Launching your own business can be exhilarating, but scary. After you look at the statistic that 90% of new startups fail, you may be even more scared. However, with proper preparation and planning, you can drastically increase your chances of success. As an aspiring entrepreneur, the best way to do this is to make a checklist.
In this article we will go over a checklist for entrepreneurs to use when starting a business so that they will be prepared for the road ahead.
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Checklist for entrepreneurs starting a business
As you begin to solidify your entrepreneurial aspirations and business ideas, a lot of questions will form: In what way will my business profit? How will my business compete with others? What will my business expenses look like? Before starting a business, it is vital to answer questions such as these and create solutions to them.
Below is a checklist for entrepreneurs meant to provide entrepreneurs with clarity and help them be prepared for their business venture. It will give you a sense of what you need, the best practices when starting a business, as well as strategies for success. Of course, this checklist can be modified based on your industry and values, but these are core components of starting a business.
1. Sound business idea and plan
Any business venture starts with an idea. Finding an innovative business idea is arguably the most crucial component of starting a business. Therefore, it should not be overlooked, and should instead be analyzed and improved upon to make it valid. A business idea is your business’s why; it is the reason for setting up the business and what it revolves around. Your business idea should:
- Be profitable
- Be innovative
- Have a unique value proposition
- Solve a problem or meet a need
- Have the potential to scale
- Be adaptable to market changes
To ensure that your business idea is sound, think about performing a SWOT analysis to evaluate the idea’s internal and external factors that would either make it fail or succeed. If possible, your business idea should align with your hobbies, interests, and skills. That way, you enjoy what you do and are more eager to pursue its success.
Along with a business idea should come your business plan. A business plan, which is typically a written document, is an outline of your business’s goals and the methodology it will use to accomplish them. Additionally, it should also provide a detailed description of the business and explain its various components. A business plan is crucial for attracting investors and maintaining your business’s vision.
2. Know your industry and build your skillset
To be successful in an industry, you must have extensive knowledge of said industry. Being knowledgeable of your industry will provide you with a competitive edge that contains invaluable insight and stay informed of emerging trends. This means learning what competitors are doing, industry developments, technical aspects, complex issues within the industry, and outside knowledge that can be utilized within the industry.
In addition to knowing their industry, entrepreneurs should build a versatile skillset to handle potential challenges, seize new opportunities, and make effective decisions. Crucial entrepreneurial skills include:
- Risk-taking (and risk tolerance)
- Innovative
- Communication
- Taking initiative
- Leadership
- Time-management
- Empathy
3. Ensure that entrepreneurship is right for you
Next on the checklist for entrepreneurs is to ensure that entrepreneurship is right for you. You need to ask yourself questions such as: Am I willing to put in the necessary time and effort needed for success? Am I confident in my business idea? Can I take risks and be content with their outcome? Can I be content with failure?
If you have an innovative idea you wish to bring to the market, or want to provide a solution to a problem, then entrepreneurship is for you. However, to be an entrepreneur, you also need to have what it takes to lead people, be creative, and think big. You need to drown out what other people say and do what it is you want to do.
4. Proper funding
To start a business, you need funding. It’s simple but often overlooked. Adequate funding allows a business to make the most of opportunities that come their way and keep it afloat. Business funding can be used to fund business ventures, invest in growth, and support business operations.
Entrepreneurs most often rely on their own money, often known as bootstrapping, to fund their business startup. However, they may not always be able to and instead have to rely on external funding. External funding comes in many forms, including:
- Venture capital
- Angel investors
- Loans (and SBA microloans)
- Friends and family
- Crowdfunding
Of course, external funding comes with downsides. This includes debt obligations, ceding equity, and lessening your stake in the company. Nevertheless, proper funding is essential to a business’s growth and stability.
5. Legal business structure
To avoid legal issues in the future, entrepreneurs should choose a legal business structure, or business entity, that will act as the organizational framework that the business operates under. A legal business structure ensures regulatory compliance, offers protection for your personal assets, and has potential tax advantages.
Emerging businesses have many options to choose from, such as a limited liability company (LLC), which has tax benefits and protects your personal assets in cases of bankruptcy or lawsuits, or partnerships, which is a good choice for entrepreneurs that operate within a group.
Whatever structure you choose, make sure that it is right for you. This will depend on numerous factors, such as your risk tolerance, confidence, tax needs, and goals of your business. Your legal business structure will also depend on your business’s size and type.
If you do not register your business, then you are essentially liable for everything. Your location and preferred business structure will determine how you must register your business. To register your business, contact and register with local and state governments, as well as federal agencies. A guide to registering your business can be found here.
6. Exit strategy
Unfortunately, not all businesses will prosper. As we stated at the beginning of the article, a majority of startups fail. This highlights the importance of an exit strategy, which should be on every entrepreneur’s checklist. An exit strategy is a plan created by the entrepreneur to transition the ownership of a company, either after the sale of the company, a merger and acquisition (M&A), or the failure of the business.
An effective exit strategy should account for both positive and negative scenarios within a business. This plan can be used to maximize profits or limit losses. Creating an exit strategy provides insight into the company’s value as well as the best method of selling it. It will also help the entrepreneur mentally, helping them to manage the situation of their business.
7. Sales and marketing strategy
Sales and marketing strategies should be on every checklist for entrepreneurs as their primary goal is to bring in more revenue for the business. Marketing focuses more on customer acquisition, while sales focuses on converting those customers to revenue. When starting a business, strategies for both marketing and sales should be created to garner traction to the business and understand where to find customers
An effective sales strategy acts as a roadmap that outlines what you need to do to improve your profits. It can improve your customer service and sales efficiency, in turn improving customer retention and conversion rate. A sales strategy consists of goals and methods that the business uses to position its organization and product to close new customers.
A marketing strategy maximizes marketing efforts by striving to understand consumer behavior and what the business can offer to customers. It establishes how your business will reach its goals, typically relating to revenue and sales. Similarly to a sales strategy, a marketing strategy is used to boost sales as well as attracting customers.
8. Create a market-ready product
A product is the foundation upon which a successful business is built. It is how they make money and what operations are focused on. Building a great, market-ready product is essential for any business. This product should solve a problem or cater to customers’ needs and/or wants.
The best way to create a market-ready product is to conduct product development, which is typically done in the form of product validation or product iteration. Product development is a process that involves the idea of a product being created and put on the market. Typically, this process consists of refining the features and components of a product so that it fits customer needs and wants, making it more enticing to potential customers.
9. Establish management
When starting a business, it is important to establish how it will be ran. This is important not only for all individuals involved, but also to potential collaborators. For a single-person business, this will be easy. However, for businesses with more people involved, it can get tricky.
Businesses will need to outline the various roles and delegation within operations. They will need to formalize processes pertaining to workflow, finances, scheduling, sales, and more. Thus, new businesses need to establish a management system that determines how the business will be ran. A management system should consist of:
- Organizational hierarchy
- Standard operating procedures (SOPs)
- Communication channels
- Performance metrics
- Hiring process
- Company culture/ethics
A checklist for entrepreneurs will allow them to see their business’s full potential by essentially giving them a head start. Remember that you can change this checklist as you please, but ensure that the list is comprehensive and accounts for the various components of a business.
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