Most people consider opening up their own business at least once in their lives. When the moment finally comes for conjecture to become reality, it would be helpful if there was a neatly packaged guidebook for those embarking on the daunting entrepreneurial journey. As it so happens, the entrepreneur is a much-studied specimen with a whole lot of different considerations to bear in mind, not least of all, business insurance. Any good entrepreneur will know that someone who opens his or her own business is dealing with a three-pronged problem: social, psychological and financial.
"An investment in knowledge pays the best interest." Benjamin Franklin
The financial considerations aren't as varied as the social; however they are probably the most important. Before you can launch your business you have to complete a business plan in which the two most important aspects of your finances are written:
- how it is you expect to maintain cash flow while making a profit and...
- how you will manage the business as a whole
At this stage, it can be taken for granted that a sufficient capital investment will have been secured. So all that's left is for you to put into action all of the strategies outlined in the business plan. For example, matters such as getting paid upfront for services before they are rendered, in order to limit how much of the client’s unpaid debt the business carries on a monthly basis.
You will also need to consider that managing clients is not the same as managing the process or product. You’ll discover that it's rare to find people with equal competencies in both, so most times the two should be split. A few reasons you should also consider business insurance include:
- if you have a business prone to payments that come later than the deliverables;
- if the business is involved in a high-equipment availability industry, where equipment such as trucks, freight-carriers etc. are used and the longevity of the business depends on the continued maintenance of physical resources;
- or if the industry itself is volatile and there is a high chance of losing money against your control on a period-by-period basis.
In such cases, business insurance mitigates the risk faced by your company.
"We intend to continue our practice of working only with people whom we like and admire. This policy not only maximizes our chances for good results, it also ensures us an extraordinarily good time." Warren Buffett
All social considerations have to do with the people involved with the business, from customers and suppliers to staff and management. Some of the tips seem fairly obvious but how often they're repeated reflects just how rarely people remember them. For one, the main tip is to know the problem. You have to know the problem you're addressing incredibly well before building a whole business around it.
And, once that problem is known, check out the competition. If you're creating a product you should try by all means to use your competitor's product. If you're offering a service, try by all means to use the services of a competitor. This allows you to see the weaknesses in an existing business which is similar to what you are planning to do.
Also, get the team right. Once all the nitty-gritty research is done and your fictional 'Coca-Cola employee' has drunk his fill of Pepsi, make sure that he surrounds himself with as many like-minded people as possible. To expand on the metaphor, you don't want to be surrounded by pro-Pepsi employees while your modus operandi is to sell Coke.
A good team allows you to solve problems efficiently, to target your marketing and demographic, and it allows you to use other's experience to your advantage. The latter is important because experience matters. A "we'll train them later" paradigm is not usually viable in the long run. People who've been in the trenches of a particular industry bring not only contacts but also insights from their many years doing the same or similar things.
As an added tip, if viral marketing or sharing is what you desire for your products or services, then a large percentage of the existence of the product should rely on sharing so that it becomes organically tied to your product. Think of how easily multiplayer video games are shared or products which inherently involve sharing, like the launch of a new pizza or a family combo at a fast food place.
"Entrepreneurial business favours the open mind. It favours people whose optimism drives them to prepare for many possible futures, pretty much purely for the joy of doing so." Richard Branson
Lastly, the oft-forgotten psychological aspect of starting your own business is that it can be mentally taxing. In a paper published in the Journal of Personality and Social Psychology, after polling over 600,000 people in the US and similar large-scale data sets in the UK and Germany, it was found that the ideal entrepreneurial profile is someone who is open to different experiences, highly extraverted and conscientious when it comes to work and professionalism. Agreeableness and neuroticism should be low. What this means is that an entrepreneurial person is more willing to explore, work hard and be the centre of attention without harbouring a restrictive desire to be liked.