What does an entrepreneur need to know?
What do you need to know when starting your own business? What pitfalls can be, and what is the key to success? What does an entrepreneur need to know in order to quickly start earning, and not lose all the money? There are no universal answers to such questions, but we have collected some proven tips in the article.
First, accept the fact that things will never be the same again. We’ll have to say goodbye to the usual schedule, a clear plan and paid vacation. Your business requires more participation, discipline, energy, at least at first. Secondly, accept the risks: try not to make rash decisions, but know that there is always the possibility of failure.
Each transaction and each new stage of development will be associated with risk, there will be no other way. These few reasons are the answer to the question of why not everyone wants to start their own business. However, if you are ready to change the way of life and thinking, start doing and do not stop – then you will get a result that will be worth the effort spent.
Knowledge of economics and ability to work with numbers
Economics is the foundation of everything in business. You need to know the basic definitions, indicators and formulas. For example, profit is the money that is left after deducting costs, revenue is the money that a company receives for providing services or selling a product, costs are the amount that the company spent on the production of goods or development.
Every company strives to increase profits. Some do it by scaling the business, others cut costs, and still others choose a niche with low competition and high demand.
The situation on the macro market affects the profitability of a business: what are the economic growth rates, exchange rates, inflation? What is the unemployment rate, the average salary, the most likely changes?
Such analysis must be carried out constantly so that the business remains relevant.
You must know the laws of your country if you want to avoid unreasonably high taxes and fines. For example, what does an entrepreneur in the food trade need to know? These are, at a minimum, requirements for points of sale, rules for storage, labeling and sale.
You need to know the basic forms of ownership:
- Sole proprietor – in this case, one person owns the business, that is, takes all the responsibility, risks, receives all the profits.
- A limited liability company is a business that employs several founding partners. Each of them invests money, risks his share and makes a profit. Not everyone is required to manage, but one of the participants.
- A joint stock company is a business that sells its shares. It is managed by a board of directors and top managers elected by the owners of the joint-stock company – shareholders.
- Cooperatives are often created for the joint consumption of goods and services – these are, for example, credit unions.
Learn tax systems and legal ways to pay less, monitor information about grants, subsidies and government support.
Production and partnerships
Let’s start with services. For example, you work as a guide and show tourists the city. A competitive guide is a person who knows the best places and negotiated the best conditions for visiting them. He brings visitors to a restaurant where they are given a discount and dessert is served at the expense of the institution, shows an observation deck that is closed to the rest, and spends without queues where they are.
This specialist will earn a lot, because he knows how to negotiate with people. It increases the profits of restaurants, museums and other sites, getting into the top itself.
And this, it would seem, is in the service sector, where production capacities are not needed. And if you decide to create automotive parts? You need to find suppliers, and each transaction will improve or worsen the final product, reduce or increase its cost.
Suppose you and your competitor are using the same supplier. You were able to negotiate a lower price, that is, you secured a higher profit.
Now every business needs promotion. You must have a good idea of your target audience: how old they are, how much they earn, what social networks they spend time on, and most importantly, how you can help them. Work on a unique selling proposition – this is what will make you stand out from your competitors, what will you be chosen for.
Learn the basic tools: sales funnels, A / B tests, ABC analysis. This is what an aspiring entrepreneur needs to know in order to enter the market with a new product. What segment are you in? In B2B, that is, for business, or B2C, that is, for individuals? Are your potential customers watching videos on Tik-Tok or reading emails?
If you do not understand and do not want to understand marketing, hire a good specialist. But where will the money come from?
You can open a business without investing a single ruble of your money. Here are a few options you can use to raise capital.
- Family and acquaintances are the first to whom you can come with an idea. True, you need to remember about the likelihood of spoiling the relationship.
- Private investors invest money in exchange for a stake in a company. Then the value of the business grows, and he resells his part and earns on it. It also happens that he is counting on a part of the profit, and not on the growth of shares.
- Accelerators, or in other words business incubators, train entrepreneurs, help them draw up a business plan, find their first clients, and, most importantly, organize events where you can meet potential investors.
- Grants and subsidies – usually it is difficult to pass the competition, but it is real. In addition, you will have to devote a lot of time to reports for all the money received. However, it makes sense when the amounts start from several million 🪙.
- Crowdfunding, that is, the contributions of a large number of private investors. In exchange for their money, you give them some kind of advantage. Let’s say you’re raising money to make a movie. Those who have invested receive a movie ticket, a mention in the credits, or the right to use the project for commercial purposes, depending on the amount.