How to Start a Business from Scratch: 13 Simple Steps

How to Start a Business from Scratch

When it comes to starting a business, you’ll find hundreds of stereotypical tips, which can be helpful and even necessary. On the other hand, the business world has changed a lot. The rate of business failure has also, of course, increased. Now more than ever, failure is part of the business game.

That is why we are going to take a series of steps before starting a business and that they have probably never explained it to you in this way, but it is something that I at least would have liked to be explained in this way.

13 Steps to Start a Business from Scratch

How to Start a Business from Scratch

1. The pre-step: Assume the worst result.

When the worst possible outcome is assumed, we release ourselves from the burden. It is clear that when you decide to start your own business, you do it thinking that you will be successful. In fact, it’s something they advise you to do: visualize yourself as victorious.

Today I am going to advise you to apply the thought of the Stoics here. Think of the worst scenario you can imagine: outright failure. And now ask yourself:

  • Could I get on with my life?
  • Would failure in business cause me depression?
  • Would I put my finances in alarming danger if I failed?

The moment you assume that failure is a real possibility, be aware that you can end up on the negative side of the business failure statistic and still, you can assume failure without causing a serious problem in your life, go ahead . You are now ready to start your own business.

Never start a business if you have not considered the possibility of failure and if you have not studied what life would be like after failure.

2. Do your own research.

We assume that you have already thought and identified your business idea. Now we must balance it with a bit of reality.

For a business idea to work, it must have three essential factors:

  • A product or service to offer.
  • A potential market.
  • The entrepreneur’s ability to introduce the product to the market.

Does your business idea have the real potential to succeed beyond your own desire and dreams to succeed?

Your business idea must solve a problem or satisfy a need. In short, it must offer something that the market wants to buy.

We can validate this question in a simple way with several questions:

  • Who needs my product? Who is my potential customer?
  • What other companies offer the same products that I offer? Who is my competition?
  • Why would they choose my product over the competitor’s product?

And be careful with the third question, because it is the key to the success of your business. And wishes are one thing, and real events are quite another. That is, effectively, you can have as a business idea a social network that is effectively better than Facebook, works better than Facebook, is much more complete. But reality shows that you could not do anything today competing with Facebook.

3. A business plan and realistic market study.

Until now, when it comes to making a business plan , it is done as a mere procedure to request financing. In this case, we are going to directly confront the business plan with the market need, directly giving us the market study.

If you plan to put a product on the market for sale online, you have it really easy. You should only order a small number of units before making a large investment.

Sell ​​your first 5 or 10 units.

There is no better business plan and market study than to take action directly and face your business idea directly to the market. Develop your sales strategy, either through advertising on social networks or directing traffic to your website.

Analyze and measure all the data you can measure:

  • How many people have clicked on your ad?
  • How many people have ended up seeing more information about the product?
  • How many people have shown an interest in buying?
  • And most importantly… of all those interactions, how many people have ended up buying?

That is the true business plan. And for the more advanced and risky, this can be done even without having a product.

That is, you may plan to sell a product and pretend you have it. Run an advertising campaign and see how many people get to the end of the buying process. Then you just have to tell him that you have run out of stock and that it will take “x time” to have more units, or simply return the money.

Read: How to Start a Dog Walking Business: A Detailed Guide

It might seem grotesque to do it this way, but it’s the best way to find out if you have a potential audience willing to buy the product. This practice is increasingly used before making a large investment.

4. Have a financial plan.

It’s not to be pessimistic, but anyone who has ever started a business will agree that things don’t always turn out the way you expected. On a few occasions, they tend to turn out better than you thought, but in most cases, the expenses are greater than you estimated and the income less than you thought.

Most businesses go bankrupt for one simple reason: they run out of money.

That is why a vital strategy for the survival of a business is to understand and prepare to make an initial investment before generating profits, having calculated where the necessary capital will come from to cover current expenses before making a profit.

It is advisable that you calculate upwards in a spreadsheet what will be the fixed costs and approximate variable costs that you will have to face.

In personal finance we call it the Emergency Fund. I do not advise you to undertake if your business does not have an emergency fund (or a capital raising strategy) capable of covering at least 12 months of fixed and variable costs of the business.

But once you have a number in mind of the expenses you are going to face during those 12 months, here are some of the ways you can finance your small business:

Typical financing.

