Here’s What to Consider Before You Start a Business in 2024

Are you thinking about starting a business? Congratulations on taking this exciting step! But, before you dive in, there’s more to it than meets the eye.

As the old saying goes, “Failing to plan is planning to fail,” and this holds true in the world of entrepreneurship.

Taking a moment to consider several factors before starting a business can be the difference between success and struggle.

To put it into perspective, the Bureau of Labor Statistics reveals some sobering statistics. In the first year, 20% of small businesses close, with an additional 30% shutting down in the following year. By the fifth year, 50% close down, and at the ten-year mark, a staggering 70% of small business owners face failure.

Now, I’m sure you don’t want to be part of those statistics, do you?

What to Consider Before You Start a Business

Here are some factors to consider when thinking about becoming an entrepreneur and before starting a business:

  1. Market research
  2. Business plan
  3. Legal and regulatory requirements
  4. Financing
  5. Marketing and sales strategy
  6. Technology and infrastructure
  7. Risk management

In the following sections, we’ll dive into each of these aspects, ensuring that you’re equipped with the knowledge needed to launch your business with confidence and foresight.

Emily is an aspiring entrepreneur with a burning desire to start her own business. However, Emily encounters the common hurdles that many budding entrepreneurs face. She’s overwhelmed by the flood of information, unsure about her next steps, and the fear of costly mistakes keeps her up at night.

Emily’s goal is crystal clear – to build a successful business, gain financial independence, and make a positive impact. She’s yearning for guidance, a lifeline in the midst of all this confusion.

But she’s not alone. Many, including you, might be sailing in the same boat.

It’s common for people to rush into starting a business without giving it enough thought.

They get excited about their business idea but overlook the essential details that can make or break a business. However, before you turn your entrepreneurial dreams into reality, you must navigate the treacherous waters of business planning.

You might be wondering why it’s crucial to consider certain factors before starting a business…

Well, think of it like building a house – just as a house needs a sturdy foundation, a business needs solid groundwork.

These initial considerations set the tone for your entire venture. They guide your decisions, steer your strategies, and help you navigate the often unpredictable waters of entrepreneurship.

Now, let’s talk about the important things to consider when starting a business. I won’t overwhelm you with an exhaustive list; instead, I’ll highlight the most vital aspects that can set you up for success in your business venture.

Trust me, this journey is worth taking.

Let’s get started.

Check out: Low-cost Profitable business ideas to start a business

Market Research

Before you leap into a business idea, it’s crucial to assess the market demand for your product or service.

Market Research - Business Planning
Zoom in on your market. Effective market research is a crucial step in building a successful business.

Market research is all about gathering, analyzing, and interpreting information about your business idea’s market, which includes understanding your potential customers and competitors.

Imagine this scenario – you’ve come up with a machine that can transform banana peels into gold. Exciting, right? But pause for a moment and ask yourself, does anyone actually need this magical banana-to-gold converter? Probably not.

A strong business idea begins with identifying a genuine problem or need in the market. Think of it like finding out that people are tired of eating bananas and are craving something else. That’s when your solution becomes a golden opportunity.

Start by conducting thorough research to identify potential customers, their needs, preferences, and pain points. This knowledge is your compass, helping you determine if your business idea is viable and has growth potential.

Market research also aids in spotting trends, estimating the size of your potential customer base, and making informed decisions about pricing, distribution, and marketing strategies.

Business Idea Brainstorming
Unleash your creativity for business success

You have several tools at your disposal for collecting market data:

  • Surveys and Questionnaires: Gather direct feedback from potential customers.
  • Interviews: Engage in in-depth discussions with individuals or focus groups.
  • Observation: Study customer behavior and trends.
  • Online Research: Harness the power of search engine data, social media analytics, and online surveys.
  • Competitor Analysis: Understand your rivals, as it can provide valuable insights.

Know Your Target Audience

Before starting any business, regardless of its size, you must conduct comprehensive market research to pinpoint your target audience. Your target audience represents the specific group of people you intend to serve with your products or services.

To identify your target customers:

  • Conduct market research to gather demographic (age, gender, location), psychographic (lifestyle, values, interests), and behavioral (buying habits, preferences) data.
  • Use social media analytics to gain valuable insights into potential customers and their interests.

Once you’ve pinpointed your audience, define your ideal customer and construct a customer persona. Grasp their pain points, purchasing behavior, needs, and desires. Identify the problems your business can address for them.

