Entrepreneurship

What You Need to Know About Owning Your Own Business

owning your own business
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Reading Time: 6 minutes

Owning your own business has a certain allure to it. You’ll be the big boss, setting your own hours and pay rate, deciding what to sell and not sell, and driving forward your own economic success.

Countless small businesses have evolved into massive corporations (Google and Microsoft come to mind) that now lead the world in their respective fields. Everyone wants to come up with the next great business model that develops into a phenomenon. Unfortunately, that’s not always the case. While plenty of small businesses succeed (i.e. become profitable), many more will fail.

These failures occur for a variety of reasons — anything from neglecting proper research into a particular industry to an idea that was flawed from the very beginning. Any business can fail if it doesn’t have the proper visibility, or access to its desired demographic.

The bottom line is that there’s a laundry list of steps you need to take to even give your business a chance. Otherwise, it might barely leave the launch pad before crashing back down.

Evaluate Your Motivations

When someone asks you why you’re starting your own business, please don’t say it’s because you “want to make some money.” If your only motivation is to make money, the chances of your business idea succeeding are slim.

Before even thinking about launching your own business, ask yourself why you’re doing it.

All of the great business ventures in history have one thing in common: at their root is the solution to a problem. Each creator of any of the world-changing businesses you see today saw a problem or a process that could be improved, and decided they were going to make it better.

The best way to ensure that you’re motivated to fight through adversity — and there will be adversity — is to follow an idea that you’re passionate about.

When people ask you why you’re starting your own business, you should be able to answer with confidence that you’re trying to introduce an idea that will make the world around you better. Businesses driven by passion are the ones that succeed.

Make Sure Your Business Can Make Money

That being said, it’s important that you turn a profit from all of this. The point of a business is the make money, so you should do the necessary research to determine whether your idea will actually make you money or not.

There’s no way to be absolutely certain you’ll be able to turn a profit, of course, but the best way to estimate if your business will succeed is to conduct a break-even analysis. A break-even analysis helps you chart out how much revenue you’ll need to pay for your expenses, before you make any profit.

Preparing a break-even analysis requires a lot of research, and you’ll need to evaluate the following figures:

Fixed costs

These are the costs that don’t change from month to month. Fixed costs include rent, utilities, website hosting, insurance and equipment. As a precaution, add an extra 10% to your fixed cost projection to account for random expenses that can pop up.

Sales revenue

This is the total dollars from your sales activity, which can be measured on a monthly or yearly basis. Remember to base your projection on how much money you really expect to make, rather than how much you want to make.

Average gross profit for each sale

Your average gross profit is the leftover money from a sales dollar, after paying the direct costs (what you pay to provide your service) of the sale. Basically, it’s the money you actually make. For example, if you sell a T-shirt for $30, but it costs $10 to make, your profit is $20.

Average gross profit percentage

This is how you know what percentage of each dollar of sales income is gross profit. Divide your average gross profit number by the average selling price to determine your average gross profit percentage. Again using the T-shirt example, making an average of $20 per T-shirt you sell for $30 each, your gross profit percentage is 66.7% ($20 divided by $30).

Calculating the four figures above should paint a clearer picture of how successful you’ll need to be to reach your break-even point. If your projections look favorable, proceed with caution as always, but there’s good reason for you to be optimistic.

owning your own business, office boy

Create a Productive Work Space

Procrastination and distractions attack from all fronts to keep you from getting work done, and nothing kills productivity faster than a distracting work space. The only way to truly combat distractions is to practice intense focus, but if that’s not your deal, you can at least set up safeguards against losing focus. Owning your own business relies on you being able to produce maximum efficiency and concentration.

Try setting aside a quiet place to work, and if you don’t have space for a home office or workshop, a small shed can provide you area to concentrate on your craft.

It can be a shed, a garage or even a spare room in your house. As long as it’s quiet and somewhat secluded, it can function as a space conducive to high amounts of productivity. Hey, if it worked for Steve Jobs and Steve Wozniak, what’s your excuse?

Register Your Business Name

Believe it or not, registering your business name is just as important as coming up with your business name. Thinking of the cleverest name in the world won’t mean anything if a quick Google search reveals that someone in the next town thought of it first.

As soon as you’ve landed on a name you just know will stand out among the rest, get it registered. What that means is following state and local laws that govern when you have to register for a fictitious (assumed) business name.

Filing for registration could also necessitate applying for trademark protection of your business name, but that really only applies if you’re planning on conducting business on a national level. Otherwise, getting your business name in your local system should suffice.

Develop a Marketing Plan

You must have a good idea of how to promote your business. If you have a storefront, you can’t just rely on the likelihood that people will happen to stumble into your place of business by accident.

Understanding consumer behavior, especially those who shop within your industry, is of the utmost importance. Remember that consumers won’t go where they aren’t invited. So you have to invite them in.

There are many different avenues you can take to spread the message of what your business does:

Social media

This is the most popular choice by far, and arguably the most integral. You must maintain at least one active social media account to stay relevant in today’s business world, as it demonstrates your understanding of your potential customers and your desire to connect with them. You can pay to “boost” posts for your business’s Facebook page, for example, or simply stay active in responding to customer questions/complaints and producing engaging content.

Television

One of the more expensive options available, television ads (when produced well) can create a lasting impression in the mind’s eye better than any other medium. Having customers see your smiling face on their screens, inviting them to trust you with their patronage, goes a lot farther than you think.

Radio

A ubiquitous medium, radio offers a certain flexibility that other advertising media don’t have. Radio as a medium is everywhere — in the car, at work and at home. Consumers listen to the radio all throughout the day, so if you can pinpoint exactly when your desired demographic is most likely to tune in, you can tailor a message specifically for them to hear.

Print

It’s bad news for anyone over the age of 60 that physical newspapers and magazines are a dying breed, as everything is going digital. Still, there’s always an opportunity to share your message using the oldest method of advertising. The good news is that print advertising is usually the cheapest of all the options.

Billboards

These are effective if used in bulk and in short bursts. It’s true that billboards bolster a certain consistency, with cars zooming back and forth every single day. And everyone is bound to look up at it at least once or twice, right? The biggest danger with billboards is their inability to be updated quickly. You’ll likely have to show the same graphic for a few months at a time, and it’s tricky to find a balance between generic messaging and a relevant call to action.

Determine which method works best for you with trial and error, but be careful with how much you spend. Those advertising contracts can start to add up quickly.

Network

Networking has many uses, especially where getting a new job is concerned. However, it can also prove invaluable if you are looking into owning your own business.

Building a strong network can gain you referrals, potential employees (if you grow to that point) and even mentors. Speaking with other entrepreneurs — even those who have succeeded and failed — can give you critical insight into where your next steps need to take you.

Advice from other business owners can help you navigate the tricky landscape of balancing your home life with being in charge of literally every aspect of your business. And this can be a stressful balancing act, whether your business is thriving or struggling to keep its head above water.

1 Comment

1 Comment

  1. Ewen Munro

    December 10, 2016 at 3:12 am

    Really loved this post, Megan! Great summary and very insightful. 😉 #keepgrowing #keepcreating

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