How to Start Your Own Business: Three Ideas for Newbies

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When you are wondering how to start your own business, the first thing you do is picture yourself as a business owner. That being said, having your own business is a pretty broad concept. What three types of business are popular among newbies? A businessman and co-owner of a group of companies Ivan Kroshnyi shared his thoughts with us.

Option 1. Own business: Pros and cons

The number one option is to start your own thing. Many people associate it with success and financial independence. However, you need to think everything through at the early stage if you wish to reach your goals and not fail as you are halfway there.

How to start your own business?

1. Scrutinize the niche you are planning to run a business in.
2. Check out competitors operating within this niche, and see what their advantages and drawbacks are, and what goodies they offer.
3. Become their customer if possible; this will help you understand their product better.
4. Working as a hired employee in that specific industry will let you explore all of its aspects from the inside.
5. Complete accounting and/or economics courses to get a better idea of the cash flow within your future company.
6. Write a thorough business plan and take all preparatory steps.
7. Break all projects into small parts.
8. Keep a close eye on what is happening in the niche you’ve picked, attend relevant events, and make sure to stay on top of the latest developments.

Advantages of having own business. You are the sole decision-maker who is in charge of building and maintaining strong relationships with your team and partners.

Drawbacks. This is a huge responsibility you should be ready for. You also have to be able to adapt quickly to the ever-changing environment and always have a Plan B.

Hidden pitfalls. As evidenced by statistical data, 90-95% of newly-incorporated companies do not survive past their third anniversary. Why does this happen? The culprit is a lack of proper preparation early on.

1. Wrong or poorly investigated niche and its prospects, risks, and possibilities.
2. Poorly chosen partners with whom you haven’t properly discussed and agreed on areas of your responsibility or whose values don’t meet yours.
3. Errors were made when planning the business budget and course of the company’s further development.

Deciding to start your own business is a very serious step. You should be a sensible person capable of carefully weighing every decision you make and quickly responding to the situation at hand. However, once you reach your goal, you will see that it was all worth it.

Option 2. Investing in someone else’s business: Benefits and hidden pitfalls

The second option is to become an investor. After all, you don’t necessarily have to invest solely in your own business—someone else’s work for it is just as good. This is an excellent solution for those seeking to diversify risks or those who already have a certain capital but aren’t ready to start their own business just yet. Another advantage is that investors have far less responsibility to carry.

There are two key options: you can invest in either a newly-emerged startup or an already existing business that is now scaling up.

Startups. Buying into the hype around Google and Amazon’s success stories, many investors dream about finding that one startup that will eventually evolve into an industry giant. But the sad truth is that 95% of startups fail before they even hit their first sales.

Drawbacks

1. Investing in startups is a high-risk affair.
2. You need to be realistic and understand that you are investing in a new concept and a young team that has been recently formed.
3. You have no idea how well the team will perform and whether it will be able to deal with the arising market challenges.
4. Less than positive survival statistics.

Benefits

1. You can have an influence over the new business and become a co-owner.
2. You may become gloriously rich if you manage to find a truly worthy idea and invest in it early on. But the problem is that finding a real diamond like that is not an easy task.

If you are still determined to invest in a startup, make sure to analyze the niche and its prospects thoroughly. Examine the roadmap, and scrutinize the analysis of the product-to-be, reaction, surveys, and profile of prospect customers, and meet the team. Before investing, you need to do thorough work because both the future of the startup and your capital depend on it.