Few experiences in life can be as exciting and exasperating as launching a new business. While entrepreneurship has numerous benefits, including greater flexibility with your schedule and control over business decisions, many start-ups fail because they neglect to address all the associated market, economic, and lifestyle considerations.
Let’s take a look at the top 10 factors to consider before establishing a new business:
1. Initial Investment and Cashflow
Starting your business off on the right foot means taking a realistic look at your startup costs. That means determining your initial investment, or the upfront money you’ll need to contribute toward your company. This includes expenses such as scouting a location, infrastructure setup, the purchase of inventory and equipment, legal and accounting fees, insurance, and the costs of developing a business plan.
Your initial cash flow is the total money that is available when your company is in the planning stages. This figure includes any loans or investments made in the business. Don’t be concerned if your initial cash flow is a negative figure. This is usually the case, since launching a business requires capital investment with the goal of generating future income.
Lack of cash flow and adequate planning are two common pitfalls that cause businesses to fail. That’s why it’s essential to determine start-up expenditures when researching your business plan.
2. Break-Even Point
While you’ll naturally be eager to see your business thrive, it’s important to have realistic expectations initially. At first, your business will likely operate at a loss, since its revenue won’t cover all of its costs. When revenue and expenses are equal, your company will reach its break-even point. This is the amount of revenue that a business needs to earn to cover both its fixed and variable costs.
The break-even point is a metric that can help determine whether your business is financially viable. It reveals the minimum performance required to become profitable, helping you make decisions critical to your company’s growth. After reaching your break-even point and all costs have been accounted for, you’ll be able to start generating profit.
To calculate your company’s break-even point, divide your fixed costs by the contribution margin (selling price – the variable cost per unit). Keep in mind: Fixed costs are independent of the number of units produced, while variable costs are dependent on that number.
3. Market Validation and Customer Acquisition
Perhaps the most important questions to ask when launching a business is, “Will people actually buy this product or service?” The process of market validation seeks to answer this question by determining whether your product or service appeals to your target market. Market validation is a critical step in ascertaining market demand and the potential for customer acquisition. By collecting empirical evidence based on actual customer behavior, it aligns business objectives with customer needs, allowing you to understand and engage your target market.
Of course, you’ll want to first define who your target market is. Then, by conducting market research, analyzing your competitors, gathering feedback, and assessing market size and potential, you can test your product or service ideas for viability, minimize your risk, and build a successful, customer-centric business.
4. Competition And Differentiation
Knowing who your competitors are and standing out among the pack are musts for any business, but particularly important upon startup. Begin by researching businesses that offer similar products or services and learn what demographic they serve. Then, map out how to differentiate your business from the competition.
A differentiation strategy comprises offering a unique product, feature, or service to your target audience to gain a market advantage. Consider what makes your company distinct, such as its exceptional customer service, unique value proposition, or marketing approach.
There are two types of differentiation strategies. A broad differentiation strategy emphasizes identifying and promoting distinctive characteristics that set your company apart from others. A focused differentiation strategy involves the unique features your company provides via a particular product or service that increases value for customers.
5. Scaling and Growth
How to scale successfully for optimal growth is another factor to consider when starting a business. Scaling is the process of rapidly growing and expanding a business, considering revenue, customer base, and employee headcount. The goal is to eventually reach a larger audience, increase profitability, and/or dominate the market.
While you may not be ready to scale until you’ve reached consistent revenue growth, it’s advantageous to build your business with scaling in mind. This means ensuring the core structures of your company are designed to grow naturally with the business. In the early stages, it’s wise to focus on customer acquisition and retention, key metrics, and building a team that can be easily expanded down the road.
6. Marketing and Sales Efforts
A process that plays a key role in the success of a startup is creating a solid marketing strategy — one that can help boost your sales efforts, allow your business to gain exposure, and position you for long-term growth. To be successful, your marketing campaign must align with your target market and business goals.
Developing a strong understanding of your target audience and competitors through market research is necessary to craft a targeted marketing plan. You’ll want to create a marketing budget and determine which methods will best help you to rapidly grow your business and meet your goals. Social media and email marketing, search engine optimization (SEO), promotional materials, and networking events are strategies to consider.
