For an entrepreneur, launching a startup begins with the creation of something from nothing. This creation should take into account what an individual is passionate about and this can be done by listing the items and prioritizing them to help an individual remain focused on their idea.

When launching a startup, an entrepreneur must make sure that he or she stands out from the crowd especially because of the large number of new businesses that are launched every year. This is the reason that a successful launch is necessary to help an individual have a strong social proof, build a user base rapidly and improve the chances of long-term growth.

The following are five popular ways entrepreneurs can launch a startup:

1. Determine your target market

The target market chosen should be an industry that is growing fast, big and profitable. The selected market can then be won by differentiation where a business gives customers more of what they want and this boosts their willingness to pay or a business that serves as a low-cost producer and charges the lowest price in the industry. When customers buy the products, the entrepreneur should monitor the changing customer needs as well as new technologies and figure out other additional products to build as well as fresh markets to conquer.

The competition should be studied through the performance of the strengths, weaknesses, opportunities and threats analysis. A list of businesses that offer services and products similar to the one being launched should be done, a review of the marketing materials which includes brochures and ads should also be done.

The marketing tactics and strategy should also be chosen. This involves the sales as well as the marketing channels that can be used which include online, catalog or using dealers. Multichannel marketers usually achieve great success because customers like it when they can shop when and however they like.

Knowing the product’s life cycle is important because the campaign used during the introduction as well as education phase of the service or product needs to be updated as the service or product matures. An entrepreneur should monitor the marketing results carefully so as to notice any diminishing returns that indicate when to revise the service or product, alter the media message or phase out the particular offering.

2. Build an email list

This is important so that people can start signing up to receiving emails from an email list. This should be done before the official launch. Email is important because it can get people engaged as well as convert them into customers. For the email list to work an entrepreneur must get their contact list together, this can be done by downloading contacts from those on the email or from people spoken to. This data can be put in a customer relationship management system. Emailing people directly with the launch announcement is more effective than posting it on social media.

Having a large list of motivated and qualified email subscribers is important if the business is to grow. This list can be built by using list building strategies as follows:

> The list can be built with article marketing where the content is taken from the entrepreneur’s blog or website and is then submitted to article directories.

> Videos can be used to build the list because videos help to authentically connect with the people who visit the entrepreneur’s site and allows engagement in a compelling manner. Videos also allow an individual to interact with prospects better.

> Pay-Per-Click advertising can be used in list building and is one technique that can attract many ideal as well as highly qualified leads consistently.

This list dictates the number of clients and customers that sign on and this affects the income of the business.

3. Optimize your website for signups

For an individual to optimize their website, it is important that they give the right kind of information that will grab people’s attention as well as leave an element of mystery that will generate curiosity. The content on the website should be useful, link-worthy and entertaining as this increases the chance of the start-up being discovered. Assess the type of content the competition is creating and use gaps in the content as an opportunity to deliver something the competitors have missed or are lazy to perfect. Keywords should be worked into the posts and the blog optimized for the search engines.

Having a page that is a basic “Coming Soon” page, can be used to entice people to sign up. Offering a special bonus can be an effective way to get early subscribers. Make social sharing an important part of your website and lead generation plan as well.

The sign-ups should be monitored on a daily basis and this should be set up in a way that an email is received every time someone signs up. This can be used to send the person a follow-up thank-you note.

4. Communicate regularly and clearly

Attracting clients consistently requires that the entrepreneur’s marketing message be clear and stand out. When this message is clear, the marketing plan will be so much easier as well as less costly. To communicate regularly it is important to engage the audience immediately. This can be done by sending out emails regularly, as well as offering people something that will be useful to them with each message. This is one way to keep them signed up, and respond positively to the launch. Have email programs that will allow the set up of “autoresponder” sequences that enable the automatic sending to people a particular set of messages once they sign up.

The emails can offer sneak peeks concerning the progress of the business, industry news, fun quips and also how-to.

5. Develop strategic partnerships

To launch a startup successfully, align it with relevant companies that have significant reach. With that being said, it is very important that an entrepreneur looks for opportunities in brands that will complement their product offering and provide unique value for the customers. Build relationships with people regarded as influential in the industry. This will open the business to powerful resources, endorsements as well as introductions to other key influencers in the industry.

