In modern developed nations, a robust medium of exchange has developed between people over human history that made proper business possible. Once we were no longer limited by geographical boundaries or the barter system, it was possible to use single currencies in order to trade with people that did not share the same language or values as us. Business is a form of human communication that allows value to be exchanged seamlessly and without conflict. It has allowed individuals and groups to flourish on their own merit by building themselves and others up around them.
The backbone of any economy, whether it be large or small, is businesses run by private individuals or corporations. Businesses are a flexible way to provide goods or services to people through organized mechanisms of exchange that may be in the form of retail stores, restaurants, taxi cabs, bail bonding services, manufacturing facilities, or anything in between. Some statistics approximate that there are more than 30 million small businesses in the U.S. alone.
In fact, the only “wrong” way to conduct business is by losing money or engaging in unethical behavior between parties. If there is a (legal) need that someone needs filled, there is probably a business somewhere to fill it. To open a business can be a freeing activity for many people who would otherwise be impoverished or relegated to lower level jobs with less freedom.
In this article, we’ll discuss how to open a business and what is required in order to do so. Remember that businesses are simply organizations for mediums of exchange and that even your wildest dream idea can work in the right market. Whether you are manufacturing silicone roof coatings or providing legal services, if there’s a will there tends to be a way.
Decide On Your Niche
The first thing to consider when you want to open a business is to decide on what that business actually will be. This is sometimes called a “niche” and describes the particular area of business that you’re going into. Running a retail store is different than a restaurant, which is also different than being a touring musician. While many skills from different areas are interchangeable, you have to be careful about what you choose in order to increase your chances of success.
By deciding what you want your business to be, you’ll avoid a lot of painful upstart costs and failure by going into the wrong area. For example, if you have experience in fast food and driving, but decide to start a roofing service, you might not be successful at first. This isn’t because you can’t learn how to operate such a company, but your skillset may be ill-equipped to continue the business into the future and make it survive with profits.
By taking an honest assessment of your unique skills, background, and temperament, you’ll be able to go into business in the area of life that is best for you. If you don’t feel that you have an area most suited, then you may want to consider gaining additional skills through education, training, traveling, or other methods. For example, if you want to start a bail bond agency you can either study the business model or get direct experience by working for one with little experience. But if you want to be a lawyer and open a law practice, you must receive a license and have a law degree.
Knowing Your Market
In the business world, the term “know your market” can have many different meanings. It may mean taking an inventory of your customer base so that you can effectively advertise to them more efficiently. It may mean taking stock of your surroundings deciding that a certain business model will not work in an area or would be a waste of time and money to operate. If you live in an area where every house has carports instead of garages, then you may not be able to make a living doing garage door repairs until the market changes.
However, sometimes opening a business itself changes the market for the better. It may be that no one around you owns a security system for their home or business until you open up a security company and make convincing sales pitches about the many benefits. To open a business is to take a risk for sure, but sometimes that risk is well calculated and worth the effort. This is why the term “know your market” can have many nuanced meanings so that you must decide for yourself what is the most important to focus on.
If you know that you are selling to specific industries or individuals, then you can advertise more effectively to them in creative ways. If you own a moving company or aspire to start one, you can place ads near places that people commonly need moving companies, such as the benches near apartment buildings or on the side of buses. If you have your own fleet of moving trucks, you can provide all your information on the trucks so that every time someone moves they are also giving you a bit of free publicity.
Find A Business Mentor
If you want to open a business, but don’t have the experience required to make it successful, it can be helpful to find a business mentor that will show you the ropes of a particular industry. This can start as a simple employment relationship that develops into a professional friendship, or it can be an apprenticeship that you actively seek out. When you gain practical experience in an actual business environment, it can sometimes be worth all the formal education in the world.
Business mentors sometimes seek out willing individuals to assist them with their current business, and you can find them in a variety of ways. Message boards, online advertisements, and plain old paper listings will sometimes have the contact information of business owners that are looking for motivated and willing employees to take under their wing. Not all of these people will want to train you to take over from them, but many offer practical experience in industries such as real estate, management, and the buying/selling of assets such as vehicles and precious items (gold, trading cards, etc).
