Starting a business of your own can be a fascinating experience. You have the chance to create your rules, and to release your full capabilities to achieve your goal. Many people are attracted to the idea of establishing a business, however, there are several difficulties you need to surpass.

When establishing a business, it requires very cautious planning, also practicality is a very important trait. A great business idea in your mind does not guarantee success, the journey from ideation to execution is the important part, which required creativity, determination, and business acumen.

1 – Know your capabilities

To be a successful business owner, you need to have a lot of knowledge regarding the industry and not be afraid of taking risks. Understanding your strengths and weakness can help you manage your business more effectively. The optimal traits of an entrepreneur are as follows:

  1. Personal Characteristics: Now that you are the leader your personality should reflect characteristics like resilience, determination, optimism, desire to succeed.
  2. Interpersonal Skills: You need to create and nourish amazing professional relationships with your employees, suppliers, investors, and customers.
  3. Practical Skills: To run a successful business, you need to be at your best and have clear practical skills like decision making, objective setting, business knowledge. These skills can help you reach the top.

2 – Is your idea worth it?

Before starting your business, you need to have a clear picture of the business environment you are planning to become part of. Understand your customers and the competition. To better understand the needs for products or services accurate market researches can help you grow your business and market share.

Below you can find some important aspects of market research:

  • Understand the industry: We highly recommend using only reliable sources when conducting market reach, business analysis regarding your industry. It is important to collect and analyze customers’ reviews to better understand them, as well as your competitors.
  • Product or Service Analysis: To have a better understanding of how the customer behaves and their purchasing trends, it is crucial to understand the value that your product or service provides. There are numerous cases of industry leaders like Starbucks, GE, that have improved their products utilizing direct customer feedback.
  • Trend Analysis: By using this methodology, based on sale figures, you can better understand the changing trends in customer behavior and preferences. If you are not happy with the results you should revise your business plan and make changes to your products to better fit customers’ needs. Many tools can help you understand trends based on reviews of your business, like Google Alerts.

3 – Do you have the resources needed?

Transforming your idea in a successful business requires not only an incredible amount of work but resources as well. You should have a clear picture of the resources needed for your business to be fully operational. You should take into consideration all costs related to the business, including equipment, manufacturing, labor costs, also office space is important.

Having a detailed list of all assets you need; from the ones, you already have to the ones needed to be purchased. This will make it easier for you to calculate the investment costs and related expenses.

4 – The Financial Plan 

Before starting your business, it is of utmost importance to have a clear picture of your financial situation and the amount you are willing to invest into your idea. What are your financial sources? Do you need a loan? Have you compared credit cards or loans offering before choosing the right one? Using your home space for the business can help you decrease costs.

We advise you to consider the points below when creating the financial plan:

  • Identify Fixed and Variable monthly costs. Understand and calculate the costs for the fixed and variable costs you expect each month. The main costs you need to take into consideration are costs related to renting, production materials, production costs, rent, packaging and shipping, salaries.
  • The cash flow statement.   To keep track of your cash balance you will need a cash flow statement, which will help you to combine all costs, sales, and collections monthly. When deducting the costs to the cash balance you will have a clear picture of your working capital and cash needs.
  • Break-even Analysis. This analysis will help you to estimate the timeline when your business will turn a profit. By completing this analysis, you can set prices on products more effectively and be more accurate in planning your business cash and profit strategy.
  • Monthly Sales.  This is one of the trickiest parts when completing a financial plan since it is very difficult to accurately predict the monthly sales of your product/ service. The best thing to do in this case is to create three different estimations, best, worst and likely scenario.

5 – Patience

On average for a business to break even it needs 12 to 18 months, and for the founder to pay themselves it will require years, based on Melinda Emerson, a small business guru, and writer.

Being patient and attentive to changing trends will help you to overcome difficulties and failures. This level of preparedness and analysis during the starting phase will determine a big part of the company’s success. Following the tips above will help you to overcome the initial turbulence.