Today, there is more information available than ever before on how to set up a successful business. No wonder – the Internet offers start-ups a wide range of opportunities, which is why more and more people are opting for self-employment. This article reveals ten tips on what to consider when starting a business.
Today, there is more information available than ever before on how to set up a successful business. No wonder – the Internet offers start-ups a wide range of opportunities, which is why more and more people are opting for self-employment. This article reveals in ten tips what to keep in mind when starting a business.
The dream of owning your own business
Being your own boss, calling the shots and also setting your own working hours – for many, this sounds like a dream come true. Those who run their own company can decide for themselves and are responsible for success or failure. This gives incomparable freedom, but also great responsibility. Today, it is easier than ever to start up a business, because there are numerous guides and assistance available, even free of charge. Nevertheless, it should not be taken lightly. After all, almost 80 to 90 percent of all newly founded companies fail – and that's already in the first three years. Often, this is not because the idea behind the start-up doesn't have potential. However, many inexperienced founders proceed without thinking and do not focus sufficiently on planning. In many cases, the start-up is also a mixed bag. It is precisely then that special stamina is required, which puts some start-ups to the test. But the good news is: If you have a convincing idea and plan its implementation in detail, you have a good chance of being successful these days. The following ten tips will help founders create a successful business.
1. Simple and clearly defined business idea
A start-up stands and falls with its business idea. Especially at the beginning, motivation is high, which is why many founders get overzealously lost in details and make their business idea unnecessarily complicated. However, the fine-tuning often only comes with the implementation anyway. Then plans have to be partly overturned and reformulated, which doubles the workload. In the start-up phase, it is therefore important to clearly define the business idea, but to express it as simply as possible. This helps the founders themselves to later orient themselves to the core of the company and always return to it. Also financiers can begin more with a simply described idea, which was clearly brought on the point. Credit institutions or sponsors want – and need – to get a comprehensive overview of the company they may be supporting financially. This works best if the founders provide them with transparent information, data and facts.
2. Treat the start-up like your main job
Many founders start their own business because they are passionate about it. That's all well and good, after all, it's about implementing the idea for years and decades to come. However, building a company is no walk in the park and often has little to do with passion. There is a lot of organization involved here, for which a lot of staying power is needed. If you don't keep your eye on the ball, you quickly run the risk of getting bogged down in chaos.
Therefore, entrepreneurs should approach their business professionally from day one and not consider it a hobby, but their main profession. A serious approach brings faster success and also shows financiers and business partners that the founders mean business.
3. Flexibility in business start-up
One important point to bear in mind when setting up a business is flexibility. One's own ideas and plans may fail due to unforeseeable events. Now it is a question of rethinking and finding an alternative. Hardly any start-up goes entirely according to plan and without hurdles. Experienced entrepreneurs are prepared for this and initially only draw up a rough plan, which can be modified and optimized at any time. This keeps them open to emerging problems, but also to better alternatives that arise during the start-up and initial phases.
4. The business plan
The business plan not only describes the idea behind the business, but also provides founders with detailed guidance for the first few years. It also includes the financial plan, which lists and compares expenses and expected income.
It is almost impossible to start a business without a business plan, and certainly not when outside funders are involved. They use it to get an overview of the project and then decide if they want to take the financial risk.
A sophisticated business plan is time-consuming. Founders should invest this time, however, as it feeds into their subsequent business. The start and the first years are more successful if the entrepreneurs can always refer to the business plan and see where they stand at the moment. This also shows whether the initial goals have been met or need to be adjusted.
5. The financing of the company
The financing of one's own venture causes many new entrepreneurs sleepless nights. Equity is usually too low to make the whole idea a reality and a loan is considered expensive. In fact, most start-ups resort to a loan and generate only 20 percent of the required capital from their own resources. The financial support of credit institutions is particularly helpful in the initial phase, when entrepreneurs need to pay for larger purchases such as machinery, materials or office space. At the same time, it can move the company forward quickly and ensure that it is in the black in a timely manner.
When choosing the right funder, founders should not jump at the first opportunity, but should obtain comparisons and opt for the best conditions. Finally, they enter into a commitment that binds them for years to come.
6. The legal form of the company
Founders can operate as a sole proprietorship, a GbR partnership, a GmbH or a stock corporation, among others. Which form is the right choice depends on the business idea and the risk associated with it. If possible, entrepreneurs should limit their personal liability so that, in the event of damage, the company alone is liable with its financial resources. For this purpose, entrepreneurs can, for example, establish a limited liability company. If the share capital of 25.000 euros is missing, can also fall back on the little sister of the GmbH: Its foundation is already possible with a share capital of one euro.
7. The insurance of the activity
Speaking of liability – mistakes happen everywhere where action is taken. Even with the greatest caution, not everything always turns out as originally planned. Good insurance that covers your own work is worth its weight in gold in these cases. Here, founders should already inform themselves about the necessary – and possible – insurances before starting their business and also read the fine print.
8. Giving up work
Many start-ups still try to do everything themselves at the beginning of their business. This is not only unwise, but simply not possible in the long run. Therefore, it is important to accept help at an early stage and to hand over tasks that others may be able to do better.
9. Find good staff
This succeeds, for example, with motivated personnel. This leaves the entrepreneurs themselves more time for their core business. Meanwhile, they can hand over simpler tasks and let helping hands take care of them.
10. Create your own brand
The own start-up competes on the market with numerous similar enterprises, which address the same target group. Founders can only stand out from the crowd if they create their own brand and thus create a recognition value among their customers. One's own brand is the unique selling point that distinguishes a company from its competitors. For example, a special make of the products, unique color combinations or a specifically designed social media presence play a role here. All these aspects ensure that the target group recognizes the company even when no name has yet been dropped.