How to Start a Business: A Basic Guide
The idea of having your own business goes through the mind of more than one, however, not everyone feels qualified to undertake something on their own, due to the challenges and commitments it represents.
Starting a business requires not only financial planning but also structural calculations. This is because the needs of the spaces will not be the same for each entrepreneur.
For example, if it is a clothing store, it will require large spaces and a warehouse as a minimum. On the contrary, if what is intended is to set up a restaurant, it is possible that not only the size of the establishment changes, but also needs such as kitchen, warehouses, bathrooms, parking, among many other areas.
Next, we will talk about the steps you must follow to start a business and the elements that you must take into account for it to be successful.
Steps to start your own business
To start a business, you must carry out a series of steps, which we will divide into two main stages:
- Planning stage
- Execution stage
Starting a business can be an easy task if you are organized and consistent. It will take a lot of your time as well as extra effort to make it profitable.
Here is a complete guide to the steps you must follow so that you can earn money with your own business.
As its name suggests, at this stage we will talk to you in detail about the planning and organization necessary to start a business.
It is of vital importance, since this stage will depend on whether the business is successful. Why? Thanks to metrics that can be calculated such as Return on Investment (ROI), you can know in advance the probabilities that your project will be profitable and if it is worth investing in it.
Now you ask yourself, how to plan effectively? For this you need to define these points, which will help you establish where to start and what you need.
1. Define your business idea
Is there something you like to do or what you want to specialize in? In general, most of the people who want to undertake already have an idea in mind and the only thing left to do is give it shape.
If this is the case, define what category the type of business you want to start belongs to, for example, the food sector such as restaurants or cafes, the service sector, the commercial sector. With this clear, you can take the next step.
If, on the other hand, you want to undertake but you do not have an idea in mind, you can look around you, there are several types of small businesses from which you can take ideas for your project.
The advantage of small businesses is that they have the flexibility to use predesigned premises or establishments, and adapt them to operational needs. These are some examples:
- Clothing or accessories store
- Laundries and dry cleaners
- Grocery stores
- Hairdressers and aesthetics
- Coffee shops
- Fonda’s (economic kitchens)
- Pastry shops
- Shoe stores
The options for small and profitable businesses are many, the important thing is to pay attention to the needs you require to carry it out and look for a site that meets the characteristics.
2. Analyze the environment to define the type of business
Now, it is important that when defining the turn of your project you take the environment into account. Have you come across that in the same shopping plaza there is more than one place with the same product or service?
So that this point can be carried out, define the location where you would like your project to be and analyze what type of businesses there are in the area. Is it feasible to install your business in that area?
It is also convenient to analyze the needs of the area in which you want to undertake, for example, perhaps there are no nearby laundries or if you want to set up a restaurant you will find that there are several but they do not serve the same type of food and your project can add variety.
If you already have a local or are going to start your business from home, you must also verify that it meets a need of the inhabitants of the area.
3. Market studies
Perhaps you do not have the necessary resources to carry out a market study that guarantees that your business will be profitable, however, based on what we mentioned in the previous point, you can conduct surveys among the inhabitants of the area, even in surrounding businesses.
Your product or service can also be useful to the owners or employees of nearby businesses.
Many entrepreneurs do not have to worry about this step, since there are real estate companies – such as BMF inversions – that have investment lots and macro lots with market studies and suggestions for projects to be developed.
4. Choose the location of your business
Once you are clear about the direction of the project and that the area that interests you is viable, continue to choose the exact point where it will be.
In each city there are better areas than others, and to find the best one for you, you must physically visit the ones that interest you. For example, in Mérida the best locations to start a business are the north and east of the city.
If you plan to rent or buy a space to open a physical store, it must meet certain characteristics:
- Being located on main avenues or streets.
- High influx of human and vehicular traffic.
- Preferably in a commercial area.
- Be accessible.
Have the appropriate measures for the service you are going to offer or the product you are going to market.
5. Make a budget
When we are starting a business, on many occasions the budget does not conform to the plans we have, therefore our advice is not to borrow from loans from the beginning.
First, you must define: Buy a place or better rent it? If you have the capital to invest in land in a commercial area, the benefits are many, for example, the type of land use has already been defined.
Although at present the land is not as cheap as in the time of our grandparents, for this generation there are also opportunities to acquire properties on installments and with affordable down payments.
If you decide to lease, you will be able to find many well-located premises or land, since this is one of the business ideas that investors carry out to generate income.
Once the above is defined, write down in your budget the cost of the rent, or where appropriate, the monthly payment of the land or premises. Note the expenses in services such as electricity, drinking water, internet and advertising.
Knowing your fixed expenses will help you calculate your return on investment and ensure that your business is viable.
