5 Things to Consider When Starting Your Small Business
Starting a small business is a thrilling prospect for would-be entrepreneurs. If you like to do things your own way, then running your own store, restaurant, or salon gives you total control — not to mention the potential to earn more money than you would as an employee. However, starting a small business requires more than just passion: it takes research, planning, and dedication. This article looks at five important things to consider when starting your own business.
The Benefits of Owning a Company
Owning a company can have personal, financial, and social benefits, such as:
Flexible hours: Set your own schedule and take holidays when you want. And if your business thrives, you can delegate more and more tasks to employees.
Creative freedom: Every creative decision — from branding and marketing to what kind of soda you stock in the fridge — comes down to you. You have the ability to execute your specific vision.
Earning potential: There’s no limit to how much you can earn from running a small business. Scaling up, franchising, and partnerships all offer gateways to higher income.
Community engagement: Setting up shop alongside other businesses can be socially fulfilling: you’ll get to know your regular customers and business neighbors.
Tips for Starting a Small Business
In the United States, 18% of small businesses fail within their first year — often due to poor management, lack of marketing, or lack of financing. So it pays to come up with a strong business strategy that will get you through the difficult early days and put you on track for success.
1. Make a Five-Year Business Plan
A clear and focused five-year business plan isn’t just about setting targets for yourself. If you want to land funding from a third party, you’ll need a convincing plan to sell your vision. Your five-year business plan should include:
Mission statement: What your business is about
Market analysis: Why you believe the business will succeed in the current market
Company legal structure: Options include C or S corporation, general or limited partnership, sole proprietor, or limited liability company (LLC)
Product line: What goods or services you plan to sell
Funding requirements: How much you want from investors (as debt or equity) and the specific terms of the investment
Financial projections: Financial outlook for the next five years, with a quarterly or month-by-month breakdown for the first year
2. Know Your Audience
Knowing how to do market research for a startup is just as important as knowing how to run one. Before you start thinking about storefront designs, inventory, and staffing, you need to be confident that people want to buy what you’re selling. What are the demographics of your potential customers? What is the level of market saturation in your target area? How much are people willing to pay for your offering?
Be sure to understand the local demographics in any area you are considering a brick-and-mortar store. A children’s clothing store will do better in an area with many young families, while a modern barber shop will get more traffic in an area with young professionals. Useful market research tools for small businesses in the United States include these consumer spending statistics from the Bureau of Economic Analysis and the Consumer Price Index (CPI) from the Bureau of Labor Statistics. You can also carry out your own research through surveys, questionnaires, and focus groups.
3. Use Products and Services Built for Small Businesses
If you’re opening your first restaurant, you’re unlikely to be using the same equipment as a multinational company like McDonald’s. But that can actually be a blessing in disguise. Important tools like your point-of-sale (POS) system don’t have to cost an arm and a leg.
For example, SumUp POS Lite is an entry-level option suited to new businesses with a single location, comprising all the hardware and software you need to carry out transactions with no monthly fees. And you can always upgrade to a more comprehensive solution if you want to expand your business. Other essential investments like accounting software and security systems can usually be obtained on a basic plan suited to smaller businesses, while insurance providers sometimes offer small business discounts on commercial property or general liability insurance.
4. Create a Clear Identity
Branding can be the most fun part of setting up your own business. However, every element of your business — name, logo, interior design, digital marketing assets, inventory, menu items, etc. — needs to form part of a cohesive identity so customers will remember you clearly.
If graphic design isn’t in your wheelhouse, be sure to get professional help for your logo. This little symbol of your identity can help you cut through the noise and get ahead of competitors. It’ll also end up in more places than you might predict, from business cards to third-party delivery apps. Working with a professional designer ensures you think through best practices and each use case to land on an identity that is consistent and practical, along with eye-catching.
5. Reward Your Customers
Customer loyalty programs for small businesses are a tried-and-tested strategy for retaining customers. You could use a simple punch card system, but starting with a digital loyalty program through your POS system instead provides huge advantages:
Build a digital customer database that can be leveraged for marketing efforts
Segment your customer database by their spending habits to make tailored promotions
Customers won’t lose their card (or be able to forge stamps!)
Offer rewards for both in-store and online purchases
Your POS system provider can market your business to customers across its network
Choosing the Right Small Business POS System
Above all, small businesses require simplicity, reliability, and low startup costs when investing in their first point-of-sale system. With its cloud-based operation, SumUp POS delivers on all three counts, helping brand-new stores, restaurants, and salons take care of transactions, inventory management, customer relationship management, and much more.
