Six steps for starting a new business
During the creation phase, an entrepreneur is confronted with a series of situations that he wants to manage simultaneously. However, creating a business requires acting methodically. Indeed, the different stages of business creation are part of a structured process. Here are the 6 steps to starting a business that will help you move from idea to business project.
1. THE FORMALIZATION OF THE IDEA
In this stage, it is a matter of moving from a somewhat vague dream to a clear and precise idea. You must be able to put your project in clear shape. There is no good or bad idea when there is an opportunity or a need to be satisfied. Experience shows that two factors very often lead to the abandonment of projects:
• The very (or too) innovative character.
• The desire to create without specific project.
So you have to ask yourself these two questions before you start:
• What is the ability of my future customers to accept my idea of product or service?
• What is its real usefulness in relation to the existing supply?
2. THE MARKET APPROACH
Market research is a very important step. Confronting your product or service to future customers will allow you to identify their expectations, to adapt and/or to develop your offer accordingly.Thebest-mattress.org has done an extensive market research for the wellness of its customers.
It is therefore important to ensure that the market is buoyant and to define an adequate commercial strategy:
• The price: how much are your customers willing to pay and for what product or service? What is your margin?
• Distribution : you must define your distribution channels, according to each customer segment,
• Communication: this is the message you will deliver in order to attract customers and retain them.
3. THE CHOICE OF LEGAL STATUS
The choice of legal status is decisive for your company. Indeed, it will have a considerable impact on the daily life of the structure and its possibilities for evolution. Two main families of status are available to you:
• Individual undertakings , which have no legal personality,
• The companies (SARL, SA, SAS, SASU, etc.) which have a legal personality.
4. DEVELOPMENT OF THE BUSINESS PLAN
Developing your business plan is the key to the success of your project. It allows you to present all the elements that compose it in order to convince investors (banks, business angels, etc.) to finance you. In this document, you will have to discuss the business model of your company as well as the financial package. The economic model (or business model) defines how your business will generate cash. A business model has 6 functions:
• Articulate the value proposition (what is your product or service?)
• Identify a market segment (which category (s) of customers are you targeting?)
• Define the structure of the value chain in the company (what are the different functions of the company, the key activities that contribute to the creation of value?)
• Specify revenue generation mechanisms
• Define the company's position in the external value chain (what is your position in relation to partners or competitors?)
• Formulate a strategy based on competitive analysis (How do you deal with the competition?)
The answers to these questions will help you to clearly define your offer. This preparatory work will be of help to you when it will include presenting your project to potential investors.
The financial package consists of translating into financial terms all the elements gathered during the previous stages. You will have to build an economic model in line with available or mobilizable means. These include human resources (the number of jobs to be filled), means of production (premises and installation costs), and material means of operation (machines and tools), intangible items (patents or Licenses).
Be careful not to underestimate the costs necessary to the maturation of the project. Indeed, during the first months, you may not realize a sale and will therefore have no income. Now you will have operating costs to cover. Your financial package will have to take into account these cash shifts which constitute the working capital requirement of your business.
5. THE SEARCH FOR FUNDING
You have defined the business model, developed your strategy. The challenge now is to raise the capital needed to finance the various sustainable needs identified in the previous steps. Several sources of funding are possible:
• Your personal funds ,
• Family, friends (also known as "Love money"),
• Private organizations (banks, associations or certain specific fund to assist entrepreneurs, sites crowd funding, etc.)
• Public bodies (the State, the regions, the departments, etc.).
All this funding will therefore often depend on the nature of your project, the amount of your financing needs and also your geographical location.
6. ADMINISTRATIVE PROCEDURES
You have a reliable business idea and you have checked all aspects of it. Your strategy is developed just like your creation file. It has enabled you to obtain the necessary funding to get you started on this adventure. All that remains is to carry out the last administrative steps to officially open your business.
Want to make your startup journey smooth? YS Education brings a comprehensive Funding Course, where you also get a chance to pitch your business plan to top investors. Click here to know more.