6. Establish the name and objectives of the business
Who are you going to sell your product or service to? Establishing the target audience, you are going to address will be a necessary step to define the name of your business, why? Because it is not the same to sell to young people than to older people.
Although many want to sell to everyone, it would not be a wise decision. You must clearly define who your potential customers are and direct your sales and marketing efforts only to them.
The ideal buyer persona or client has defined interests and knowing them will be a key piece. The name of your brand must be according to the buyer persona, a too fresh or youthful name might not be to the liking of older people and vice versa.
As for the objectives, determine in advance what you want to achieve with the project, both economically and in business growth.
7. Analyze the competition
In digital marketing there is something called benchmarking, this refers to observing the competition and analyzing what works for them, it is not about copying but about being inspired to do something better.
Analyzing the sales strategies implemented by businesses similar to yours will be the starting point to create yours and improve what already exists in the market.
8. Make a business plan
The business plan must include all the above points, it does not have to be extremely long, but it must be complete.
Having all the project information in a single document will allow you to better control the progress of the process and detect possible failures or errors and correct or change some details.
This must include a complete marketing plan, and consider in the budget if third-party services will be hired for the management of social networks and advertising campaigns, or on the contrary, if you want to carry them out yourself, you will find a wide variety of online courses to learn how to do it.
The time has come to put everything planned into action. To execute your business plan, we have prepared for you this list of steps:
1. Seek financing
The ideal when starting a business is to have the resources to make the initial investment, however, the circumstances do not always lend themselves to it, because the reasons for opening your own business are very varied, from doing it by choice to by necessity, as is the case of being unemployed.
If you do not have savings or capital destined to invest in your own business, obtaining financing will be the indicated option, as long as it is reasonable and the level of indebtedness does not exceed the expected profitability projections.
At this point you will ask yourself, where to get the right financing? For this we have prepared this list with some suggestions:
- Banks: They are the most common means of obtaining financial resources, each bank manages its interest rates, as well as its financing programs for SMEs, finding the one that best suits your needs will require time and information in detail.
- Financial institutions oriented to SMEs: In addition to banks there are other entities where you can obtain financing, these focus on small companies and are more accessible than banks, the interest is lower but the loan amount is also lower.
- Partners: A partner is a natural person who shares both the profits and the risks of the business, he works with you to grow the project and obtain a percentage of the profits.
- Investors: Unlike the partner, it provides the capital in whole or in part in exchange for a percentage of the profits without working together.
- Competitions: By competitions, we refer to government programs, universities or other entities whose interest is to promote the creation of new companies. To obtain the financing you must prepare the business plan and enroll, if you are selected, they will provide you with the capital to start.
If you want to know more about the factors to evaluate the risks of an investment, we invite you to read the article we have on this topic.
2. Proceed to the purchase or rental of the premises
In the planning stage you chose the place with the ideal location for your business, now continue to formalize and proceed to buy or rent it.
For this process, we recommend that you have specialized advice in real estate, especially if it is acquired through a third party and not a real estate company.
Buying a land with legal certainty will guarantee your investment and provide security to your project, in addition to having the peace of mind that the property has no legal problems and the payment of taxes has been carried out.
In the case of leasing a land, we have these recommendations for you that it is very important to take into account:
- Check that the duration of the contract and the renewal are ideal for you.
- Include a clause that allows you to transfer or sell the business in case it does not turn out as you expected.
- Ensures the possibility of transferring the contract to the new owner in case of transfer or sale, in this way you will minimize losses.
- The contract must be clear about the agreements on construction and improvements that can be made, to avoid future problems with the owner of the property.
Being sure of all these points before signing the contract will avoid future problems.
3. Remodel and decorate your premises
In your budget, you must allocate a part of the capital for this purpose. One of the most common mistakes that starters make is investing too many resources in this step.
Focus on the renovations that are necessary for the operation of your project, and with that as a base, decorate the place with your personal touch and according to the type of business.
We recommend hiring trained personnel to carry out the essential renovations. For tasks that you can do yourself, such as painting and decorating, you can request the help of family and friends who will surely be willing to do it.
4. Install the machinery and furniture
The machinery and furniture will depend on the line of business, always aiming for functionality rather than aesthetics; It is not pleasant, for example, to arrive at a very nice restaurant but with uncomfortable chairs.
As with remodelling and decoration, buy what you need to open and function, over time as you make a profit you can allocate a part to improve or expand the furniture.
It is always possible to save money and get what is necessary without investing a lot, for example: for the restaurant area, suppliers can provide tables, napkin rings, a refrigerator among other objects, if it is an office, you can get stationery.
This is common since the tenant obtains the furniture and the suppliers advertising by having their logo on said furniture.
Another interesting way is to reach an agreement with local artists who are looking for spaces to display their works or products.
5. Find your suppliers
The next step is to contact the possible providers of products or services that you will need.