Recommended Books on Ways to Launch a Startup

The Startup Survival System by Kurt Won
New Business Next Steps by Ann Hawkins
Become Your Own Boss in 12 Months by Melinda Emerson
Startupland by Mikkel Svane
100 Days of Growth by Sujan Patel

If you had to pick one, which way would you launch a startup? Share in the comments:

The post 5 Popular Ways Entrepreneurs Can Launch A Startup appeared first on The Entrepreneurs Library.

Raising money for your startup can seem exciting. It seems as though it’s the first step in what will eventually become your Zuckerberg-sized concept you’re going to blow up to the moon.

These investors want to give me money? …Well of course they do because my company is totally destined for greatness.

Okay, you may not get this absurd with your internal monologue, but in all likelihood it’s the feeling you’ll get when you get a “yes” in a room with an investor.

That said it’s not all sunshine and rainbows. In fact, if you can get creative and scrappy and bootstrap your company for as long as you possibly can prior to raising a round of funding (IF you have to raise one at all), you’re going to get a WAY better deal when the time comes, AND you’re going to be a lot more likely to use that money wisely.

As a business mentor for MentorMojo, I spoke on this topic in more detail here:

Don’t get me wrong – I’m not anti-VC money. In fact, I’m a huge advocate of it under the right circumstances.

Here are 4 instances where raising funds may be a very bad idea for you:

1. You’re a brand new founder

If you’re a new founder, chances are you’re a combination of smart, hungry and clueless. We all were – and it can be a profound asset for us in the early days. As in anything, no matter how predisposed you may be to success, there are going to be some hard lessons you need to learn before you’re good enough for the next level.

I’ve had the privilege of living among a few different first-time founders who just raised a round of venture capital, and rather than allowing themselves to fail on a small scale by trying to leverage some creative financing and/or bootstrap things before upping the ante, they instead burn $1 million or more because they’re simply too green to know when they’re making good, informed decisions, or when they’re simply throwing money at a problem they’re not yet intellectually capable of solving on their own.

2. Your idea came from your own brain

Most founders start their first business – or even their first couple – because they had what they believed was a good idea. Every time they think about it, they get so fired up to the point where they take the leap, and soon begin investing time and hard-earned money to make it real.

What they soon start to realize is that an idea is only good for one thing: to spark the very first action. However, as you move forward, you’ll find that your success will not come from any one person’s idea – even if it’s your own. After all, you are only one single plot on your overall customer graph. If you want to grow and move forward, you have to look at and adapt to the overall patterns in the feedback you gather from your target customers, and allow your product or service to evolve as a result.

If you can begin doing this even before you build anything at all, you’ll find that you’ll be able to craft a solutions that your customers may even finance themselves through pre-sales and early-access discounts – negating (or at least prolonging the time before) the need for outside funding.

3. You believe your idea is the path to untold riches

Start a successful company, no matter what it is, could be one of the more difficult, confusing and anxiety-ridden journeys you ever embark on. Every single founder is going to have terrible days where it feels like the walls are closing in around them. These moments are the ones that separate a successful founder from one who cracks under the pressure.

Regardless of how mentally tough you THINK you are, you’ll be a lot LESS tough if you’re only in it for the payday. We all love money, but as strong of a motivator as it can sometimes be, it’s almost never strong enough to kick a struggling founder into gear. Your customers will also sense when you’re only in it for the money as it’ll be a lot less about their ROI and a lot more about yours. Soon after, they’ll run for the hills.

That said, if you’re instead intensely passionate about solving the problem your product or service has set out to solve for your customers and you absolutely love living and breathing what you’re working so hard to create, you’ll be a lot more likely to weather the storm and move forward. Your customers will also gravitate to you – so by focusing on helping them, they’ll help you in return.

4. Your team is made up of friends and friends of friends

Your team’s implementation of your concept or company strategy, not your concept or strategy itself, will be what determines the success or failure of your brand. However, new founders often justify hiring their friends – or friends of friends – because they both don’t know how to find and recruit talent, and they simply want to work all day with their friends.

Most of these new founders then soon realize how tricky having a prior friendship can make an employer/employee relationship. While they can succeed in some rare cases, they’re nearly always much more complex in nature.

Instead, forego hiring friends and personal connections and instead focus on educating yourself on how to recruit great talent. Embrace the “hire slow, fire quick” mantra, and never raise a round of funding until you have a great founding team comprised of passionate, proven individuals.

