Starting a new business is one of the most rewarding experiences any person can have. It is an adventure filled with excitement and new possibilities. But there are also risks to consider and important decisions to be made.
For entrepreneurs to minimize these risks, they should take into account three important factors. They are due diligence on legal matters, choosing the right time, and establishing long-lasting, fruitful partnerships.
Due Diligence on Legalities
If your business doesn’t work, it doesn’t work. It is as simple as that. Sometimes, no matter how promising your idea might seem or how large the market for it may be, some companies don’t take off as expected. There are several reasons for this.
First, you are in the right industry but at the wrong time. Second, there is too much competition, and, in reality, the market is not big enough to handle new entrants. Finally, your firm doesn’t have the necessary leadership to steer the ship through challenging waters.
Whatever the case may be, the last thing you want is for your organization to fail because of laziness and negligence. As such, before you embark on the entrepreneurial journey, make sure all legalities are taken care of.
Examples are your company’s business entity, the different types of contracts that different employees will have, and the benefits your staff will receive. This includes retirement plans under defined contribution or defined benefit schemes, leaves, and fringe benefits.
Taking proper care of legal procedures is the best first step a starting corporation can take. It ensures the organization will start on the right foot. Aside from this, it prevents legal problems from occurring later on in the company’s existence, many of which can be costly and time-consuming.
Choose the Right Time
If you do a Google search on “quotes related to timing,” you will find hundreds, if not thousands, of results. From celebrities to politicians, authors, athletes, and everyone in between, it seems there isn’t a single quasi-famous person who doesn’t have something to say about the importance of timing.
But what does choosing the right time mean? Is it based on what you think the market wants? Is it more about how you feel about your product and your abilities? What does the competition have to do with it?
Answers to these and other questions are unfortunately not as simple as one would hope for. Still, there are a few key questions you can ask yourself to determine whether you should keep going as planned or take a break and recalibrate things. Some of the most important ones are:
- Is there a real market need?
- Can my product or service provide an added benefit that the competition cannot?
- How much room for growth is there in the industry I am about to join?
- Do I see myself working long-term in this? Is it something I am passionate about?
Remember, the more honest you are with your answers, the better the chances you are giving your enterprise to succeed.
The first time Michael Jordan had another all-star player on his team, the Chicago Bulls won their first six NBA championships. Every single year thereafter, if Michael Jordan played a full season, the Bulls won. Most people do not recognize the names Wilbur and Orville. But everybody knows who the Wright Brothers were. Sergey Brin and Larry Page could not succeed on their own. Yet, together they created Google.
Like these, there are dozens of other examples of successful partnerships throughout history. Similarly, if one were to look for unsuccessful ones, the list would be just as long. Still, one thing is certain. A prosperous, mutually-beneficial collaboration will always be better than a single individual or entity working independently.
From a business perspective, this couldn’t be truer. For instance, let us imagine a small business wishing to expand in a foreign country. On the one hand, the company can invest many of its financial resources on a full-fledged marketing campaign that will create brand awareness for thousands of new prospective customers. It can also open a new office and use existing networks to establish its clientele.
On the other, it can work with an established enterprise in the country of choice by placing a distribution agreement. The latter would be much more beneficial for two reasons. First, the small business will save a lot of money as the client network is already there. Second, the local business will expand its product line and reach a wider market range.
As we have seen, three key elements will have an enormous impact on your new company’s success. By being aware of them, your firm will find itself on the best possible path to prosperity.