Over the years, entrepreneurship has grown to become a large part of our modern-day society. Although it was once thought to be reserved for wealthy and educated businessmen, the past few generations have proven that entrepreneurship is for everyone.
No matter your age, race, or experience level, you can start your own business and achieve success by putting in the work.
However if you’re just getting started as a new business owner, it can be difficult to define what “putting in the work” actually means. Without any experience or a reference point, you may feel intimidated by all the possibilities.
Luckily, there are a number of tools and tips you can take advantage of to give you a foundation to build upon. While keeping these basic tips in mind, you can then grow and evolve with your business and ultimately see success.
So if you need some help getting started as an inexperienced entrepreneur, keep reading below.
1. Adopt Money Management Principles
One of the most important parts of any business is money. Practically speaking, it is essential to a business’ survival and in some shape or form, you will have to understand how to use it.
Whether you are earning money, spending it, or even just managing it, it would be wise to nail down some basic money management principles in your personal life to help guide you in your business.
Not only will this benefit your business financially, but it will give you a basic foundational understanding of how to fund your business in the future.
Set Up Financial Goals
Setting goals for yourself is always a great way to hold yourself accountable. Try limiting your goals to 1-3 goals at a time so they can all be reached in a timely manner. And remember, these goals should be achievable or SMART goals.
Try to avoid listing just general, long-term wishes for the company because these can easily become overwhelming and seemingly unattainable; making it difficult to get started in your business.
Be Intentional With Credit Cards
Additionally, you’ll want to be intentional with credit cards both in your personal life and your business. Credit cards should not be obtained just on a whim but should instead, have an intended purpose. Similarly, with each purchase you make on your credit card, you should have a plan for paying it off.
If you can, always try to pay it off right away. However, if you cannot do so, try to limit your spending and establish a reasonable cadence you can follow to pay off the purchase.
Save and Invest
Lastly, saving is an essential money management skill to practice personally so that you can utilize the same principles in your business. There are many different ways that you can effectively save however, as a baseline, start by setting aside a certain percentage of your personal income or business profits into a savings account.
Then from there, you can learn some basic investing strategies. This is great to get in the habit of when you’re handling smaller, personal dollars, and then after a great amount of financial success in your business, you can move into larger investments.
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2. Understand the World of Business
Regardless of the industry that your company falls under, you should always establish at least a baseline understanding of how business works. Business is incredibly complex and will take time to learn without prior experience; however, by starting with some basic terms and business concepts, you can begin to build your business and incorporate any further learning into your plans for the future. A few terms and concepts you may want to start with include the following:
The first term that you should know and come to love is, “customer”. While it sounds like a simple word that we all know and say regularly, it is often one that is overlooked because of how seemingly simple it is. However, actually identifying who your customers are is a little more complex than one may suspect.
When done correctly it should take quite a bit of analysis to decide who your target audience is and how you can get your product or service to them.
You’ll want to understand who they are in a demographic sense but also go a step further to dive into their likes, and dislikes, where they go, what they do, what type of marketing structure they fall under, etc. All of this information will help to give you more insight into how you can market and sell to your customers.
Supply and Demand
Supply and demand is another basic principle to understand before starting a business. Luckily, however, it may already be one that you’ve seen or experienced and just hadn’t put a name to it. Supply is referring to you as a seller and what you can provide to the customer.
Demand is based on the buyers and their willingness to pay for what you are selling. Essentially, this economic rule suggests that when your supply is greater than your demand, your prices will fall to appease your target market and expand the pool of demand.
However, if your demand is greater than your supply, your prices are likely to rise in order to gain more profit. This is important to understand as you price your products or services and profit off of your business.
Fixed and Variable Costs
Fixed and variable costs are extremely important to understand when it comes to business spending. Understanding the difference can help you to establish a budget and financial plan for the future.
Fixed costs are those that remain stagnant no matter how much profit you make as a business. These are often referred to as overhead or operational costs as well. In a business, this can include things like rent, employee salaries, bills, etc. Variable costs, however, are just the opposite. They are dependent on how much profit you make and are likely to fluctuate.