Every single investor will ask you about your team as they know how important it is for you – and you need to ensure this is one of the first things you address before walking into a room expecting VC money.

So when SHOULD you raise venture capital?

In my humble opinion (after starting, bootstrapping, scaling and selling 6 tech companies in the last 6 years), there is only one and only scenario where raising venture capital is appropriate:

When you’ve built a small, strong team with proven track records who have put together a minimum viable product you’ve crafted through extensive feedback sessions with your target customers (many of whom are currently using and paying for your product) and you’ve got a well-researched plan on where you’ll target more customers, how much it will realistically cost, what you’ll need build next, and what a realistic exit strategy will be for both you AND your investors.

Oh…and you have discovered, after doing all these, that you actually NEED outside funding to scale your business (in many cases, you no longer will).

If you don’t have ALL of these, keep bootstrapping!

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4 Common Reasons Why Startup Companies Fail

You have a superb business idea. The question is – how do you know it will be a success?

The answer is simple – you don’t. And unless you try it out, you will never know it for sure. You need to take the step to find out whether your brilliant idea will transform into a successful business.

But before you take the step, be cautious.

The facts can be dampening – 8 out of 10 startups fail. But if you are aware of the common pitfalls, you can try to steer clear of them. Why exactly do startups fail? Often a combination of reasons works together and ultimately leads to failure.

“Only those who dare to fail greatly can ever achieve greatly.” – Robert F. Kennedy

Let’s take a look at the most common reasons why startup companies fail:

1) The Core Idea isn’t Right

The idea may be too small, and attract only a small niche market, in which case you won’t be able to attract investors. Or, it may be the solution to only a really frivolous problem, in which case you won’t get customers.

Another possibility is that the product or service you offer really isn’t necessary, but only an addition to whatever is already available. In each of these circumstances, the possibility of building a successful new business will remain a distant dream.

Tip: The best way to assess the potential of your idea is to present it to investors.

2) The Funds Are Dried Up

Perhaps you miscalculated how much you may need, or you spent more than you can afford, or you misjudged the time you will need to break even, or maybe it was some other reason. Whatever it is, it can spell doom for a startup.

Also, if you want to run it as a lifestyle business, you may not want to involve investors. But this strategy won’t work if you want to build a big business. Running out of cash can forestall any chance of success, and eventually lead to shutdown.

Tip: Plan your budget; and double it. Also, keep aside an emergency fund.

3) The Team Doesn’t Work

Put together a directionless leader, an unmotivated team, and no advisors – and you have the perfect recipe for disaster! A startup needs a team with all the components right; and one that knows how to manage a startup.

You need to come up with a management that understands how to build up a new business, a team that works together with the same vision, mission and ethics, and advisors who can help overcome the hurdles on the way.

Tip: Don’t take it all on yourself; it will go haywire if you have to stay away for a week.

4) The Competition is Too Tough

Unless your startup involves an original invention, you have to worry about competition, even in the first phase. Be it selling pencils or managing yacht charters, many new businesses are outcompeted by the established ones.

Again, sometimes your product may be too complicated to use, or your service may really be unnecessary. And customers prefer the time-tested solutions to innovations. If there’s a gap in your strategy, your idea may never become a successful business.

Tip: Do thorough market research, especially about your competitors, in advance.

A startup may fail for any of these, or some other reason. And even if yours does, it’s no cause to think of it as a failure and regret your step. Even Edison failed 1000 times before he came up with the light bulb.

Instead, analyze why you failed, and learn from your mistake. It’s the only way to success.

Recommended books on overcoming business failure

How to Ruin A Business Without Really Trying by MJ Gottlieb
The Pumpkin Plan by Mike Michalowicz
Zero To One by Peter Thiel and Blake Masters
Fail Fast or Win Big by Bernhard Schroeder
The Startup Survival System by Kurt Won

What was the most significant way you overcame failure? Share with everyone in the comments below:

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7 Recommended Books for Starting an Online Business

Do you really need to attend a business school to be a successful entrepreneur? While it may help you in certain circumstances, it isn’t a necessity, especially when you want to start an online business. Pete Cashmore began Mashable when he was only 19. And look at how amazingly successful it is today!