A customer persona is like a semi-fictional profile representing your ideal customer. It blends demographic and psychographic data with motivations and behaviors. Personas humanize your audience, making it easier to create products and marketing that resonate.

For example, if you plan to open a cereal shop in Kenya, create a persona like “Health-conscious and time-strapped Kenyans.” This guides you in meeting their unique needs.

Remember, a product or service attempting to cater to everyone often misses the mark. Understanding and serving your audience lays the groundwork for a thriving business, ensuring your offerings align with your customers’ preferences and needs.

Conduct research on competitors

Examining your competitors is a critical step in positioning your business effectively. Having a unique and innovative business idea can give you a competitive edge, differentiating you and making your offerings more appealing to customers.

I once met a young entrepreneur eager to venture into the competitive world of online clothing stores. Instead of blending in, she concentrated on sustainable, handcrafted items. This set her apart from the fast-fashion giants, and her business quickly gained a devoted following.

Here are some techniques to assess your competition:

  • SWOT Analysis: Use this method to identify your competitors’ strengths, weaknesses, opportunities, and threats.
  • Product and Service Evaluation: Examine their offerings, pricing, marketing strategies, and customer reviews.
  • Online Monitoring: Utilize digital tools to track their social media activity, website traffic, and search engine rankings.

PRO TIP: Effective market research is an ongoing process. Markets evolve, and customer preferences change. Remaining well-informed and adaptable is the key to long-term success.

By comprehending your target audience, the market, and your competition, you’re better equipped to carve out a successful niche for your business.

Related: How to start an Online business in Kenya with small capital

Business plan

Think of a business plan as the blueprint for your business. It’s not just a formality; it’s a crucial document that provides a clear roadmap for your venture. This document outlines your goals, target market, financial projections, and strategies for growth.

A well-constructed business plan not only guides you but also communicates your vision to potential investors or partners. Without it, you might face costly detours and dead-ends. Treat it seriously, and it’ll prove invaluable in your entrepreneurial journey.

essential components of a business plan
Key Components of a Business Plan: A comprehensive business plan not only helps you secure funding but also keeps you focused and accountable throughout the business development process.

Creating a business plan might seem overwhelming, but there are abundant resources available to help. Online tools, templates, business plan software, and even professional consultants can all help you craft a solid business plan.

Platforms like Bplans and LivePlan, as well as organizations like the Small Business Administration (SBA), offer tailored resources and templates for various industries.

Remember, a business plan is not set in stone. It should evolve with your business, adapting to changing circumstances and new opportunities.

Regularly reviewing and updating your business plan ensures that it remains a relevant and effective tool in guiding your entrepreneurial journey.

For additional guidance, check out PeerViral’s comprehensive guide on how to write a business plan. It’s a great resource to kickstart your planning process.

Legal Requirements for Starting a Small Business

Starting a business requires careful consideration of legal requirements to avoid costly fines or legal action. Let’s break down the key legal considerations to keep in mind when starting your business:

1. Legal Structure

When commencing a business, a pivotal decision is determining the appropriate legal structure. This choice profoundly influences aspects such as capital procurement, liability, taxation, and compliance.

Common business structures include sole proprietorship, partnership, limited liability company (LLC), and corporation. Each option has its advantages and disadvantages.

Business StructureProsCons
Sole ProprietorshipSimple to set up and manageUnlimited personal liability
PartnershipShared responsibility and expertiseUnlimited personal liability
LLCLimited personal liability and flexible tax optionsMore expensive to set up and maintain
CorporationLimited personal liability and easier to raise capitalMore complex and expensive to set up and maintain

Seek advice from a lawyer or accountant to discern which legal structure best suits your business.

2. Business Name

Once you’ve settled on the legal structure, pick a unique and memorable business name that aptly describes what you do, what you stand for, or who you are (your business’s nature, ethos, or identity).

Following this, proceed to register your business name with the pertinent authorities. Registration grants your business a legal identity and bolsters its credibility.

Learn how to choose a business name

3. Regulatory Compliance

Conducting a business legally often necessitates obtaining the requisite licenses and permits. The specific regulatory requirements vary based on the nature of your business and its location.

