How New Businesses Make Money – 5 Business Tips for a Successful Startup
So, You Want to Know How New Businesses Make Money?
Many entrepreneurs start a business and want to grow but often they don’t know where to begin. Today, we would like to help you begin a solid foundation to turn your new business into a scalable profit-center. We have a list of 5 business tips to help guide the foundation of your new venture which will enable you to begin making profits and scale your business. Although the task may seem daunting; many new businesses make money once they lay a solid foundation and stick to their mission.
I. Learning The Fundamentals
New businesses make money when they understand basic business principles.
There are many moving parts to business. As an up and coming entrepreneur, you have to first, know yourself. You must know what you are good at and what you may need to work on. Also, it is good to know what you shouldn’t waste your time on because your time is valuable when laying the foundation for your organization and you can easily get lost in the little details that could be handled by another. Understanding your own strengths and weaknesses will help you in the long run as you begin developing your team, which we will discuss later. 123 Test offers a wide variety of free tests to help you learn more about yourself. We highly recommend at least taking their Competency Test which is an in-depth measurement of your work-related competencies. We also recommend that you go a step further and examine some of the other tests provided by 123 Test such as the DISC Personality Test or even their Work Values Test both of which will give you a good idea of your work styles and who you may need to aid in the development of your company to help with your weaknesses.
Now that your introspection is out of the way it is time to learn some Business Fundamentals to properly prepare your new business foundation. One of the best services provided by the U.S. Government for Small Businesses is the U.S. Small Business Administration (SBA) which aides startups and Small Businesses in their ventures by providing a variety of services. Locate your Local Small Business Development Center (SBDC). Who better to explain what they do than to look at the source itself. The SBA describes the SBCs,
SBDCs help entrepreneurs realize the dream of business ownership and help existing businesses remain competitive in a complex, ever-changing global marketplace. SBDCs are hosted by leading universities and state economic development agencies, and funded in part through a partnership with SBA.
Although the SBA is a great resource for Startups; do not limit yourself to their resources. Explore other experts in business, as well as, your industry to gather more information and opinions. Sign up for networking groups with like-minded entrepreneurs. MeetUp is a great platform to find local groups and events to network and educate yourself.
Another must-have for new entrepreneurs is a mentor or individual with extensive experience and expertise in business or your industry that you can count on to provide you with unbiased advice based on facts and their experience. As a new business owner, you will encounter many issues during the course of your operations that others may have encountered before. Why not take the time to speak with someone that has already been there before?
Ok, so you have gathered business and industry information, as well as, associating yourself with proper networks to aid in your business development. Where do you take your business planning from here? Well, it is time that you investigate your market and ideal customers. Throughout the start of our Blog Series The Art of Digital Marketing we have explained the importance of doing extensive industry research and knowing your ideal customers. You must do the homework if you expect to step up and play with the “big boys”.
This foundation of education, experts, and self-awareness is the beginning of a profitable startup business plan. Now, that you have your industry and business fully analyzed you can begin the next stage of Developing your Product(s) or Service(s).
II. Developing Your Product/Service
Solid Products and Services equal solid business.
You are making progress to the realization of your entrepreneur dreams. Do not stop the moment that you have gathered to this point. Trudge on through your companies foundational development, you will not regret this down the road when your company scales and you need to look back to your original vision.
You need to dive into your products or services to ensure you are providing something unique from your competitors. This is important to gaining market share and creating opportunity with potential customers. When you are at this stage of your business foundation remember that there are several ways to differentiate your business from the competition.
- Customer Service
These are just a few differentiation techniques well-known to businesses. Once you decide on a unique value proposition you need to begin planning how you will bring your brand to the public.
As we describe in our Post Creating Brand Visibility Through Content Marketing, Content is vital to the visibility of your newly founded company in the crowded marketplace. Unless you successful position your brand as unique from your competition you will be lost in the crowd. You have invested your time and savings into your new business so do not be slack when it comes to your brand’s public image because this will be the catalyst to which your organization grows or fails. Set your standards and ensure they are met before any and all content is distributed to the public.
All of these steps involve the next, which is Thinking Long-Term & Strategic Planning. A proper business foundation requires extensive research, planning, and testing. Without putting in this legwork up front you might as well be throwing your money into a slot machine.
III. Thinking Long-Term & Strategic Planning
Your growth is tied to strategic planning, this is paramount and must be remembered as you progress down your journey as an entrepreneur.
While its true you need to make tactical decisions every day, these should not detract from your long-term goals. Ensuring your daily decisions align with your long-term strategy will amplify your growth. Invest in your Startups future by having a long-term plan. How do you measure your success if you don’t have a plan and stay on course in your daily business operations?
Establish your Key Performance Indicators (KPIs) from the Start of your Business.
