Business and Investments

7 Golden Rules of Starting a New Business

What are the golden rules of starting a new business? Or rather, the golden rules of succeeding with a new business?

Anyone who is planning to start a new business – be it startups or business owners who are planning to exit a business and start a new one, go through the same dilemma. What business to venture into? How to choose the right investment? What are the chances of success…?

There is no hard and fast rulebook for starting and succeeding in a new business or everyone who started a new business would have succeeded in it. Every business has its own strengths, weaknesses, opportunities and threats. But there are some fundamental principles that help you lay a strong foundation for a new business and help it grow into a flourishing venture.

Do what suits you best

If you are a start up, choose a business venture that excites you; something which you love doing. Never choose a venture only by its financial possibilities. There is no fun in building up something which you don’t enjoy. If you don’t like what you are doing and do it only because you think it offers better possibilities of growth, then success, even if it comes your way, will be temporary  or unfulfilled.

If you are a business owner and you are looking to diversify, choose a venture those synergies with your current one. This will not only help you be in a stronger position with better business knowledge of your industry, you will also enjoy your new venture as a fresh area of growth. For instance, if your business deals with supplying food materials, you can explore areas in processed foods or food products.

Fulfill a need

Fulfilling an existing demand is always safer than creating a new demand. It is one golden rule that always works for new businesses that do not have the financial muscle to start a farm fresh new concept and convince prospects that they do need what you want to sell to them. It is safer to venture into a business which produces products and services that fulfills a need which customers know they have. 

But remember to identify the USP (Unique Selling Proposition) of your product/service to make it stand out from the crowd of competitors. Once you yourself are convinced about your product/service, you will be able to convince your customers to buy from as opposed to your competitors.

Are the margins healthy?

The growth possibilities are always better in businesses where you can have a healthy gross profit margin. If the difference between your cost price and selling price is narrow, you will not have much left to plan expansion, hire more people, promote your business or save for reserves. Therefore, choose a business that offers a better possibility of profits.

Give the right picture

One golden rule that many start ups and new businesses give short consideration to is promising more than what they can deliver. Don’t oversell your products or services by promising to your customers something you can’t deliver. It is always better to beat expectations by providing a better-than-expected product than handling disappointed customers who expected more than what they received. Be truthful about your products and true to your buyers.

Business plan is a must

Before jumping into a business, create a well-detailed business plan which will include profit/loss forecast, cash flow analysis and break-even analysis. Creating a business plan will help you analyze how much your start-up costs will be, what your cash flow requirements are and what your marketing strategy will be. Once you have a well-laid out business plan, it will be convenient for you to work your way up, set your targets and plan your growth.

Keep all agreements in hard copy writing for your records

Keep all your contracts and agreements in hard copy. These include contracts detailing the sale of goods, rental agreements, paperwork regarding purchase orders, and storage agreements. Don’t rely on verbal agreements. Business is business, and you will regret it if you do not document everything.

Remember to keep a backup of all your records, because if you store everything in on one computer hard drive without regular off-site backups, you are creating a recipe for failure. One hard disk crash can be disastrous. Don’t take shortcuts when it comes to keeping records and agreements in safe and secure hard copy and backups.

Seek professional help from CEO clubs

It is a good idea to seek professional help from experienced people who have rich experiences in starting and succeeding in new businesses. Join a CEO club where other CEOs from non-competing industries can properly guide you on how to go about starting your new business and at the same time handling the current business successfully. A CEO association can also help you create an effective business plan and offer you practical suggestions.

 

About the Author

Tom Bordon is a freelance writer who has extensively written about CEO association in Atlanta and executive business coaching. His articles focus on guiding CEOs, COOs and top level executives in starting a new business, selling a business and making exit planning strategies.

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