Common types of licenses and permits needed to launch a business encompass:

  • Business licenses and permits
  • Zoning and land use permits
  • Adherence to health and safety regulations
  • Compliance with environmental regulations
  • Adherence to employment laws
  • Tax registration

Getting your legal structure right and ensuring your business is duly registered and complies with local laws and regulations is paramount to evade costly penalties, legal entanglements, or even potential closure.

Advice: Research and understand the regulatory requirements for your business and location. Consider seeking guidance from a lawyer or regulatory expert to ensure full compliance.

Financing

Financial Planning - Business Startup
Smart financial planning sets the foundation for a thriving business.

When it comes to launching a new business, financing is a key factor to consider. It’s the fuel that propels your startup from a business idea to a fully functional entity.

Before you can even think about opening your doors for business, you need to figure out how you’ll finance your business.

Assess your financial situation meticulously and thoroughly.

Do you have savings or access to capital to fund your startup?

If not, what are your funding options?

Start by estimating your startup costs. This includes everything from equipment and supplies to marketing and legal fees. It’s essential to be as detailed as possible in your cost projections. Remember, it’s often better to overestimate expenses to avoid unpleasant surprises.

Once you have a clear picture of your startup costs, the next step is to consider your sources of funding.

Funding can significantly impact the success or failure of your venture. As a matter of fact, according to 2022 studies conducted by CNBC 47% of startup businesses fail due to lack of funding.

There are various small business funding options available for startups. Personal savings, loans, grants, crowdfunding, and investors are all potential sources. It’s crucial to choose the one that aligns with your business model and goals. Each source comes with its pros and cons, and careful consideration is essential to ensure your business’s financial health.

A financial plan is your roadmap for managing your business’s finances. It outlines your revenue projections, expenses, and profitability.

This plan provides a clear financial vision for your business and is a vital tool when seeking financing or investment. A well-structured financial plan is essential for gaining the trust of potential investors or lenders.

By creating a budget and forecasting revenue and expenses, you can set realistic financial goals and make informed financial decisions.

Understanding the financial aspects of your venture is crucial to ensure a smooth takeoff and sustained growth. Remember, wise financial decisions are often the difference between business success and failure.

Marketing and Sales Strategy

A well-crafted marketing strategy is the compass that guides your business towards its target audience. It outlines how you’ll reach, engage, and convert potential customers into loyal patrons.

Establishing a recognizable brand image is important for marketing. Your brand is more than a logo and a catchy slogan. It’s the personality of your business.

It is what customers will remember and associate with your products or services.

Therefore, it is essential to have a strong brand that reflects your values, mission, and vision. To create a strong brand, you should:

  • Define your brand’s personality, voice, and messaging tone.
  • Create a unique logo, tagline, and color scheme.
  • Develop a consistent brand message across all channels.
  • Ensure your brand is relevant to your target audience.

Remember, consistency is key. Ensure that your brand identity is reflected in every aspect of your business, from your website to your customer service.

A strong brand identity not only makes you memorable but also builds trust with your audience.

Developing a marketing and sales strategy involves understanding your audience’s needs and preferences, defining your unique value proposition, and setting clear, achievable goals. It’s about aligning your products or services with what your audience is searching for.

Planning how you’ll promote your business is crucial, but it should be informed by your target audience and branding.

Identifying marketing channels is the next crucial step. This entails choosing the platforms and mediums through which you’ll communicate with your audience.

Will it be through social media, email marketing, content marketing, or even traditional methods like billboards and flyers? Or a combination of these and more?

Understanding where your audience spends their time ensures your message reaches them effectively.

Technology and Infrastructure

Starting a new business requires careful consideration of technology and infrastructure.

Team Building - Business Growth

Whether starting an online business from home or a brick and mortar business, choosing the right technology is crucial for the success of your small business venture. Here are some factors to consider:

  • Cost: You need to choose technology that fits your budget. Consider the cost of hardware, software, and maintenance.
  • Scalability: Your technology should be able to grow with your business. Choose technology that can handle increased traffic, data, and users.
  • Ease of Use: Your technology should be easy to use and maintain. Consider training costs and user-friendliness.
  • Compatibility: Your technology should be compatible with other systems and software you use.
  • Security: Your technology should be secure. Choose technology that has built-in security features and can be updated regularly.

