So you want to start a small business – that’s awesome! Small businesses account for over 50% of jobs in the United States, and two out of three new jobs in the U.S. are created by small businesses each year.
In the past, most brick and mortar businesses began with a business plan, applied for a small business loan, incorporated themselves and got down to, well, business. Today, the Internet has not only changed the entire nature of the small business world; it has changed the way SMBs must think about creating and positioning themselves before they even enter the market.
What follows is a pre-game checklist of things to do – and things to think about – before you start a small business.
1. Survey the competition
It may sound counter-intuitive, but it’s essential to make sure that there is plenty of competition in your market before you start a small business.
If there is absolutely no competition, or no successful competition, it doesn’t mean that you’re a brilliant business pioneer with an idea unlike anything the world has ever seen. Instead, it most likely means that someone has already tried your idea and failed.
The key to deciding what kind of business to start lies in making sure that there is money to be made in your chosen market. No competition means that no one is making money, and that you probably won’t either.
Just like deciding upon keywords with low, medium or high search engine competition, choosing a niche with a moderate level of healthy competition assures you that your target market is alive and well… and ready to spend money.
It also means that you don’t have to reinvent the wheel. Assess your competition, figure out a problem they’re not solving very well, and find a way to offer something even better.
2. Solve a specific problem
The products and/or services offered by your small business must solve a specific, pressing problem that your customer needs remedied now.
It’s your job to either ease your customer’s pain, or increase their pleasure, and to do it in a unique way that keeps them coming back again and again.
Are you easing the pain caused by termites by providing your customers with expert, affordable pest removal services? Or are you increasing your customer’s pleasure by creating out-of-this-world gluten-free cupcakes?
Remember, your product must solve the customer’s problem and give them what they want – which may not necessarily coincide with what you want to give.
So what’s the difference? Here’s an example:
While you may think those neon-yellow bike pants with a built-in iPhone charger will sell like hotcakes because you love neon-yellow bike pants, it doesn’t mean that everyone else loves neon-yellow bike pants. Your customers may very well prefer lime green bike pants, and if that’s the case, you better start giving the people what they want (in short, either go green or go home).
Regardless of your personal tastes or what you think people should prefer, as a small business owner, you need to cater to your customer’s needs and wants, not your own.
3. Define your target market
Once you’ve figured out the problem you’re going to solve, you need to become intimate with your target market.
Which people most desperately need the solution you’re offering and have the money to pay for it today? What type of person would you love to interact with on a daily basis?
If you suspect that your target market is comprised of Fortune 500 CEOs with over $1 billion in annual income, but the thought of giving Larry Page a call makes your blood run cold, you may need to rethink your approach.
In addition to targeting people who want, need, and crave your services, your target market must consist of people you actually like. Fall in love with your target market, and watch yourself going above and beyond the call of duty to get and keep their business.
Paint a specific picture of your ideal customer. Instead of targeting middle class Latina females from ages 35-47, create a profile of your target market, personified: Her name is Elena Sanchez, she is 38 years old, a mother of two, works in a travel agency, owns a home, and is thinking about going back to school.
Once you’ve defined Elena on paper, you’ll be able to start a small business with her in mind.
Everything from your business plan to your marketing materials will attract people like Elena and let you qualify your leads without doing any extra legwork.
Remember, if you try to appeal to everyone, you’ll appeal to no one!
4. Create a game plan
When you finally decide that you’re ready to start a small business, you may be tempted to simply dive right in!
As excited as you may be, force yourself to put the brakes on long enough to create a detailed game plan that incorporates your above work with 3, 6, and 12-month checkpoints.
What are your goals for your first year of business? How many sales would you like to make, and how much do you expect to make in revenue? More importantly, what will you need to spend to get started?
See also: What Is Annual Revenue? Meaning, Formula & Examples
Ask yourself all of these questions, and get specific with the answers. After all, if you can’t even imagine your business generating $100,000 in its first year, how is it ever going to actually happen?
As you set goals and plan for the future, keep in mind that much – if not most – of what you write down will probably change. The important thing is that you take the time to brainstorm ideas, set specific intentions, anticipate problems and needs, and account for every area of your business’s operations.