5 Basic Business Steps You should Know Before Starting A Startup

Startup Business Concepts

The nature of your business does not matter; All new entrepreneurs must understand the economic basics that help their companies prosper.

Without a solid business background, being in charge of a new company can be overwhelming. Knowing how to read a balance sheet and a profit and loss statement is as important as knowing how to make the product or service you provide.

Here are five things you need to know as a successful entrepreneur.

1. Know The Economic Outlook

It is essential that as a founder of a startup you know where your business fits into the economic puzzle, or what effect an economic recession would have on your company. You don’t need to be a professional in economics to launch and grow your own business, but at least you must understand what your economic community is like.

That means you must know your market and the place your startup occupies in it. Who are your main competitors and what do they contribute that you don’t? More importantly, what is your company’s unique value proposition? You need to know what sets you apart from the competition if you want to convince potential customers to choose you instead of them.

2. How To Read A Profit And Loss Statement And Other Financial Skills

Training financially is one of the most important investments you can make at the beginning. While you will almost certainly hire qualified financial experts to handle your company’s accounting or tax needs, it is crucial that you understand the basics.

Can you read a profit and loss statement? Do you understand the difference between debt financing and equity financing, and what each can mean for a young company? Do you know how to budget?

If the answer to any of these questions is “no,” then you should invest in your own financial education as soon as possible. These concepts are not too difficult to understand, but you must know them well before opening the doors of your business. After that, pairing up with one of the top accounting firms is advisable as it’ll save you a lot of headaches down the line.

3. Cash Flow: What It Is And How To Improve It

Making a budget is only the first step. You should also understand the concept of cash flow projections. How much money can you expect your startup to generate? How much of that total will be profitable and how much will it finance daily operations? It is essential to perform this task.

Understanding cash flow also means having a basic understanding of financing and fundraising options. They include venture capital, investors, crowdfunding, self-financing, grants, loans, etc.

What is the best option for your business in its early stages? The answer can mean the difference between having a thriving business or needing to look for a job.

4. The Regulatory And Legal Framework In Which You Work

All companies are sensitive to certain financial, economic and legal frameworks, which means ensuring that all legal and regulatory requirements are met. The legal aspects of your business include:

• Commercial structure
• Tradename
• Taxes
• Permissions and licences

Understanding the legalities of doing business also means managing your intellectual property and upholding the right to do business. Does intellectual property like trademarks, copyrights or patents support your business? If so, you will need to know from the beginning how that IP is defined and what you must do to protect it.

Finally, as a means of managing risk and reducing legal exposure, insurance is crucial for a growing business at any stage of development. Find out about the different types of insurance products available (social responsibility, professional liability, workers compensation, etc.

5. Marketing

Last but not least, as an entrepreneur, you must understand the basics of marketing.

You can’t wait to open your doors to a steady stream of new customers on the first day. People just don’t make buying decisions that fast. They need to be persuaded and have confidence.

That’s basically what good marketing does. You must know the process that each client carries out to make a purchase, and know at least the basic marketing techniques that help the client to take each successive step.