These days, it’s easy set up a business on a whim. So many do it, and while some may be successful, it also may explain why so many new businesses fail. If you have dreams of becoming a business owner and really want to do well, there are things you can do first that will maximise your chance of success. They will help you to avoid many of the pitfalls that cause less well prepared business to fail. Here’s how you can go about it!
Get Your Business Degree
As someone with an interest in business, it makes sense that you will first get educated on the topic. If you’re young and just starting out (or are in a position where you can quit your job and focus on study full time) you could go to university and study a business related course as an undergraduate. You could then go on to do a masters if you wanted on top of this. Another option would be to study a course like mba organizational management online, the benefit of this is flexibility. You could gain knowledge and get your qualification without having to quit your current job which is useful if you’re not in a financial position to lose your wages. Gaining an education would give you an excellent understanding of everything business, and create a solid foundation for which to build your own venture. While it’s possible to learn as you go, having a wide understanding of your subject certainly puts you in the best position.
Most businesses start with a deficit where they have to lend money to get off the ground. There’s nothing inherently wrong with this, if your business does well you can quickly pay it back and it’s all profit from there. However many businesses struggle at first even when they do everything right, and paying back a loan on top of everything else can add to that. Having some money saved up is always useful, keep this as a buffer in case your business falls upon hard times. There will always be peaks and troughs in the market, having some money set aside to get you through that first uncertain year could be the difference between success and failure. It means you’re not having to keep borrowing money, and you can keep your venture stable and afloat until things pick up again. Start a savings account and aim to have a few thousand in there as a backup option for when you start your business.
Improve Your Credit Score
As previously mentioned, most businesses need to borrow money to get off the ground. Unless you have previous positive experience in business it’s unlikely you’ll get a business loan right away, meaning you will likely need to apply for a personal loan. To get the very best rates, you need a good credit score and this is something you could work on before getting started. Make sure you are on the electoral roll, and take out a couple of different lines of credit such as a credit card, store card or loan. The aim is to prove you can lend money responsibly, so pay them on time each month and you get a green tick next to your name for every month this is done. If you have no previous credit you will likely be offered higher interest rates, but if you pay back the full amount each month and don’t carry a balance you won’t pay interest anyway. Don’t take out any new credit in the months leading up to your loan application as this will temporarily lower your score, and be sure to get the balance right. Don’t have too many open lines of credit as the bank may see this as a chance for you to become overcommitted. A couple of accounts that are well managed for at least a year will do wonders for your score, and give you the best interest rates (and chances of being accepted) for a loan that will allow you to start your business.
Do Your Market Research
Finally, you might think that your business idea is a complete winner- but you need to run this by potential customers. You need to find out if this is a product or service people would buy, and if they would, how in demand it is and how much they would be willing to pay. Having this information available before setting up is invaluable, you may need to tweak your original idea to give your business the best chance of success when you finally launch. Think about the way the market changes, and whether future developments will render your business obsolete. Think about both now, and in years to come and whether your business idea could adapt to change later on.