It is not advisable to go for the first one you contact, even if it takes more time, quote and compare prices and quality, in this way you will save future expenses.
To find your ideal suppliers, take these factors into account:
- Payment facilities.
- The delivery time of the product or service.
- The guarantees and the duration they have.
- Refund Policies.
- Experience and reputation.
6. Hire and train new staff
Now is the time to post the vacancies and interview the candidates for the positions you apply for. For this, there are digital platforms where you can make your requests, most of them have no cost and are very effective.
It is important to immerse the selected candidate in the mission of the business and that they feel committed to meeting the objectives to achieve the established goals.
One option to lower payroll costs is to hire staff who work for commissions or freelancers, this is recommended at the beginning, when you already have financial stability, you can start to put together a fixed employee payroll.
7. Formalize your business
Many entrepreneurs ignore this part to avoid paying taxes, however, formalizing your business will give you the security of protecting your assets, in addition to being able to issue payment vouchers, qualify as a credit subject and be able to buy and sell without restrictions.
How can you formalize your business?
- It establishes whether it will be constituted as a natural person or a legal person.
- Determine the type of business or partnership.
- Register your brand name.
- Raise the articles of incorporation to a public deed with the help of a lawyer.
- Register your deeds in the Public Property Registry to obtain your title.
- Choose the tax regime and obtain the taxpayer code.
- Obtain your operating license.
8. Promote and open to the public
After all the hard work of planning and execution, the time has come to open up to the public and receive all potential clients.
Promote the opening of your new store among family and friends, also in the area where it is located with the opening date and the products or services that you will have.
Make your opening something special, you can offer special promotions for opening in the first purchase, sandwiches or a free sample.
Remember to promote the event on social networks, which provide the necessary tools to reach a large number of people located in the target area.
We are at a time where entrepreneurship in business has been on the rise as a result of the economic problems left by the Covid 19 pandemic.
Consolidating a business has become a planned goal to which both young and old alike aspire.
Summarizing all of the above we can mention:
- How to start? It is advisable that before anything else, you define the category and the characteristics that your establishment should have.
- Once the above is planned, generate a budget, both of the capital you have as well as the one you need to invest.
- If you still do not feel economically prepared, wait. It is not advisable to acquire debts to solve the start of a business, this to avoid risks of return on investment. You can also review the payment plans and verify what facilities they offer you; interest-free months are a great option.
Every good decision starts with good saving and planning habits in order to arrive prepared when investing.
In the same way, prior advice and consultation is important to know the most viable options according to the profile of each new investor.
And above all, the environment where the establishment is located must be taken into consideration, since property and location are two concepts that must go together to have profitability in the business.
When is the best time to start my business?
If you have the capital to pay for the purchase and deed expenses of your property, it is a good sign to move forward with your business plans.
To take advantage of your budget, quote your options for investment in commercial land, but choose based on two important points:
Select based on a balance of both qualities, since it will not matter that you save capital when buying a land if it is far from where people will be able to find you.
The investment land is ideal for securing capital in the medium and long term. The only thing that should matter to you is choosing the right location to be able to generate a great capital gain.
How much should my business measure?
It is not possible to establish an exact measure to define the necessary surface of a business since it will depend on the business that it will have, and the investment that will be allocated for its development.
However, there are parameters to take into account, and in this way define which of your options best suits your needs.
- Dimensions of your furniture (refrigerators, warehouses, counters, display cabinets, etc.)
- Consider the volume of your merchandise displayed or in stock.
- If it is a business that provides a service, take into account the space you require to serve customers, will it be a counter or a waiting room?
Insure your real estate investment
If you already comply with all of the above and are ready to take the first steps of your investment, it is also important to acquire the security of your property and prevent possible risks. How?
- Avoid informal or “word” purchases with third parties. Make sure the purchasing process is transparent and reliable.
- Contact your salesperson and learn about the projects they present to you in depth. Check all the points that cause you uncertainty in the business that they raise you.
- If necessary, request legal advice to verify that you have the legal support you require.
Investing in real estate will secure your business
Leasing a premise can be a start if you do not have the resources, however, investing money in something that does not belong to you can be considered an expense. Using that money in an asset that will be your entire property not only ensures your business, but is also a way to ensure your future and build an equity.
At BMF inversions we know the needs of the current entrepreneur, for this reason we develop ideal projects for medium and small commercial companies, such as dry cleaners, shops, among others.
We have more than 25 years of real estate successes, contact us and learn more about your investment opportunities in the areas with the highest economic growth within the Mexican southeast.
The idea of having your own business goes through the mind of more than one, however, not everyone feels qualified to undertake something on their own, due to the challenges and commitments it represents. Starting a business requires not only financial planning but also structural calculations. This is because the needs of the spaces will not be the same for…