But the road to success isn’t easy. You need to gather adequate information, couple it with wisdom and imagination to make things work. And what could be a better source for all these than books! Just take your pick, read and absorb what the best have to say.

Here’s a quick look at 7 of the best books for starting an online business:

Will It Fly? By Thomas K. McKnight

Does your business idea have wings? Or will it fall flat? The 44-item checklist in this one will help you find the answer to this vital question. Do you have the right personal traits? Do you know where the exits are? You’ll find answers to all your queries and also evaluate your chances of success.

The $100 Startup by Chris Guillebeau

Is it really possible to build a million dollar business on a modest budget? Guillebeau brings forward a series of case studies to prove his point. A pleasant read, this offers great value if you are on the lookout for a book that helps you understand why you should do what you love – and how to do it too.

The E-Myth Revisited by Michael E. Gerber

Being an entrepreneur isn’t exactly similar to being the mythical hero it is often cut out to be. If you wish to get the entrepreneurship facts straight, this is the book to read. It also illustrates the distinction between working ‘on’ your business and working ‘in’ your business.

The Barefoot Executive by Carrie Wilkerson

Want a little inspiration? Take up this book and glimpse Wilkerson’s journey to become a home-based entrepreneur. An entertaining read, this helps you understand the ways in which to tackle the core issues – identifying the target market, creating marketing strategies, building your brand, and so on.

The Lean Startup by Eric Ries

Creation and assessment of business processes may not be an easy task. And it is where this book can be a handy guide – when you are planning to start an online business, especially a software startup, this is one of the must-reads. And the best part, it comes from his experience.

The 4-Hour Workweek by Tim Ferriss

Well, flexible work hours are one of the chief points that drive individuals to begin their own businesses. This book explores the opportunities that you can get when you decide to take the plunge. And the way the author relates the points in a fun and motivational manner makes it all the more interesting.

Lucky or Smart? by Bo Peabody

Bo Peabody was an online multimillionaire in his twenties. In this book he answers the important question – was it luck or was he smart enough to do it? He illustrates the way you can cultivate your perception and identify when he was plain lucky. Smart for him to do it!

No single book can be your only guide; read up on as many as you can before you take a step.

Recommended Books on Growing an Online Business:

Zero To One by Peter Thiel and Blake Masters
Digital Bacon by Alex Rodriguez
The Suitcase Entrepreneur by Natalie Sisson
The Startup Survival System by Kurt Won
Virtual Freedom by Chris Ducker

What books for starting an online business would you recommend to online entrepreneurs? Share your books in the comments below:

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5 Effective Ways To Raise Money For A New Business

You may have a winning business idea, but unless you can arrange for the right amount of funds it most likely will not transform into a successfully scalable venture in the 5 plus years to come. The question is – where do you get the money from? Well, there is always the bank loan; but it’s the hardest to get for a new entrepreneur.

How do you manage to raise money for a new business? Here are 5 of the most effective ways to do it. Remember though, you may have to mix and match all or a few of them to make it work to your advantage.

1. FUND IT ON YOUR OWN

Self-funding is often the only option for a new entrepreneur, as financial institutions make it difficult for them to get a loan. Liquid assets aren’t the only option though. You can leverage your other assets to raise the necessary money.

It can be anything – downsizing to a smaller home, selling off your luxury car, selling off jewels, and so on. You can also take out a loan against your home, your savings account or even your whole life insurance policy.

2. RELY ON FAMILY AND FRIENDS

While banks will ask for business plans, financial projections, and collateral before they give any loan, you may not have to face any such hurdles when you decide to borrow from your close ones. But it’s easier in theory than in practice.

You may not have to pay any interest (or even if you have to, it’s usually quite low). But make sure you get every detail in writing. And also make sure it is a loan, and you don’t give away a legal stake in your business to everyone.

3. GET TRADE CREDIT

If you can convince your suppliers to work with you in such a manner that you have a fixed period of time before you need to pay for the supplies, things can work out. It works in the same way for established businesses.

But it isn’t easy. You have to provide suppliers with a good business plan, financial projections, collateral, and any other documents they ask for to make it work. Once you have the agreement in place, you will have a fixed time before you need to pay them.

4. APPLY TO ANGEL INVESTORS

These are successful entrepreneurs who can help you get your business on track. But remember, it’s not a loan; it’s an equity investment. So, you have to hand over a slice of ownership to them when you get their money.