The KPIs you establish for your Startup will give you benchmarks to gauge the progress of your business. Even Forbes discusses the importance of KPIs in their post The Seven Startup Metrics You Must Track by Young Entrepreneur Council. The seven KPIs they explain are:
- Revenue Run Rate – Rate of Revenue growth
- Average Revenue Per User (ARPU) – The average sale per customer
- Customer Acquisition Cost (CAC) – Cost to gain each customer
- Churn Rate – How well you keep your customers
- Burn Rate – Business costs
- Operation Efficiency – Return on organizational spend
- Gross Margins – Gross Profit Margins on sales
These 7 KPIs will provide a good start to what you need to monitor throughout the life of your organization. As you scale your company you will find that you need insight into other operational metrics. By keeping up with this data you will be able to create forecast models and track the overall progress of your company.
We know you may be asking yourself, how am I a single entrepreneur supposed to accomplish all of these tasks when launching my Startup? Well, the answer is actually quite simple and leads into our next two tips Developing a Strong Team and Leveraging Technology will enable you to manage the tasks required to build a solid foundation. Don’t give up though the journey may seem rough the rewards of properly setting up your company from the start will benefit you and your stakeholders for years to come.
IV. Developing a Strong Team
Let go when you can and grow your team, invest in others and they will invest in your dream.
Giving up some control in your business is hard and many entrepreneurs find this one thing the hardest to do. Employees remembering the importance to the owner is part of the problem, however, delegation and creation of processes to get things done efficiently is vital to scaling your business. Pushing down responsibility and developing organizational autonomy is key to freeing up valuable time to grow the business.
As the business owner/CEO, your job is to provide the vision for your organization. Your main focus should be growing your business and keeping your eyes on the future of your organization. If you are bogged down with daily tasks and redundant decisions, then how will you be able to dedicate your time to the overall growth and well-being of your company? Well, the short answer you won’t or else you will be working 24/7.
We understand as business owners ourselves that in the early stages of your startup there will be many tasks that you simply cannot delegate or you may not have the cash flow to take on extra employees; however, this is when it is most important to build your core team because through the acquisition of talent in the early stages of your company you will see who is most dedicated to the mission of your company and who is just looking for a 9-5 job.
You need to take the time out of your busy schedule and take some money out of your budget to establish a few key team members that you can rely on to get things done. This will eventually determine how your company will grow.
At Laris Media, we like to look at experts in the field to understand the best practices to acquire, keep, and grow our talent. Entrepreneur has a wide variety of information for startups, small businesses, and large organizations alike. Aytekin Tank’s Post 9 Ways to Recruit the Best Talent for Your Startup provides quality insight into Startup Talent Acquisition. His 9 Ways are:
- Build your company with a mission and vision.
- Hire your fans.
- Consider hiring remote employees.
- Be a great place to work.
- Start building your brand from day one.
- Hold onto your existing talent.
- Offer challenging projects.
- Talk about your company online.
- Speak at events and network constantly.
Tank alludes to several points that we have covered in our discussion of laying the foundation for your profitable Startup. Number 1, creating a vision and mission plays right into much of the preparation necessary to establish a solid foundation for your new business.
Having a solid team will benefit your company from day one because you will have people around you that can complement your skill set. Be sure that you are hiring a variety of individuals with backgrounds that aid in the development of your company.
Once, you have hired a few core team members you will begin to realize that the task of growing your business isn’t as daunting as you originally thought. Another way to aid your growth is by Leveraging technology, which we will be discussing in our final point.
V. Leveraging Technology
The use of technology to gain the upper hand and automate your business is something successful business owners do.
As a Digital Media Company, we understand the importance of technology in business today. Through the proper use of technology, you can easily make a team of 3 seem like a company of 10 or 20. The biggest takeaway though is through the Proper use because you can arm yourself with the latest and greatest of everything, but if you are not using it to its fullest potential then you might as well be using pencil and a piece of paper.
First, we recommend that you begin the launch of your company with the launch of a reasonable quality website and appropriate social media profiles based on your niche. These will be your digital storefront; the face of your company to the public at large. You can establish your company as professional and bigger than it may actually be with the use of quality web design and Social Media Marketing.
Second, we recommend that you purchase and use proper hardware and software to maintain your business. It is not enough to have a Chrome Book and tablet to run your company. If you want to scale and maintain business be sure that you have the appropriate equipment and software to meet your business needs. You can speak with our sister company, Laris Tech for more information on Business Networking, Hardware, and other IT infrastructure related services.
When it comes to websites, Social Media Marketing, and software you can speak to our team, we are here to help. We offer reasonably priced CRM Systems and interactive websites that can automate many of your business processes to improve marketing, sales, and other business operations.
Keep in mind, there is much to do before launching your Startup, but if you properly plan and manage your time you will be making profits before you know it. Do not spread yourself too thin, get ahold of experts to aid your growing company so you can ease your concerns.