Running a Business
in today's world running a business needs to be done the right way. In general, you cannot just throw together a few ideas, and start the business. There is some amount of planning and structure that you must put into place before you start the business operation. In this page, we introduce a few of the items that you need to run a business the right way. By no means will this page highlight all of the issues, but please comment down below if you want to see some more information on the page that is missing.
Know your Target Customers
Starting a business, or deciding to stay in business, all comes down to customers. As a business owner you'll need to have an in depth understanding about who are your customers, and what makes them tick. Today, I was listening to a podcast from the founder of Lululemon.com, athletic apparel. He went into detail about how he defined the target customer of his brand. The target customer was a 32 year old female born in September. Now, this is very telling right? He obviously put a lot of thought into who are his customers. He continued with an entire narrative about what type of house they lived in, their income level, their relationship level, etc. Chip Wilson knew with great detail who were his customers...and he is now a BILLIONAIRE from his hard work.
Have your First Customers - or Next Customers
If you are just starting out, don't quit your job, or take too much risk until you have your first customers. Many first time business owners, get too excited, and too optimistic, and think their business can fly. Some will obviously be right, but many will not be correct. Or if you are an existing business, and you're reading this you should think about where are your next customers coming from. Having a flow of customers is so important for a small business that you must know this part of it before you take too much risk in starting a business.
Know your Average Selling Price
Next, you'll have to have your finger on the pulse of your sales, and the average selling price(ASP). How much will you make from each sale? If you are selling sandwiches you may make $6 profit per sandwich, which can be used to calculate your total profit per month. The goal of knowing your ASP is to be able to get an idea of how many sales you need to make to achieve your goals. Here is what you need to think about:
- How much income do I need each month?
- How many sales to create the gross profit I need?
- How many employees do I need to create this many sales?
- How much gross profit do I need to cover all expenses and salaries?
These are some of the initial questions that we must ask when we think about starting a business. If you don't know what you are going to sell, how much of it you need to sell, etc. then you should not yet take too much risk with your business. If you are still in the early stages of understanding your business, and where the profit is going to come from, don't take too much risk yet or quit your day job.
Start to Execute
If you are ready to leap into your business, and you're full of optimism. Get started! But don't yet take too much risk. You'll want to take baby steps to ensure that you can cover the revenue and expenses that your business will generate. When I was young I started a business with blind faith and it lucky worked out into a business that could yield a good amount of earnings. But there was a point where I needed to rely on family assistance to help me get through it. So, in order to do it the right way, proceed by following the proper steps to not over extend yourself.