Starting a business has its challenges

Starting a business has its challenges

Starting a business or own business is not easy, but if we do it right, can be one of the best decisions of his life.

Many people want to do but do not know how. This leads them down the wrong path, based on trial and error, which rarely works. In fact, statistics show that about 80% of new companies do not survive the first two years of operation.

Some ideas for starting a business

If we have already decided to create a company, we must first think – obviously – on your goal.

  • What are you going to spend?
  • What needs will solve? In which way?
  • Who are our potential customers?

We also have to think about the legal form in which we shall establish it. In other countries it does not happen, but in Mexico few people think of this when creating a business.

However it is important we do not want to be in the informal economy. We need to research well about how it suits us more, because there from the main obligations of the company and even the taxation to which subject. Also the initial capital contribution.

We have to think about the financial aspect. What is our initial investment? What is the cost of our sales? What will be the price of our products and services? What we profit margin? How soon we reach the point of equilibrium, from which the company will begin to be profitable? How long we will recover that investment? What working capital needs will be?

For this, before creating a company must develop a business plan well done. It will make projections of our financial statements for the first three to five years. Many times we think in stages: launch, another growth, perhaps thinking of later financing rounds if we overcome certain metrics, etc.

We also have to think about how we market our products and services, how we’re going to give out. Sometimes you will have to think even in advertising, but it is not always necessary.

Another fundamental aspect is the fulfillment of our various obligations, not only fiscal but also labor. Will we have employees? We will have to register them to social security for example. Do not forget to take into account these costs.

Consider also the professionalism. Many companies benefit from a board of directors, to take executive decisions. To create a company worth finding a mentor (or several). These are precisely the people we need on the board: with his experience we can provide strategic direction that may be key.

In many cases we can also benefit from business consulting, that can help us from defining the strategic plan, to venture strategies to optimize our costs. In Mexico and other countries there is also a lot of companies specialized in consulting for small and medium enterprises, even there are many institutions that provide comprehensive advice for starting a business successfully.

Finally, we must not forget that the personal finances and business should be completely separated. I have seen many times how people use their personal credit, mortgage your house or even into debt with their credit card to purchase inputs or furniture for your business.

This is a serious mistake: if the company fails not only have lost the initial investment but we are left with a huge debt to our personal assets – which will be at serious risk.

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