Maybe a promising small business idea struck you in the middle of the night. Or perhaps you’ve carefully mapped out your strategy and are just waiting for the right time to move. Whatever your reason for considering life as an entrepreneur, now could be the ideal time to start a small business.
Almost three million jobs were lost in March and April, with only two million having since been replaced. Many recently unemployed people are finding it a challenge to even get an interview, much less an offer. Those who have kept their jobs may have had their hours reduced or taken a pay cut, or are dealing with a less-than-ideal work environment — all while managing how the pandemic has affected their personal lives.
But with big obstacles come bigger opportunities. Some of the most creative ideas come from hardship and limitation. Despite the hurdles, Q4 2020 could be the opportunity of a lifetime for entrepreneurs.
5 tips on starting your small business
Like any venture, preparation is key. By following these five steps, you can be sure you’ve properly planned things out before you open for business.
1. Begin with a single idea
Focus on one key idea at the beginning—like Canadian companies McCain and Endy did with French fries and mattresses. Even large corporations can get bogged down trying to do too much at once. Think about what would make your life easier. Start small by writing down ideas when they come, then expand on them later.
When you’re excited about what you’re seeing take shape, see if others feel the same. Pitch your small business idea to trusted family and friends and gauge their reactions. This can be a valuable source of feedback before you move onto the next stage.
2. Research your target market and competitors
“Measure twice, cut once” is an age-old saying for a reason. Do as much research as possible while you’re still in that low-risk stage. For example, you could:
- Use Google Trends to see what people are searching for online
- Check Statistics Canada for accurate stats in your industry
- Look for free syndicate reports or case studies on a sector or company
Your business is only an idea at this point, and that’s incredibly freeing. You have time to change and grow, so if something fundamental isn’t working, scrap it and start again. Experiment and make mistakes in this conceptual phase.
The first stage of analysis is identifying who your target market is. Asking yourself who would pay money for your product or service is helpful, but this is a chance to get specific. Figure out your target audience’s likes and dislikes, hobbies and spending habits. If they support similar brands, what are they and why should they choose yours instead? Once you know who your business is for, you can start determining whether it’s a large enough market to support you.
This leads to the second half of your research: competition. You won’t be alone in the market, so learn who your biggest competitor is. Even if your idea is revolutionary, someone else will be vying for the same audience or trying to solve the same problem.
Analyze your competitors’ businesses and how you compare. By understanding their strengths and weaknesses as well as your own, you can start finding opportunities. Use this to identify your competitive advantage: what do you offer that no one else does?
Find out how to do a SWOT analysis to size up your competition.
3. Answer the basic financial questions
The pieces are starting to fall into place. You understand what your business is and who it’s for, but how will you actually run it?
To determine the initial cost of starting up, think about the day-to-day procedures. Break down everything you need to do to serve your customers in a single day, and then in an entire year. Predict whether parts of your business will change based on the season. Once you clarify the details, the start-up costs will become clearer too.
Divide your finances into fixed and variable expenses. Consider costs like rent, raw materials, salaries, benefits, maintenance and marketing. This is in no way an exhaustive list, but it begins to paint the complex picture of running a business. With all this in mind, you can figure out what you’ll need to start a small business, survive your first year and begin to turn a profit.
4. Create a blueprint for success
With all your research and financial planning in hand, you can start making your small business idea official. Create a single document that encapsulates everything your company is and will be. This is the beginning of your business plan.
Whether you’re taking out a loan or finding investors, your business plan proves you’ve done your homework. Remember, this is meant to sell others on your operation, so keep it concise and engaging.
5. Put your plans into action
You have a real solution to a real problem. You have data that backs up your hypotheses about your target audience, your product and the market you’re in. You know what kind of money you need to get off the ground and where to get it. You’ve created a business plan to get you from where you are to where you want to be. It’s time to take action!
Get expert advice to reach your business goals
Becoming a successful entrepreneur takes preparation and grit and even single operators need a team to be successful – no one can do it all. We’ll connect you with the resources and advice you need to keep your small business financially healthy. Connect with your Business Advisor directly, call 1-888-597-8083 or contact us online to speak to a financial expert.