Even though most people realize that it takes considerable work to launch a business, many still underestimate the sheer multitude of tasks they must complete before officially opening their doors. One common mistake is for entrepreneurs to rush to open their new business without first testing the market to determine if there is enough demand for what the company will offer. In fact, this is one of the leading reasons that more than 60 percent of new business owners must close their companies within three years.
Research Means More Than a Google Search
Having the Internet available has certainly made researching the industry and marketplace more convenient and less time-consuming. However, it’s no substitute for getting out there and talking to people in the same business as well as those who could potentially become customers. It’s also essential to test the product or service and gain valuable feedback before developing your company’s offering further.
Remember That You Can’t Serve Everyone
Another common mistake by new business owners is attempting to serve too broad of a base of customers. Unfortunately, trying to sell to everyone means missing the mark on your target customer. It’s helpful in the early stages to create a customer persona. This is a fictional person in a certain age category, income level, and other target demographics with a specific interest in the products or services that you intend to market.
Conducting market research at this stage can be especially useful in determining what motivates people to make specific purchasing decisions. This will help to clarify what your new company can do to attract your target customers’ attention and gain their loyalty after launching the business.
Learn as Much as You Can About the Market
In addition to knowing your customers, you must learn about suppliers, distributors, and especially your competitors. You could gain this knowledge in a variety of ways, including spending more time working in the industry, asking questions of people in your network, finding someone to serve as your mentor, and independent research. It’s impossible to do well in an industry when you don’t have intimate knowledge of how it works.
Make Sure That You Choose the Right Structure for Your Business
The structure that you choose to establish your business under has significant legal and tax ramifications right from the start. Early on, it’s best to work as a limited liability corporation (LLC). It’s much easier to convert to a different structure as your business grows than to try to move from a larger structure back to an LLC. Limited liability means that your personal liability only includes amounts you have borrowed or invested. You can typically write-off the costs associated with starting and launching your business on your personal tax return with the LLC structure as well.
These are just some of the many considerations of starting a new business. You can use all the help you can get to launch your small business successfully, and Doerhoff & Associates is here for you. We strive to provide what you really want and need – a unique and customized set of services to fill the gap and support you, the business owner.