The advantage is that you don’t need to fret over regular payments or interest rates. But on the downside, you may have to share the authority over your business. And it may be a little difficult at times to ask for approval from every investor.

5. FIND SMALL BUSINESS LENDERS

Certain companies specialize in finding lenders for small businesses. All small business loans can help you find the funds for your new venture. But you need a business plan, financial projections and some money for the startup.

Online lending sites are good places to get loans for your small business too. But they are unsecured loans. And it’s essential that you scrutinize every detail, especially the fine print, of the loan agreement before you sign on the dotted line.

You can also check out the loan programs available from the government to identify possible opportunities to get adequate financing. If you are eligible, it can take out one of the biggest hurdles in creating a successful business – startup costs.

Recommended books with tips on raising money for a new business:

Venture Capital by Elaine and Kaiwen Leong
StartupLand by Mikkel Svane
Everyday Entrepreneurs by Ken Horn
Do Cool Sh*t by Miki Agrawal
The Startup Survival System by Kurt Won

What are some ways you suggest for entrepreneurs raising money for a new business? Share with everyone in the comments below:

The post 5 Effective Ways To Raise Money For A New Business appeared first on The Entrepreneurs Library.

Unlike Google, not all businesses start their humble journey from their garages. You will find some types of startup companies operating from brick and mortar stores whereas some others maybe working from startup incubator centers.

Thanks to the massive development in the field of technology, we are surrounded by many different forms and types of startup companies that are consciously or unconsciously changing our perception of how a startup should work.

As we move into the new year, let us recap some of the most popular types of startup companies from 2014 –

1) SMALL BUSINESS STARTUPS

It is a fact that the vast majority of startups are still the same old small businesses. Travel agents, plumber, electricians, carpenters, storefronts, consultants etc are some of the types of startups that fall under this category. It is a fact that these types of small businesses struggle to hog the limelight of the popular media but the truth is that these small business owners work as hard as any other startups in the Silicon Valley. The good thing about these small business startups is that they mostly hire local talents and thereby contribute to the local economy. The purpose of these startups is to earn enough money to feed their families. Small business entrepreneurs rarely make it to the magazine cover but they do play a prominent role in the economic development of the country.

2) LIFESTYLE STARTUPS

We are now seeing an increasing number of startup companies who are blurring the line between passion and profession. For example, people, who are passionate about drawing, are launching Animation startup companies as it gives them the perfect opportunity to do what they do best. People who have some level of expertise in sky jumping are now offering sky jumping training as well; this is another form of lifestyle startup. Lifestyle Startup is all about pursuing ones passion and finding a way to earn money through it.

3) BUYABLE STARTUPS

The cost of designing and developing a mobile based or web based app has plummeted massively and this has given birth to the new breed of Startup Company known as buyable startup. Some of these startup companies are not even looking for traditional Venture Capitalists rather they are trying to raise money for their startups by opting for angle finding or crowd funding. However, this type of startup is generally sold to a third party after some time in return of a handsome amount of profit. This type of startup is gaining traction and is most likely to become more popular in coming years.

4) SOCIAL STARTUPS

Unlike other types of startups, social startups are not driven by profit rather they are driven by a powerful cause. Just because social entrepreneurs are fighting for a cause it does not mean that they are any less passionate about success or adverse to the idea of making profit. Unlike traditional startup companies, the goal of most social startups is to make the world a better place. However, there are some social startups who are into wealth creation as well.

5) SCALABLE STARTUPS

Scalable Startups are vastly different from small business startups despite the fact that they too have very humble beginnings. Unlike small business startups, scalable startups aim high. They believe that their ideas can change the world and the perfect examples are Facebook, Twitter, Skype and their likes. Scalable Startup revolves around a simple but powerful concept and they always look for financial investors to raise capital for their dream idea.

Recommended Books for Building a Startup Company

The Toilet Paper Entrepreneur by Mike Michalowicz | For a summary according to Mike CLICK HERE
Startupland by Mikkel Svane | For a summary according to Mikkkel CLICK HERE
Virtual Freedom by Chris Ducker | For a summary according to Chris CLICK HERE
Hooked by Nir Eyal | For a summary according to Nir CLICK HERE
Pocket Man by Scott Jordan | For a summary according to Scott CLICK HERE

What type of startup company have you created or plan on creating in 2015? Tell everyone about it in the comments below:

The post 5 Most Popular Types of Startup Companies from 2014 appeared first on The Entrepreneurs Library.