Asking for money from the bank in the form of a loan or pulling credit from the cards. I do not recommend this last option, although great entrepreneurs took risks in this way. Theirs, without a doubt, are loans for small businesses. Find out what type of loans exist for it.

Small Business Grants.

Take a look at the existing grants in your city or country for small business.

Venture capital investors.

The so-called “angel investors”, an increasingly widespread figure in Spain and who tend to risk business ideas related to technology .

Crowdfunding.

Without a doubt, a very common choice today to finance the start-up of a business idea.

5. Choose the business structure (Legal form of the business)

Do you want to be the sole owner? Do you want to start your business as a society? Limited liability? Corporation?

The legal form you choose will affect many factors, from your civil liability to the way you file your taxes. That is why in this sense you should not skimp on consulting with an advisor so that he can explain without prejudice what legal form is best for you depending on the business and market you want to cover.

In this sense, it is worth making a first investment in an expert on this topic and tax issues. You will save head warm-ups in the future.

6. Before choosing the name of the company.

As I assume that your company will have a presence on social networks, before registering your business name, make sure to create the appropriate accounts on both Facebook and Twitter or Youtube (if you are going to use this route).

Try to spin fine when choosing the commercial name of your company. Studies have shown that solely by the name of a company, people can perceive the company as more trustworthy or not. There are also studies that associate the success of a company with the ease of remembering the name of the company.

Read: How to Find a Startup Idea Useful 10 Tips

It is not that it is definitive, but it is a factor to take into account. On the other hand, when someone plans to set up a local business, they can indulge in certain luxuries in the commercial name that cannot be given by the person who plans to make the international leap.

7. Licenses and permits.

Look at it on the bright side. If you are going to start the business in Spain, even if your business fails, it will not hurt as much as the martyrdom that you will go through with the issue of licenses and permits. They will bore you with the paperwork to the point of exhaustion, so if you want to conserve energy to start this business, outsource all these procedures to a consultancy as far as possible.

If your business is internet-based, make sure you are also not violating some of the many current policies and laws out there. Find someone to advise you on this issue.

8. Save at the business location?

As a general rule, you don’t need large offices or a secretary when starting a business, so you have other options to get started. You can start the business from home. You can also rent a shared space within the co-working office options where expenses of all kinds are shared.

This varies according to the needs that your company requires. And those needs are generally low at the beginning.

9. Some advice if you need a partner for your company.

If you are looking for a partner, I hope you need one for the right reasons. Although it sounds surprising, one of the reasons why most new entrepreneurs seek a partner is to share the fear of facing a business adventure.

How many employees do you need?

At the start of the business, the fewer employees you have, the better. You can start outsourcing tasks in order to save on fixed expenses and gradually incorporate certain employee profiles into the workforce as the business grows.

10. Be flexible in your business.

One thing is what you had in mind and quite another how things will happen. In the business world, you need to be flexible and open to advice from other people, as well as always have a plan B of action available in case the initial plan fails.

11. Be clear about what will make you successful in business.

In this sense I am going to be very drastic. Just stick with these two points.

1. Don’t run out of money.

As we said before, the biggest cause of business failure is due to the business running out of money. Look at money as the number of lives a character has in a video game. You must maintain those lives for as long as possible.

2. Provide more value than what the user pays.

There is probably no more secret than this. You should always give more than you receive. If you achieve this, it does not matter that your product costs more than your competition, as long as you contribute much more. Find a way to generate added value. Of course, without wasting lives.

12. Forget the bullshit of networking meetings.

I imagine they would be interesting back in the day, but these days, you just have to ask yourself why you would want to attend a networking meeting. I guess you want to sell more and get customers. You will find precisely that in a typical networking meeting. Not customers, but people wanting customers. Almost everyone goes for the same thing, so more and more they are a waste of time.

They are fine if you want to meet other people with the same desperation as you for commercial deals, but you will rarely find positive synergies in those places. Spend the time you were going to waste on a good social media strategy or content creation.

13. Mentalize yourself.

Probably the most important point. Think that starting your own business does not make you Richard Branson in his phase “lying in the hammock while I scratch my nose”, but rather the Richard Branson of 20 years facing “all kiski” and fighting 24 hours against problems. .

When you cross that line that introduces you to the business world, you must enter knowing that the business is going to absorb your life during the first stage. It will absorb your time and a large part of your energy resources.

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