Becoming an entrepreneur is not easy. There are a lot of things you need to do first before you can even start a business. Selling a product and services is not that easily done. These are things you need to do before you finally decide about your startup:
- Validating your business. You have to ask several questions: Is there a demand for the product or service? Can you sell it cheaper? Is it a better product than other existing products? Can you produce or provide the service at a profit
- Prototyping. You have to create a prototype first. The prototype would show whether your startup idea would work. It does not need to be a working prototype, but it can give a general idea of the product. One other result of a prototype is the estimated cost of production for both the materials and the labor required. You would need these values in order to come up with the estimated selling price.
- Finding funding. A company will need money to function until it can start operating profitably. You would need to calculate a budget. A simple rule of thumb says that the actual expenses for the year can be as much as double the estimate.
- Organizing a company. Finally setting up a company can take anywhere up to several months. The tasks you need to do include the registering your company, setting up a bank account, signing a lease for offices, buying office equipment, and others. Nowadays, you also need to register a domain and setup a website. The organizational costs are considered as a tax write-off or part of the expenses, but not included in the first year budget.
You have to think things through before going through the process of starting a company. Most companies only become profitable after the third year. It would help you a lot to plan for eventualities. This infographic shows how you can validate your business ideas.