You dream of starting a successful business.

You hope to succeed. Who doesn’t?

You want your spouse to be proud of you. Perhaps your children will take over the family business one day.

You are so pumped that you could fly.

Hey you! You want a dose of reality?

Most businesses fail.

Why?

You guessed it. They fail because of money.

More specifically, they fail because of bad financial decisions.

Have you ever wondered what’s the one thing you can’t succeed without?

It isn’t your business idea. Neither is your passion for your business.

It’s MONEY!

Does this mean that you have to be rich? Of course not, but you have to be smart about your finances. Money doesn’t guarantee you success, but the lack of it guarantees failure.

I am sure you hear people telling others to “Dream Big”.

Dream small my friend.

Many entrepreneurs think that starting a business is about spending like there is no tomorrow.

Startup entrepreneurs can make poor decisions that will hugely impact the financial health of their startups.

Avoid the following financial mistakes to maximize your chance for success:

1. Fund your business right.

Never finance your business with your retirement savings.

They say “getting old is not for sissies”.

The only thing worse is being old, poor.

Don’t risk your retirement savings for any startup. Think of this as an absolute.

There are other ways to fund your business, here are some of the best:

● Purchase order financing/Factoring accounts receivables – PO financing helps you get required funds directly to the supplier. Factoring is similar to PO financing. It is based on unpaid amounts owed to your business.
● Save money before you start your business – It shows that you are serious about business.
● Use credit cards – Credit cards are easy to get if you have decent credit. Many successful businesses were funded by credit cards.
● What are friends for? – Your friends and family trust you and love you. Why not ask them to take a chance with you?
● Crowdfunding – The most common crowdfunding sites are Kickstarter and Indiegogo.
● Peer-to-peer lending – Prosper and Lendingclub are some of the most popular peer-to-peer lending sites.
● Microloans – Microloans are for usually for under $50,000. They are normally offered by nonprofit community-based organizations.
● Vendor financing – This is a form of lending in which a company lends money to be used by the borrower to buy the vendor’s products.

And a few more financing options as a bonus:

● SBA loan
● Product pre-sales
● Side business – you might have one of your business fund your startup. For example, it is common for startups to finance their business through consulting gigs.
● Angel investors
● Venture capitalists
● Winning contests – There are many business-plan and startup contests.

2. Be smart about long-term contracts.

For most businesses, signing a long-terms lease is almost always a bad idea.

Let’s say you sign a five-year lease for a 2500 square foot office. Business is good. Two years later you have hired more people you have space for.

What do you do now?

The easy solution is to move into a larger space, but you are stuck.

Remember the five year lease you signed? You are stuck for three more years.

You can plead, make threats, or break down in tears.

Your landlord will not let you out of your lease.

You do have options, but none of them are great.

You can lease a second office, but it will increase your operating costs. You have no good options only because you signed a long term lease.

Don’t do it.

If you are smart, you sublease or rent month-to-month.

Do you want to be free?

Avoid long-term contracts.

Sublease or find a place you can rent month-to-month. A great place to find subleases is through Craigslist. There are a bunch of businesses that made the mistake of leasing a larger space they need.

Their loss is your win!

You get to sublease from them month-to-month. In addition, you’ll probably spend less per square foot. If you want to move, in 30-days you are outta there.

In the above example, the growing company was stuck in a cramped office space simply because of a long-term lease.

Entrepreneurs that succeed keep their options open.

Avoid long-terms contracts like the plague.

3. Buy inventory.

Spending money is easy.

Smart entrepreneurs only spend on things that make them money.

Sell it first.

Only buy inventory when you are 100% sure you can sell it.

How do I do that? You might ask.

Take pre-orders.

Some of the most successful businesses have virtually no unsold inventory.

Sell before you invest in inventory.

Selling first helps you two ways:

A. It proves that people want what you have.
B. It proves that you have the right price.

Best of all, selling first will never bankrupt you.

Inventory control can make or break your business.

If you must have an inventory, manage it to perfection.

Having too much or too little can eat up your cash fast.