If you run an eCommerce business, for example, any packaging or labels you use to send products to customers are considered variable costs. If you only sell 1 shirt for $10, you may only have to spend $1 on a box to ship it. However, if you sell 10 shirts for a total of $100, you now have to spend $10 on shipping boxes. With this example, you can see just how variable costs can change based on what you sell.
Return on Investment
Lastly, return on investment (ROI) is a necessary business term to understand. It is a basic equation that companies use to determine how much they should be earning in profit for every dollar they spend on a business need or expense.
(Benefit of Investment – Cost of Investment) ÷ Cost of Investment x 100 = ROI
Although it is a common equation used when making financial investments, it can also be helpful for smaller circumstances like deciding what equipment your business needs or what location is most ideal for your customer base.
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3. Collect Inspiration
Once you have tackled all the practical needs for your business and its success, you can now begin to pull ideas and inspiration from other great companies and entrepreneurs.
No successful business is built without help so taking time to research and evaluate other business types, strategies, and entrepreneurial leaders may be helpful to your organization. Try starting with some businesses that have rather unique backgrounds and explore their paths to success.
Me & Bees Lemonade
Me & Bees Lemonade is a beverage company that donates a portion of its profits to organizations fighting to save honeybees. It has grown to become a million dollar company and is distributed in over 1,500 supermarkets across the country.
But why is it such a unique company? It was started by a kid. Mikaila Ulmer was just 15 years old when she began her beverage company and although that may not be your story as a startup entrepreneur, it may be wise to look into how exactly she found her success.
Makaila, like many of us, did not grow up knowing the ins and outs of the business. But after countless brand deals and her recent 11 million dollar partnership with Whole Foods, it’s safe to say that she grew into her role as a CEO and found success despite any inexperience.
Similarly, Gopuff, a food delivery service started by two college students has grown to a 15 billion dollar business in just nine short years; which is rare for many businesses. While the company started at Drexel University in Philadelphia, Pennsylvania, it has grown to serve over 500 cities nationwide.
This is a huge feat to accomplish in such a short amount of time. So when getting started on your business, it may be helpful to look into how cofounder Yakir Gola and his partner, Rafael Ilishayev, went from making food deliveries themselves to now running a successful company of over 4,000 employees in less than a decade.
Lastly, Playdoh is another company with a very unique origin story because it actually started by an accident. Noah McViker was working for a soap-making company when he developed a cleaning puddy that was intended to clean coal off of wallpaper.
While the product did release and sell for that purpose initially, teachers actually began to use the puddy in their classrooms for the kids’ projects and toys. After the puddy’s success as a kids’ product, it was then remarketed in 1950 as Playdoh.
Again, as a new entrepreneur, Playdoh certainly has a story worth looking into. After switching industries and target markets entirely, Playdoh has grown into a toy empire now known as Hasbro and is valued at 13 billion dollars.
4. Fail Hard and Often
Once you are ready to start your business and become a new entrepreneur and business owner, be prepared to fail hard and fail often. Now, I know-“fail” is a word that we typically view as having a negative connotation; however, in business, it is arguably essential to growth and success. Failing is the best way to find out where your weaknesses lie and how you can improve upon them.
Or if the concept of failing is unsettling for you, remember that Thomas A. Edison once said, “I have not failed, I’ve just found 10,000 ways that won’t work.” Instead of viewing failure as the end-all-be-all, shift your perspective and allow it to be the tool that is navigating you to success.
The most important part of failing is “failing forward” or in other words, don’t ever stop moving towards your goals. When starting a business it is important to remember that a moment of failure should not define your business or who you are as an entrepreneur.
It should not stop your business plans but instead, redirect them. When you allow your perspective on failure to shift early on, you are much more likely to bounce back and improve upon mistakes as they occur.
If you need more guidance on the concept of failing forward, check out John C. Maxwell’s book, “Failing Forward.” Inexperience as an entrepreneur or business owner is completely okay and normal. Not everyone gets their start with a business degree or entrepreneurial background.
However, as an inexperienced entrepreneur, you will need to take extra steps to ensure and do some thorough research to ensure that you are making the most effective decisions for yourself and your business.
By starting with these four tips, you can continue to develop your skills and in time, you will certainly reach success in your business.