While it can be both difficult to find and accept a mentor (especially if you’re used to flying solo), the benefits can be enormous. Instead of proceeding blindly into the wilderness of a new industry where you have no experience, you can learn from someone who may have already made quite a number of mistakes and does not want to repeat them. This is just as valuable to find out as if you had made the mistake yourself, but without the painful experience. Similarly, they may have words of practical wisdom to openly share.
In Store or Online?
Nowadays with the growth of the internet and e-commerce, it is no longer necessary to have a physical presence in many ways if you want to open a business. You can have a website with a store online that sells products shipped from a far away warehouse under your brand, and nobody might be any wiser. While you are still conducting business, it is a less person-focused approach than in years past. Many products that are small can easily be sold online and fulfilled from other locations in a breeze, such as vitamins, food, or clothing.
However, many products and services cannot be sold online, and if you are considering these types of businesses you will be better off staying in the physical world. AC installation, medical services, and food preparation do not have digital equivalents and are best served in 3-D. Many service jobs follow the same route, and while this might not be convenient for someone who wants to be location independent it offers a great opportunity to those who are good with people.
Other businesses, such as manufacturing products yourself and selling them to other businesses, need to be conducted in person in order to be successful. Whether you are considering conveyor fabrication or clothing production, there is simply no way to get around doing these activities in person and being able to handle the finished products yourself. When you want to open a business that produces these products with quality and style, there is simply no other way.
Protecting Your Business
To open a business is to take a risk, even if you are convinced that your product will sell. Unfortunately, bad things happen even to the best of businesses that are run by honorable people with good intentions. Ultimately a business needs to be protected in both its physical location (if it has one), but more importantly by legal representation and incorporation to protect the employees and owner. Protecting the physical location may be as simple as installing a locking commercial garage door and security system so that you can control who goes in and out of a warehouse or location, but protecting the business entity can be a bit more complicated.
If you want to open a business, you probably want to start a limited liability company (LLC) or corporation so that you are not personally liable for any suits that the business encounters or comes across in the world. A limited liability company (LLC) is a registered business entity that is considered separate from its owners, or members, for legal purposes. Unlike a sole owner, LLCs provide limited liability protection, which is designed to keep the owner’s personal assets safe from creditors and lawsuits. This can come in handy if something goes wrong during business operations or manufacturing and you have to engage in a legal battle.
A corporation is similar to an LLC, but may include other members and even have shareholders. This may make it easier to raise capital to start and manage your business, but might also require you to pay dividends and engage in all sorts of legal arrangements. It’s best to consult a lawyer about how to best set up and protect your business from the threat of legal action. They truly are the ones who know how to best handle it.
Dealing With Hard Times
While it may be difficult to know when to open a business, it’s usually not too hard to figure out when to quit. If your business starts to lose more money than you can afford or starts to interfere with your health or wellness, then it may be more trouble than it’s worth. This is not to say that you should throw in the towel in hard times and run for the hills at the first sign of trouble, but sometimes it truly is better to call it a day than to stick it out.
If your business starts to encounter hard times, it can feel like you might have nobody to turn to. Since many people do not own their own businesses, but are simply employees, the experience might even be rather isolating and traumatic. Luckily, there are lots of business owners that have encountered the same problems as you throughout history and recorded them so that others can learn how to cope without having to trudge through the mud in toil and misery. Look in the “business” section of your favorite bookstore in order to glean whether there are any books that you can learn from about how to turn your business and professional life around.
Finally, last but not least, consult with other business owners about how to create lasting value and change in your life by improving your business. In a similar way to finding a mentor, you may make business friends in your professional existence that you can call on for advice about how to solve particular problems that are keeping you up at night. While all might not be sympathetic to your woes, eventually you will find a kind ear that may listen and help out. Perhaps you will even develop a relationship of mutual trust and do business together at some point. When people help each other out through obstacles and troubles, that can sometimes be the best point of business.
Whatever happens in your market, to open a business you must have a base level of confidence in yourself to start. With a little creativity and know-how, you may succeed in whatever you put your mind to if you get to know your market and practice your business ethics and sales accordingly. Don’t throw in the towel until it becomes obvious that doing otherwise would be a fool’s errand.