a business from scratch thinking about ideas of what business to put, but looks for opportunities and when he finds them, he defines what business is going to take advantage of this opportunity.
Business opportunities are unsolved problems, unsatisfied needs of both small groups (market niches) and consumer markets, or growing problems at the local, regional or national level.
For example, one problem in Mexico at the national level is the high rate of childhood obesity (and in part of obesity in adults). This results in a business opportunity to address the problem in various ways: gyms, workshops, diets, sale of slimming products, etc.
4. Identify threats in the environment
Around a business, there are several environments that affect the company positively or negatively. For example, the economic, political, social, competitive environment, etc.
Once you find the potential opportunities, investigate if there are limitations or factors that negatively affect your position, thinking about the different environments.
For example, in the case of the business opportunity to combat childhood obesity, you can consider the idea of slimming products. When investigating the political environment, he realizes that there are limitations to sell these products, due to the Cofepris and the SSA, which force to have a health record for the sale of this type of products.
5. Not sticking to an idea
Another very common problem when developing a business from scratch , is sticking too much to a single business idea. That is, we focus only on one idea, without considering others, and we lose the necessary objectivity to qualify the idea of business as possible or not, profitable or not. (New article: low investment business ideas)
For example, following the case of the business selling products to lose weight, decides not to take into account the legal limitations to sell these products. At the end of accounts, whether in 2 months or 1 year, you probably have a legal problem with the sale of these products, and you have to close.
6. Check that there is competition
A valuable factor in determining whether a business idea is profitable or not is to investigate if there is competition. By nature, we think that if there is no competition, we have the whole market for ourselves. Serious error, the lack of competition usually indicates that it is an unattractive, difficult, or unprofitable market. Remember that one rule to consider is that someone probably already tried the business you are thinking of (even when it is an innovative business idea). If there is no competition, it indicates a wrong turn.
Also check the national competition, if you notice that if there are competitors in other cities and not in your locality, you can effectively indicate that nobody has considered the idea, but if there is competition (then there is money to be earned)
On the other hand, too much competition is a good sign to sell, but the profit margin may not be what you expected. For example, in the case of starting a business from 0 of the sales of tablets, I analyzed a few months ago the situation to import these products from China, determining that although it is a product with very high demand in Mexico, the profit margin It is close to 10-15%, resulting in unattractive profit margins.
7. The location is everything
The location of a business is a double-edged knife when starting a business from 0. We can have a place of our own, and think “I’m not going to pay rent, I’m going to make more money”.But, if it turns out that you do not have enough consumer traffic that we’re trying to sell you, we certainly will not pay rent, but neither will we get sales.
For example, the case of a car repair business, without parking. Where do you plan your customers to park? Or a seafood restaurant in a low-income area Can the people of the colony pay the prices?
8. Create a brand
What is the difference between a hamburger restaurant and McDonalds? The brand. By starting a business from scratch , you have the possibility to create a unique and memorable brand of your business.
Import factors such as name, design, color, style, names of products, quantities, packages, etc., which in combination, create a business that the customer identifies as “different” from normal.
9. Use marketing
A common phenomenon of a traditional business, is to open its doors, and realize that in a week, only a couple of people have entered the store.
The main reason for this is the lack of publicity and promotion, both for the event of “opening” the business, and the consistent monthly use of strategies to promote the business. You have to consider how you will attract your customers, within the business plan (advice 10)
10. Make your business plan on your own
The business plan is not a librote or a paper to take out a loan. It is the guide that will force you to investigate the business, evaluate it, and plan the strategies and tactics to start, manage and grow your business.