In the last post we discussed three steps to quit your job and start your own business. If you haven’t, please explore these tips before diving deeper into the key details prepared for you below.
Now that you’ve steadied some of the natural fear and anxiety which comes with any big transition, let’s continue further down the path to business success and financial independence.
These four really simple takeaways will provide a winning foundation to beat the odds, build a solid business and play the game to win.
Let’s jump in!
In the UAE establishing your business in a legally sound fashion is especially critical. Not simply due to the penalties and/or prosecution which could incur if you haven’t crossed your ‘t’s, but also the ever-evolving policies of the country.
Business rules and regulations are constantly being tweaked and shifted, which means the margin of error for non-professionals (like most of us) is too high when looking through a lens of risk vs. reward.
The rule of thumb we recommend is: to hire a legal professional. This preventative investment will secure for you a legal foundation and a good night’s sleep. As your business flourishes, you’ll never have to look over your shoulder out of fear of having made a fundamental error.
Another great benefit of using a professional is defining your shareholder agreements. This business is going to be huge, right? Your company will be a blossoming success, correct? Then, it pays to have written in ink who gets what when your dream goes public. Don’t risk becoming the next ‘Unicorn Ripped Apart by Feuding Partners’ story.
Protect your baby. Get your legal professionally set up and move on to step two.
Validate Your Idea
Now it’s time to roll up your sleeves and do some market research. This term sounds technical and scary, but all you really need is a working knowledge of these 5 questions:
- What’s out there?
- Which products similar to yours exist in the market?
- What’s it selling for?
- What’s the high, middle, and low end for this similar product or service? What factors seem to affect the price point? Quality, brand name, durability, accessibility?
- Who’s buying it?
- Who’s your target consumer — mothers, kids, fathers, men, women? How are your competitors communicating with this audience using packaging, colors, and copy?
- Where’s it sold?
- Which retailers/markets offer products or services similar to yours? What are the barriers to entry? What are the minimum order amounts and who’s the decision maker for bringing new products/services into their current offering? The decision maker(s) can be at the store, headed over the region, or at global HQ. Think how you can get your products sold in same or similar stores.
- What makes yours better or different?
- Be critical. What you produce needs to offer a strong incentive for people to leave something tried and true for the unknown. We recommend asking strangers to give feedback.
You’ve probably already got a basic understanding of these questions, but working on them in detail will give you a wealth of further insight into your market.
Time to test the suppliers!
Whether it’s food, fabric or tech, now is the time to find out which suppliers can provide what you need. You should have an understanding of ‘‘what you’ll need’ from suppliers answered in session one.
In this step, it’s critical to get a firm understanding of: expected turnaround times, minimum order quantities, price per unit, bulk discount rates, available supply and industry conflicts.
Some suppliers have signed a non-compete to service only a single company within a given industry. These kind of barriers are the ones you want to weed out via thorough conversations with each supplier. The responses from the suppliers in the areas above should reveal which makes the most sense for your finances and vision.
Once you’ve gathered solid data on your supply chain, you can move to the elephant in the room.
Determining how much money you need to start your business can be tricky. It involves various estimated costs which may or may not hold true once you get this show on the road. However, a good rule of thumb is: plan to have at least 6 months of ‘cash in bank’.
One of the worst reasons a business can fail is poorly charting how much cash flow they’d need far enough in advance. From experience: always budget for 20-40% more than you think you’ll need. This will help you absorb any necessary, unexpected cost, which comes with just about anything in life.
Your financial work is never really ‘finished’, at best it’s more of a ‘done for now’. At this point, you want to prepare for every eventuality, and it’s better to be over-prepared than under-prepared (or under-funded!).
This template should help you understand your financials a bit better. And if it doesn’t make sense, please get a professional on board. A number of reputed accounting firms will give you a great hourly or daily rate, and – at start-up level – that’ll be all you need for now.
Easy, right? Most frustration comes from working hard and not knowing if these actions are the best to take. We’ve tried to demystify this scary and unnerving process so you can plan with the purpose and confidence to know you’re on a path to success with a rock solid foundation.
If for any reason you still get lost or confused along the way, we’re always here to help.
Stay tuned for session three where we’ll share: what to expect from your first 90 days, common mistakes and critical resources.