Similarly, a sales strategy is a plan that includes goals and actions businesses can use to increase sales and secure new customers. Generating leads requires an understanding of your key demographics and their wants and needs, as well as establishing clear goals and objectives and a realistic pricing strategy.
7. Regulatory Compliance and Legal Matters
Careful consideration of regulatory compliance and legal matters cannot be neglected when launching a business. Regardless of industry or size, all businesses must adhere to certain laws, regulations, or guidelines as part of their operations. For example, most private sector employers must observe rules set forth by the Occupational Safety and Health Administration (OSHA) to ensure a safe work environment.
The regulatory environment is constantly changing, with the volume of laws increasing dramatically during the last 100 years. While it can be a challenge to keep up with this changing landscape, businesses that fail to comply can face potential lawsuits and financial liability. That’s why creating a regulatory compliance plan and training employees on the subject can go a long way toward protecting your company.
8. Economic Uncertainty/External Factors
It’s no secret that were living in uncertain economic times, which can make it difficult to determine the best time to launch a business. External factors, such as elections, wars, natural disasters, and changing business regulations, play into this uncertainty. Despite record-high inflation and other factors, however, millions of new business applications were filed this year.
Evaluating your business’s market potential and adaptability can help influence the timing of your business launch. Still, there’s no perfect time to start a business, and doing so during times of economic uncertainty can actually be advantageous. For instance, when uncertainty is high you may experience less competition, lower interest rates, and more potential customers who are willing to try something new.
9. Burnout and Work-Life Balance
Nearly all employees are prone to experiencing burnout and difficulties balancing work and life obligations, but business owners are particularly susceptible. As the captain of your ship, the countless demands and responsibilities of running a business rest on your shoulders — so you’re faced with long days and potential exhaustion.
Achieving a work life balance is necessary for your physical and mental well-being and should not be ignored when launching a business. Taking occasional breaks to recharge will help you focus and maintain productivity. Plus, finding time to disconnect from work can allow you to devote time to family and your health. Recommended activities outside of your business include exercise, meditation, reading, and any other activity that refreshes your mind and body.
10. Technology and Automation
Lastly, entrepreneurs must be prepared to embrace technology and automation when starting a business. From remote access solutions and cloud infrastructure to artificial intelligence and data capturing tools, modern technologies should be included in your overall business strategy. Advantages resulting from these technologies include increased productivity, better service, and automation of repetitive tasks.
Proliant Simplifies Starting, Running, and Owning a Title Company
As you can see, starting a new business can be a daunting task that can quickly prove overwhelming. Fortunately, for entrepreneurs interested in starting a title company franchise, Proliant Settlement Systems eliminates the roadblocks that can stall your startup.
Our private-label, fully compliant franchise system breaks down barriers to title company ownership, providing you with all the necessary production support. We allow you to operate a successful, full-service title agency by providing you with:
T. Infrastructure:
Our unique, customized title software platform that is intuitive, easy to use, and easy to learn. Plus, it’s a plug-and-play system, so you don’t have to incur the costs or headaches typically associated with I.T.
Title Production Support:
We provide all our franchisees with title production support and assist in the title closing process. Every requested property is thoroughly researched by our veteran title staff who then prepare your title report. This also helps you cut down on your staffing needs. Our franchisees also benefit from our relationships with trusted underwriters.
Training & Support:
Extensive on-site training is provided. From simple tasks to complex processes, we are your first line of support. We have the tools and resources to help you grow your skills the moment you open the doors and provide continuing I.T. and operational support throughout the process.
Quality Control Review:
Our comprehensive quality control review process minimizes errors before you get to the closing table.
And much more!
We give you an advantage, even during economic downturns, because Proliant gets paid only for the work you send our way. Plus, our franchisees have complete control over their businesses, can choose their locations, and can even add on to their companies or sell their assets.
Let Proliant give you everything you need to take the leap and start your own title company, with all the financial operational advantages and support systems that eliminate the most difficult barriers to entry.