Starting and running a business is one of the most common goals worldwide due to the perceived flexibility of working hours, the need for autonomy, the availability of a unique business idea, the need to gain control over the direction of one’s career, or simply as a means of generating income. However, a high percentage of these goals remain unrealized over the years. Furthermore, more than 90% of those who start their own business fail within the first five years of operation. What differentiates successful businesses from those that fail? The starting point is to ask: How do you start a business? And how do you run a business profitably?
Start a business
The first step in starting a business is to conduct in-depth market analysis and intelligence. Orient it towards understanding the
- the real need for your products and services
- market dynamics that may affect the business,
- sector legislation,
- the necessary licenses, the competition
- and labor laws, among others.
Market intelligence provides you with the information you need to develop a detailed business plan, which is the second step.
The business plan can be compared to a business plan. It should guide operations as you establish the company and seek to turn it into a profitable entity. The business plan should include a summary of the idea, the resources needed to establish and run it for a few months, a financial plan, how the company will acquire customers, and a talent acquisition strategy. The business plan can be a simple one-page document or can consist of several pages, depending on the complexity of operations and whether the company intends to raise outside capital.
Execution of the business plan
The third and vital step is implementing the business plan. This involves establishing the business structure and mobilizing finances and other resources to begin operations. As the business owner and founder, you must ensure that all employees understand the business vision, the established strategy for achieving goals, and their role in achieving success. Follow the business plan, but keep it open to change. Iteration is a necessary step in the implementation phase, as it ensures the company can adopt new technologies, processes, and procedures as they emerge to improve efficiency. A rigid plan can lead to losses for the company if outdated technologies and knowledge are used.
In the implementation phase, the company is registered, all permits and licenses are acquired, the company’s location is secured, all necessary machinery is purchased, patents are registered, and all vital business partnerships are established. The company’s goal should be to become operational, rather than achieving perfection, which is an obvious waste of energy and resources. Continuous improvement of products, services, processes, structures, and partnerships should occur once the company is operational.
How to run a business profitably
The dream of every founder is to build a profitable company . While some ideas become profitable within a few months, most take longer. There are different approaches companies can take in pursuit of profitability, but the underlying factors that determine how quickly a company becomes profitable affect every industry and sector. Let’s take a look at these factors.
The caliber of employees hired in the first few months is extremely important for growing the company into a profitable entity. Hire qualified, experienced, and passionate employees. If the company doesn’t have the resources to hire full-time experts for all departments, it’s advisable to outsource the work to consultants. Employees should also be open to learning and change, as the startup business environment is one of the most dynamic.
Successful companies strive to build lasting relationships with customers. Happy, engaged customers are loyal. And they’re more likely to recommend your company to their family and friends, generating additional revenue. But how do you create happy, engaged customers? By finding a balance between your marketing efforts and showing customers that you care about their well-being over your commercial interest in them. Another way is to prioritize the quality of your products and services over the quantity of sales.
The financial health of the startup
The financial health of a startup has a significant impact on its short- and long-term success. Entrepreneurs must separate business finances from personal finances and ensure diligent use of all resources. For example, instead of investing in high-end office space and furniture, the company could operate from a modest but inexpensive location and divert additional funds toward customer acquisition. This way, the company’s finances aren’t depleted before it becomes profitable.
The pursuit of profitability is a continuous effort in all businesses. However, difficult times are imminent and unpredictable, and all entrepreneurs must be prepared for them. Remember that young companies face storms every day, and the strategy employed to weather them will determine overall success. Business requires mental agility and toughness. Therefore, entrepreneurs and founders must strive to improve their agility and toughness every day.
Now that you know how to run a profitable business, we wish you luck.
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