4. Hire staff too soon.

One of the most exciting time for a startup is when you hire your first employees.

Employees are expensive.

Business is cyclical. You might have a couple of busy months, followed by three slow months.

As a startup you might be better off working with contractors at first. It is easier to scale down with contractors than employees.

Do you want to lower your operational and labor costs?

Outsource and work with contractors.

Working with contractors gives you greater flexibility. Later on when your business is humming along, you can hire full-timers.

The most commonly outsourced business functions are:

● Customer support
● Accounting
● Web design
● Computer programming
● Data entry
● Writing/Content development
● Manufacturing
● Research & Development (R&D)
● Legal services
● Creative Services – PR, Marketing, SEO

5. Quit your job before your business makes money.

It’s liberating to know that you can quit your job.

But, is it the right thing to do?

Are you sure you have enough money to pay the bills until your business turns a profit?

Know how many months you can live on your savings. In business, everything takes longer and costs more than anticipated.

Quitting your job too soon could be one of the worst financial mistakes.

Don’t quit your job if you:

● Have insufficient savings.
● Are pumped up about business, but lack a real plan.
● Have a lot more to learn before you know enough to start your business.
● Hate your job and expect your business to help you love life.
● Are desperate to make money.

Do you want to do it right?

Start your business on the side and phase out your job as you start making money.

A steady paycheck takes a lot of the pressure off. Many successful startup entrepreneurs keep working during the day until they have enough revenue to replace their salaries.

It might take you a year or two to make enough money to feel comfortable about quitting your day job.

It’s the safe way to transition from employee to entrepreneur.

Want to know a secret?

The more financially dumb decisions you make the more likely will you fail.

Minimize your chances for failure and avoid financial mistakes.

Guest Author:
George Meszaros is a serial entrepreneur and the co-founder of Success Harbor. Success Harbor is dedicated to document the entrepreneurial journey through interviews, original research, and unique content. George Meszaros is also co-founder of Webene, a web design and marketing firm.

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Top Financial Mistakes Entrepreneurs Make When Creating a New Business

Managing to keep the cash flowing is one of the biggest concerns for every new entrepreneur. And what makes it even more difficult is their unawareness of the pitfalls along their path. Creating a new business is a big task, and keeping the cash flowing is part of the responsibility.

Forbes states that “There are almost 28 million small businesses in the US and over 22 million are self employed with no additional payroll or employees (these are called non-employers)”. The question is – how many of them will survive in the long run?

Even if you have a winning idea, a superb product or an excellent service, you need to pay attention to your finances to transform it into a successful endeavor. And while you have to focus on the dos, you also need to be careful about the don’ts.

In order to make your transformation flawless, let’s take a look at the top financial mistakes entrepreneurs make at the start.

Mistake 1: Biting off more than you can chew. You need to dream big when you start out as an entrepreneur. But if your dreams don’t fit your budget, you are in for some big trouble. Keep your head in the clouds and your feet on the ground.

Suppose you sell handmade gifts online. Do you really need to have a physical store? No. Yes, it can add to your business. But if you are hard pressed for money (that you invariably are at the start), isn’t it a better idea to make it a home-based business initially?

Mistake 2: Underestimate expenses. Just like a business plan, you need to have a financial plan at the beginning. But it’s a little different. While you need to stick to your business plan, you need to tweak your financial plan a little.

What do you need to do? Just double whatever you have set as expenses! Many businesses fail because they underestimate just how much they will need to keep things running. Doubling the figures gives you a cushion to fall back on even at the last minute.

Mistake 3: Falling prey to the allure of new. A new office furnished with modern pieces and showcasing the latest gadgets may look and feel nice. But unless you need to meet clients at your office regularly, it’s just a waste.

As a new entrepreneur, you need to focus on how you can save money. Instead, of new furniture, opt for used ones. They will be good, and come cheap too. If possible, let go the idea of an office entirely or maybe get an office suite instead of the entire deal.

Mistake 4: Employing individuals. Everyone feels high and mighty when they are in a position to employ others. But consider your decision a hundred times before you do it. It is one of most expensive choices you may make, and it can quickly become a cause of concern.

Instead of full-time employees, opt for contractual professionals for your business. They may have a higher hourly rate, but you won’t be burdened with them once the contract runs out. And as they are experts, you save time and money on training and supervision too.