Your infrastructure setup is the backbone of your business. Here are some factors to consider:

  • Location: Choose a location that is easily accessible and has good connectivity.
  • Hardware: Choose reliable hardware that can handle your business needs. Consider servers, computers, and peripherals.
  • Software: Choose software that is compatible with your hardware and can handle your business needs.
  • Data Backup and Recovery: Have a backup plan in place to prevent data loss. Consider cloud backup and recovery options.
  • Security: Your infrastructure should be secure. Consider firewalls, antivirus software, and regular security updates.

Related Reading: Best online business ideas in Kenya

Risk Management

Running a business involves facing various uncertainties. Effective risk management is like having a safety net in place, ensuring that you’re prepared for potential challenges.

To effectively manage risks, you first need to identify them. Here are some common risks that businesses face:

  • Financial risks: These include cash flow problems, unexpected expenses, and economic downturns.
  • Operational risks: These include equipment failure, supply chain disruptions, and employee errors.
  • Legal risks: These include lawsuits, compliance violations, and intellectual property disputes.
  • Reputational risks: These include negative publicity, social media backlash, and customer complaints.
  • Natural disasters.

By acknowledging these potential hurdles, you can proactively plan for them.

Once you have identified potential risks, you can create a risk management plan.

A risk management plan is a structured approach to identifying, assessing, and mitigating risks. It involves several key steps:

  1. Risk Identification: Thoroughly analyze your business operations to identify potential vulnerabilities and challenges.
  2. Risk Assessment: Evaluate the likelihood and impact of each identified risk. This helps prioritize which risks need the most attention.
  3. Risk Mitigation: Develop strategies to minimize the impact of identified risks. This could involve revising processes, creating emergency funds, implementing safeguards, or diversifying your product or service offerings.
  4. Response Planning: Determine the steps to take if a risk materializes. Having a clear response plan can significantly reduce the negative impact.

Obtaining Insurance is a crucial aspect of risk management. It provides financial protection in the event of unforeseen circumstances.

Depending on your business type and location, different types of insurance may be necessary, such as liability insurance, property insurance, or even business interruption insurance.

PRO TIP: The right insurance policies provide a safety net in case things don’t go as planned.

Consulting with an insurance professional can help you tailor coverage to your specific needs.

By developing a robust risk management plan and securing the necessary insurance coverage, you’re building a foundation that can withstand unforeseen challenges.

[Bonus] Factors to consider when starting a business

Work-Life Balance

Starting and running a business demands significant time and effort. Consider the impact it may have on your personal life and relationships. Reflect on how you will manage your time, set boundaries, and prioritize self-care. Striking a healthy work-life balance is essential for your well-being and the success of your business.

Team Building: Hiring the Right Talent

Surround yourself with a competent team that shares your vision and complements your skills. Hire individuals with the right expertise, experience, and cultural fit. Remember, your team is integral to the success of your business, so invest time and effort in building a strong and cohesive workforce.

Passion and Commitment

Importantly, assess your own passion and commitment towards your business idea. Starting a business requires dedication, perseverance, and the ability to weather setbacks. Passion will drive you during challenging times, and commitment will ensure your business stays on track towards achieving its goals.

Online Presence

Creating a website, utilizing social media, and crafting an online brochure are key steps to consider before starting your business.

Building a website has never been easier, thanks to user-friendly AI tools and templates. However, if your budget allows, considering a professional web design company can be a savvy move.

Social media pages serve as hubs for customer interaction and community building.

An online brochure neatly showcases what you have to offer and provides key information for interested customers.

By establishing an online presence, you can reach a wider audience and establish credibility with potential customers. Without it, you risk missing out on valuable customers and might appear less legitimate in the eyes of consumers.

Related: Steps to start a small business in Kenya

Bottom Line

Hopefully, you’ve found our article on key things to consider before starting a business helpful.

If you’re thinking about starting a business or you’re in the initial stages of entrepreneurship, I strongly advise you to consider these factors, so that you will be better equipped to make informed decisions, plan well, stay adaptable, and set your business up for success.

Each step, from crafting a comprehensive business plan to understanding legal obligations and assessing your passion and commitment, forms the foundation of a thriving and profitable venture.

Now I want to turn it over to you:

What are the key factors to consider when starting a business that matter most to you? Feel free to share your insights and experiences right now in the comments section below.

Sam is an experienced freelance writer, blogger, trainer, and internet marketer. His passion lies in helping people like you start a business or side hustle and earn extra money, offline and online. You can also follow him on Facebook and Twitter

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