By 2020, it is estimated that approximately 27 million Americans will leave the workforce in favor of self-employment, according to estimations in the 2018 FreshBooks report.
The penchant for self-employment and entrepreneurial spirit that is alive in the country is not necessarily new information. The country ranked first on the 2018 Global Entrepreneurship and Development Index (GEDI), and cities across America are quickly becoming hotbeds for business innovation and startups. With over 24 million Americans contemplating self-employment in 2019, one key consideration for them will be how they can best be prepared for this professional leap. Taking a few steps before starting your own business sets you up for success, and helps the incorporation period of your business run much more smoothly. It includes securing the right office space, a dedicated workforce and everything in between.
Define Your Target Market And Competition
Creating a customer profile helps you define who your potential customers will be so that you can personalize your communications, location and even packaging according to what they prefer or demand. To do this, you need to conduct thorough market research and seek information on competing businesses in the industry. Take note of current trends in the industry, such as social media communication and advertising trends or any new complimentary service being offered by other companies already operating in the market. Getting to know your competition means you can capitalize on their shortcomings, providing the customers with what they seek. It also helps you define your boundaries: do you have enough funds and human resources to fill the need uncovered by the market research? More importantly, how can you make your offering unique and notable?
Decide On Your Location – Brick And Mortar, Ecommerce Or Both?
Now that you know who and what you wish to be selling, it is time to answer the questions of where and how. The first question to address is whether you want to sell in-store or online or both. Thanks to technology and the embracing of the internet, most businesses now have an online presence in addition to their brick and mortar locations. When choosing a location, look at factors such as closeness to your target market, availability of your supply, and ease of distribution. Whether you intend to sell online or in-store will also determine the kind of premises you secure; whether it is intended for warehouse storage and distribution or customer browsing and storefront as well. OfficeFinder can help you find the right location.
Back Your Plans With The Funds
Once you have decided on the target market (who) and the good/services to be offered (what), it is time to answer the question of how. This is where financing comes in. To kick-start your plans for your own business, you will need some degree of startup capital for the purchase/leasing of business premises, stock, LLC formation with your state machinery and promotional activities. Around 77 percent of small business owners use their personal funds to start their business, while 16 percent rely on borrowing from friends or family members.
Alternatively, you can opt to apply for a bank loan or credit like 24 percent of other business owners do, according to GuidantFinancial. The average in business loans taken is $72,277, with 23 percent of owners borrowing more than that. If you do intend on financing your business with the help of loans and other credit, you should also check your credit report to ensure it is in optimal shape. The credit report of business owners (particularly small business owners) is one of the go-to things lenders consider in your application, so now would be the perfect time to boost your score or address any discrepancies in your financial past. Find more information here.
Create A Mock-Up
If you’re going to apply for a business loan or secure investor backing, you will need to pitch your idea, and a mock-up can help you sell your vision. This means creating a business plan for your financing process, which should detail your product/service, your target market, and your plans to meet the needs of the said market. Plan execution will include a marketing and sales plan, along with financial projections of your revenue and costs and your projected cash flow. It is important that you pay particular attention to your cash flow, since lenders will be taking note of cash management strategies. Finally, to round out your business presentation, you can create a demo business website and sample business cards or adverts.
Making the decision to head into a self-employment business for yourself can be fraught with many decisions in the beginning. However, the trick is to approach it systematically and carefully taking into consideration the essential decisions before you kick-start your venture.