Mistake 5: Not having an exit plan. A new entrepreneur needs to aim for success and prepare for failure. While you need to put in every ounce of your time, money and effort into your endeavor, make sure you have a safety net in case anything goes wrong.

It’s best to keep aside an emergency fund that will come in useful if your business doesn’t break even in the time frame you have set. It’s imperative that you don’t break into this fund to try to save your failing business. This will see you through until your next venture.

Be wary of these top financial mistakes entrepreneurs make and you will be able to better manage your finances, right from the start.

If you are looking for great books that provide insights into the financial management of a new business, I recommend the following 5 reads:

Business in Blue Jeans by Susan Baroncini-Moe – Listen to my interview with Susan here
The Financially Savvy Entrepreneur by Emily Chase Smith – Listen to my interview with Emily here
The Millionaire Master Plan by Roger James Hamilton – Listen to my interview with Roger here
Think and Grow Rich by Napoleon Hill – Listen to my interview with Don Green here
How To Get Unstuck by Barry Moltz – Listen to my interview with Barry here

What is the biggest financial mistake you have learned to overcome with your business or in life? Share your answer in the comments below so others can chat and learn as well.

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5 Important Things That Every Entrepreneur Needs To Know About Starting a New Business

Starting a new business can prove to be advantageous. Along with the opportunity to do what you love, it also gives you the chance to have a flexible schedule and make money from it. Nonetheless, all of this will only become a reality if you are aware of the basic and important things that matter.

Every entrepreneur needs to start right to achieve success. And to do it, you need to have the right knowledge and clear ideas. This will help you chart out the course of action you need to take to achieve success as an entrepreneur.

Let’s take a look at the important things that every new entrepreneur needs to know about starting a new business:

Legal Requirements
Well, the Internal Revenue Service needs you to get your Tax Identification Number. But that may not be all. Depending on where you decide to open your new business, there may be few, or many, more legal requirements. Check with your local small business association or you can go online to the US Small Business Administration for help.

You may need to fill out forms, submit documents and get licenses and permits to start a new business. It is best to talk to a business consultant to get a clear idea about what you need to do to ensure that the legal requirements are met.

Finances
It is important to plan your budget before you take any step in this direction. Work out how much you will be able to invest initially, what expenses do you need to meet immediately and how much do you need to make to break even.

Also, don’t forget your own finances. You’ll still have to pay your rent, health insurance, and other bills. If necessary, take up a part-time job for the first year or so. It will be hectic, but you need to have a certain amount of cash to fall back on, if anything goes wrong.

Liability
In most cases, a sole proprietor has the entire liability for the losses incurred. This may mean that your personal assets may be at risk if it fails. The advantage is that you get to enjoy all profits. But it’s best to be sure about liability in advance.

Get in touch with a business attorney to understand the different forms of business you can start. And discuss about the liability of each category. Once you are aware of the matter, you can make an informed decision about it. For an affordable solution in getting started with an attorney we recommend LegalZoom to get you started in the right direction.

Business Planning
You cannot be successful without a properly put together business plan. In reality it is a summary of how you want to organize your entrepreneurial endeavor and chart out the activities to make it successful.

Talk to seasoned advisers and successful entrepreneurs, analyze examples and read up as much as you can before you make your business plan. You can also outsource it; but it won’t be of any use if you aren’t clear about each point of the plan.

Understanding the Target Market
When you decide to start a new business, the first thing you need to identify is who will you sell your product or service to. This decided, you need to find out the way in which your product or service will be of use to them.

Ample research and detailed understanding of the target market are essential before you begin. This will help you come up with a business plan that works. And will also help you to decide the marketing strategies you need to put in place to attract them.

Starting a new business is a huge task; and you need to put in 110% of your effort to achieve real success.

The perks and benefits of owning and operating your own business are quite attractive. However the flexibility to work on your own time will only arrive if you are willing to put in a good 60-80 hours per week until you are ready to hire help.

For an insightful and inspiring book on starting a new business I recommend the following:

Startup Mixology by Frank Gruber
Listen to my live interview with Frank about his book in episode 11 >> iTunes | SoundCloud | Show Notes

The Entrepreneur Mind by Kevin D. Johnson
Listen to my live interview with Kevin about his book in episode 25 >> iTunes | SoundCloud | Show Notes

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