Questions Business and Entrepreneurship

How can I start a small business?

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Ricky Lal Rout

Purpose fuels passion

These days you will come across a lot of small businesses out there. Most of these businesses are home-based and require a very minimum investment. Whether it be a small business or a big one you need to have a full-proof plan to make it successful. You need to set your business goals and objectives so that you can move in the right direction. There are only a very few people who are naturally born with entrepreneurial skills. Majority of the people have to work hard to establish their business successfully.

Steps to be followed

Setting-up a business is not an easy task. The main steps that are involved in setting up a business include the following.

  1. Conceive an idea
    The very first step to set-up a business is to conceive a creative and unique business idea. You need to come up with something better than others. If you are having a hard time deciding on an idea, you can check it out on the net. There are several business ideas that you can choose from based on your convenience.
    You should be able to provide your customers with what they want. For this, you need to undertake complete market research to know who are your competitors, what your customers want, what is your competition providing to their customers, what can you do differently. All this can be sorted nicely with the help of research work.

  2. Make a concrete plan
    No business can stand without the backing of a fool-proof plan. Once you have decided the business you want to set-up, you need to plan out everything. For example, how you want to drive your business. The main part of planning is to set your goals and objectives straight. This will give you a direction to your business and thus, help you to move towards success.

  3. Financial planning
    Unlike big businesses, you don’t need a huge capital to set-up a small start-up. You can even start a business without any money! Before you jump into the idea of erecting a business, you should think of your finances. For example, where you are going to get your capital. You can apply for a small business loan from the bank. If the amount is a small one, you can even ask your family and friends to help you in your start-up.

These are the main steps to set-up a business.   After the completion of these steps, there are many other things that you need to fulfill including registering your business, hiring an assistant, getting licenses and permits, etc.

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People ask me this question sometimes, but as most people who are running their own businesses I avoid answering. Why? Because there is no single good advice that applies to everyone.

Some will give the advice that you should “think big”: buy big heaps cheap and sell them with profit. That works if you have a big business that is able to sell a lot from start. If you aren’t able to sell your stock, you’ll be sitting with inventory for tens of thousands of dollars and feel real stupid.

One thing I know is that you’ll never know what will work. Some of my best sellers are products I didn’t think anyone would want. Apparently every other business thought the same so I’m the only one selling the product.

Other people will tell you to start small and scale up. The risk is that you’ll get stuck with a very small business and will have very low margins because if you can’t buy a larger amount at a wholesale price, you won’t be able to sell with much profit.

As a case example, when I was looking for a printer, some people on a web forum wrote that it was more profitable to buy the most expensive HP LaserJet printer if one counted the cost per page. Such a printer cost around $800 second hand “but it lasts forever and the toners are cheap”. After some calculating, I decided to buy a $120 printer instead. The toners I have bought for it since then have, in total, not cost more than the $680 price difference, and that was more than five years ago, with me printing several pages each day.

Another example: I bought some cheap third party toners which the seller promised were “just as good” as the original. However, they smeared the toner ink and lasted only a quarter as long as the original. Maybe I was unlucky, but what a piece of junk. Now I only use the original toners and threw away the third party ones.

Lesson? You don’t know when you can be cheap and when not. There are no set rules, as far as I know.

When I started my business, I had the impression that good customer service is the most important factor. When customers emailed my I obliged and answered question after question about every detail. A single customer could use up more than 30 minutes of a day. What I realized is that the more time you give a customer, the more he will demand of you, and, crucially, it won’t make him buy more. He’ll just treat you like a free source of information… as a friend perhaps, or just someone to take advantage off. So I started telling customers “no”. “No, sorry, I can’t help you with that.” “No, sorry, if I do that I will have to charge you for that”.

“No” is a very useful word, actually. “Sorry” is another good word that one should use frequently. It doesn’t cost anything and makes the customer happier.

Be tolerant of the customer’s perspective though and don’t lose your temper. I recommend you to treat everyone with initial kindness and to assume good faith until they have proven that they don’t deserve. Give them the benefit of the doubt, especially if they are young.

But, again, that’s only my perspective. If you run an IT business it is probably different.

If you are stressed out because something just blew up and then a customer calls and starts nagging about something that should be obvious, just tell them “I am sorry but don’t have time to respond right now, I’ll respond in an hour.” Don’t lose your temper. Customers are people too.

Treating every customer like a VIP is great if you have a high-end business, but is terrible if you try to be the cheapest business in your domain. Time is money and you need to make a choice what you are focusing on. Some businesses focus on giving a great personal experience. That sounds great, but then the customer has to pay for it. Some places, such as McDonald’s, focus on being cheap. Customers know that. They use Spirit or Ryan Air for cheap flights and they know the service is terrible.

Stores like McDonald’s and IKEA are great to study. How do they deal with dissatisfied customers? For instance, at McDonald’s the customer virtually always knows what he is getting so they don’t get many returns.

It reminds me of the TV-show where Gordon Ramsey goes to restaurants to fix them (Kitchen Nightmare). He gets them fresh inventory of high quality and raises prices. Some of them went bankrupt shortly after Ramsey’s visit, saying that the higher prices didn’t work in the area.

I avoid e-commerce forums because it seems everyone claims to be an expert on how to do things. Again: what works for one business might not work for another. You just never know.

I sell a very specific type of product that hardly anyone wanted and in the first two years I struggled every day. Then customers figured that I probably knew what I was doing and now I am at least getting by. I am considered “the original”.

My uncle ran a dry-cleaning business for two years but the area had too many dry-cleaners and he was never able to make a profit. Eventually he had to close.

There are no set rules, really. When people ask me how I run my business I usually say “I don’t know”. —”But you’ve run it for six years now!?” — “Yes, but I don’t know how to run a business, I just try to get by each day.” — “Okay but how do I do book keeping? There are so many different programs.” — “I don’t know, I just write down what I earn and my expenses and calculate what that amounts to. I do it in Google Docs.” — “Can you really do that?” — “I don’t know. Probably not, but that’s how I do it.”

When you are doing good, everyone tries to emulate you, and when you are doing badly, everyone will tell you what you are doing wrong. Running a business is not a science though. If you are making profit, all is well.

One thing I do think everyone should do before starting a business is to make a reasonable budget about the business model. If you encounter any difficulty in the writing process, simply get in touch with an essay writer free online and get free essays.

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