Do you want to start your own business but don’t know where to begin? No worries, people aren’t born entrepreneurs, they become entrepreneurs! In this article, find out about the different steps and procedures involved in starting a business.
Step 1: evaluate your idea based on 2 factors – desirability and feasibility
There is no perfectly good or bad idea. Your good idea could be terrible for someone else. The goal here is to ensure that your project lines up with your values, life plans and resources. Choosing just one idea is also important to avoid spreading yourself too thin.
To help you evaluate your idea, we recommend using a scoring tool1 – a method that consists of posing five big questions and totaling your answers (scale of 1 to 10) to obtain a score on 50. You will need to set a minimum score to follow through with your launch.
The five angles to assess are:
- What are my desires?
- What are my values?
- What skills to I need to see my project through? Are those resources available to me?
- What are the financial constraints associated with each idea?
- For each opportunity, what would be the effect on my private and social life?
This step will help you think objectively about your motives and put them into perspective with your project.
Step 2: formalize and structure your project, prioritize your actions
Next, it is important to see “the big picture” of your project. To do so, you can use the comprehensive visual tool known as the business model canvas2 that will help you explore the strategic items for getting your project off the ground.
This involves six main categories:
- your offering (you need to provide a solution to an issue faced by your customers),
- your customers (who are they? What issues are they facing?),
- your costs,
- your revenues,
- your distribution channels,
- your key partners.
Drafting this shouldn’t take you too long. You can modify things later. The aim of the exercise is a first formalization of your project to gain insight into what is missing/needs work/needs validation, etc.
This approach gets you into the action: drawing up hypotheses (on customers’ needs, their profiles, etc.) that you will verify in the next step.
Step 3: assess the viability of your project
The stake here is to ensure there are customers willing to pay for your product or service. It is a vital question that will determine the viability of your project.
Field study, market study
You will need to conduct a study3 by talking directly to your customers. Take advantage of your network: friends, family, colleagues, etc.
Start by getting out to meet potential customers and pinpoint their needs. You can build your interviews around the following items:
- customer profile (socio-demographic, behavioral and psychological criteria),
- their issues,
- information about measures customers have taken to address their issues and elements that might be missing.
The second part of this step is to verify that your offering is moving in the right direction (price, functions, services, etc.), as your goal is to generate real engagement from your future customers. (A few tips4 for optimizing your interviews).
Meanwhile, it’s time to do some financial modeling: realistic estimates to give you more forward visibility.
The first step is to draw up a list of all of your monthly expenses, which could include (but is not limited to):
- initial investments (stocks, business assets, machines, computer equipment),
- insurances, bank fees and loan payments,
- fixed expenses (leases, water, electricity, equipment maintenance, stocks, etc.),
- your salary and employee salaries,
- any outsourced services, etc.
Once you have listed your expenses, you can calculate the revenue required to cover expenses and live from your activity.
The items that should be included in that calculation are:
- revenue of your competition and your sector,
- average price/purchase per customer,
- production capacity,
- seasonality, etc.
This is an important step as it will allow you to check out your hypotheses regarding the needs, profile and expectations of your customers and examine the financial viability of your project.
You can use the business model canvas to centralize your thoughts. You can also get in touch with House of Entrepreneurship5 for help with your administrative procedures.
Step 4: materialize and implement your project
There are three main pillars to materializing your project:
Legal, administrative and logistical aspects
- Look into the legal aspects linked to your activity (does your project require certain authorizations/special training/certification?), it can be good to examine this point at the very beginning of your project.
- Choose the legal status best suited to your activity (sole proprietorship, public limited company, limited liability company, etc.). Before deciding which legal status is best suited to your needs, you will need to define the form, size, stakeholders and your intention to have an associate6 or not.
- Prepare the necessary documents, procedures and policies (data protection, general terms and conditions of sale/rental or even use/insurance),
- Find a business premises, etc.
At this point, you should be able to pinpoint your needs in terms of funding. If you intend to solicit the help of a banking institution, you will need both a business plan7 and a financial plan (steps 2 and 3).
To materialize your project, you should have strategic views for the short, medium and long term. Here are a few items to work on:
- business strategy (prepare your pitch, define the actions you will take to contact/find/retain customers8, think about partnerships, etc.),
- communication strategy (how will you communicate? Through which channels? Where are your customers? How can you reach them? Via which tangible actions?), you will also need to move forward on your visual and digital identities9 (website, social network presence, business card, etc.),
- more broadly: what actions do you intend to take over the next three years? What are your development focuses? Etc.
For the very best chance at success, you will need to proceed with method and structure, parcel out your project, surround yourself with the right people and keep a positive mindset!
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