Being a business owner is not a novel idea. In fact, in 2016, 25 million Americans owned their own business or were in the process of starting one. This number has grown since 2016, indicating that the world of entrepreneurship is one that appeals to a wide range of people.
Being a business owner can be quite rewarding, too. Approximately 90% of new American billionaires are self-made through their own product or service business.
Do you have dreams of owning your own business? Working as a business owner is a great way to enjoy your work to the fullest, but it is not without challenges. To be a successful entrepreneur, you need to understand what those challenges are and have a good plan in place to launch a successful business idea. From the initial brainstorming to the launch of your product or service, here is a step-by-step guide to becoming a business owner.
1. Determine Your Business Idea
Before you can create a business plan or seek funding for your startup, you need to have an idea. Every successful small business started as an idea in an entrepreneur’s mind. Here are some ways to come up with a great idea:
Find a Problem to Fix
For a potential business idea to be a good one, it needs to solve a problem that people find frustrating enough that they would be willing to pay for a solution. For example, Uber got its start when the owners had trouble getting a cab and realized the idea of a ride-sharing service might have a market. They saw a problem and presented a solution.
Talk to the people who are close to you to get an idea of what might be frustrating them. Then, brainstorm potential solutions. You may not find a solution to every nagging problem, but eventually, you may land on a winning idea.
Watch Emerging Trends
Another way to find a winning idea is to watch how the world is changing. Staying ahead of the game is essential here. You will want to subscribe to publications that forecast trends and ideas, such as Trend Hunter. Then, find an area that is seeing growth, and determine the potential problems it could bring.
Improve on an Existing Idea
While you need to be careful about copyright laws, you may find that there is an idea out there that could use improvement. If you can make the same product or perform a similar service at a lower price or higher quality level, you might be able to launch a business. The difference needs to be notable enough to create demand, but this can be a great way to get started on your winning startup idea.
2. Develop Your Business Idea
Once you have your basic business idea, you need to develop it. First, clearly define the problem that your product or service will solve, then outline the steps you will take to show potential customers this benefit. Create buyer personas that will showcase your potential buyer, their motivations, and their overall demographic.
As you develop your idea, make sure it will be potentially profitable. Is there enough demand to make a lucrative business? Will your potential income outweigh your costs? Do you have enough projected profitability to make the business idea worth pursuing?
3. Demonstrate Proof of Concept
Proof of Concept shows whether or not a proposed product or service is feasible. It proves that, in the real world, the project is marketable and potentially profitable. The proof of concept is shown through a feasibility study that you will make to ensure that your new idea has the potential for success in the real world, not just in your imagination.
Proof of concept has five basic parts. These are:
- A clear definition of your business idea or product
- Performance goals with measurable success metrics
- A test project that showcases whether your ideas will work
- Tracking and analysis of the performance metrics using the test project
- A presentation of the results
By going through this five-step process, you will have the documentation to show potential investors that your idea has the potential to grow into a successful business.
4. Write Your Business Plan
At this point, if all of your ideas have panned out, you are ready to create your business plan. A business plan is a formal document you can show to potential investors or lenders that outlines your idea, goals, and the plan you have to achieve those goals. Your proof-of-concept research will be part of your business plan.
Your business plan needs more than just your idea, the need for it, and your proof of concept. You will also want to include your buyer personas to show that you have done market research into your target audience.
The plan also needs to include a marketing plan. The marketing plan needs to be specific to the type of business you want to launch. For example, you would market a food truck entirely differently than you would market a new smart appliance. Showing that you know how you will market your newly minted business will give potential investors the peace of mind they need to move forward with your idea as an investment.
5. Build Your Network
Now you are ready to start networking, but strategically. You need a network of potential customers and potential backers. Get involved in online communities that might be interested in your product. Reach out to successful business owners in other industries to see what they did to launch successfully. Make yourself well-known and market yourself as a trustworthy authority in your field, and you will have people ready to back your business as you launch.
6. Secure Funding
You will need money to launch a new business. If you have a solid proof of concept study and a robust business plan, you may find this step easier, but it will still take some work. To fund a startup business, you have a few options.
Get a Small Business Loan or Grant
Many lenders have loans specifically for entrepreneurs. You can also find loans through the Small Business Administration. Sometimes, grants for new business startups are possible as well.
Ask Friends and Family
If your friends and family believe in your idea, consider offering them an investment opportunity. In exchange for investing money to launch your business, you give them a stake in the company, such as a percent of the earnings for a set period of time. If they really believe in your idea, they may be willing to back you in this way.
Crowdfunding programs, like Kickstarter, allow you to advertise your idea and ask for donations to launch. Most of the time, you will offer something in return for the donations, such as free company swag or even a free product when you launch.
Choose Angel Investors or Venture Capitalists
Angel investors want to see a solid business plan and knowledge of target customers. They are typically looking for startups that have a nearly guaranteed chance at success, and they will invest between $25,000 and $50,000 in most projects. They may also offer insight into running a successful business.
Venture capitalists are looking for high-risk investments and typically want to invest in startups. They are looking to invest early, so they can maximize their potential return.
7. Launch Your Business
Once you have your funding, you are ready to plan your launch. A successful launch is essential to getting a startup off the ground and operating. You want to generate excitement online and through other advertising platforms long before your launch. Your crowdsourcing could help with this, but make sure people are interested and engaged in what you are about to offer. Provide an incentive to some of your first customers, too. If you have a brick-and-mortar location, have door prizes for the first 100 people who come to your location, for instance. If you have an online-only business, offer an exclusive discount to the first 100 purchasers. If you are launching a restaurant, give out some free samples leading up to your official launch.
8. Ensure Profitability
Even after launching, keep tracking your business and your profits to make sure you are profitable. If you notice signs that you are not earning enough profit, make some changes and shifts. You need to ensure that you can earn a profit and repay your investors, and you need to adjust as you go if you are not meeting those goals.
Start Training for Entrepreneurship with Johnson & Wales University
If owning your own business is a dream of yours, you may want to consider some training in entrepreneurship. A successful entrepreneur has more than just a great idea. They also have good business sense, and that is what the right undergraduate degree can give you. Johnson & Wales University offers an excellent degree in entrepreneurship that could get you started. If you’re interested in becoming an entrepreneur, earn your bachelor’s degree in entrepreneurship online from Johnson & Wales University. For more information about completing your degree online or on-campus, complete the Request Info form, call 855-JWU-1881, or email [email protected].