When preparing to launch a startup, it’s always good to be as ready as possible. Some steps can be undertaken after the business has got going and is operating well. Others are a good idea to arrange before opening the doors on the first day.
Here are four steps that a new startup should take.
1. Get Enough Insurance
If you’re operating using an LLC as the business entity, you should strongly consider taking out LLC insurance. This is a version of professional liability insurance that’s designed expressly for limited liability companies.
LLC insurance provides cover for the activities of the business as it relates to third parties, along with some cover relating to products and employees working with third parties. Therefore, when the business’s trade takes an employee onto another business premises or a customer’s residential home, the insurance covers potential damages that might take place.
Business insurance is something to have arranged for the first day, so there’s no gap in coverage.
2. Find Mentors
Most business owners have run smaller companies before and have a wealth of past business experience. Even if they haven’t operated in your industry before, their knowledge often has wide application.
It’s useful when running a startup to find one or more mentors. They can provide useful business advice that’s applicable when your startup is barely out of the gate. Sometimes, a single mentor is beneficial, whereas other times, developing multiple ones can support different business aspects that relate to their specialization.
3. Be Clear on the Numbers
A common problem with new businesses is that the owners are vague about their financial numbers.
A lack of clarity over numbers can create a problem. Business decisions made on the fly may rely on knowing the numbers in making the right decisions. Changing direction later when realizing a mistake is costly in both time and money.
For instance, when producing new products, it’s important to know the cost of each part that makes up the final product. Most products don’t have hundreds of parts, and even when they do, it’s still possible to know the total manufacturing cost, wholesale pricing, and gross profit.
With an online service-based business, it’s useful to know the average customer acquisition cost, total average revenue, and the cost of the service being provided. Don’t let a digital-only business model mean you ignore the numbers it’s based upon.
4. Know the Marketing Plan
The marketing plan will be where the rubber meets the road for the business.
While the product or service may lack something in the execution or quality, these issues are separate and fixable. However, when the marketing plan is either unaffordable or ineffective, there won’t be enough customers to sustain the business either way.
The marketing plan needs to be as robust as possible. This includes planning marketing channels, costs, customer acquisition costs, and more.
When startups plan properly and follow appropriate steps from the beginning, they’re likely to succeed. Given that they usually have a finite number of months to get it right, or they’re unlikely to survive, it’s essential to start as you mean to go on.