In 2008, a couple of friends at a conference in Paris noticed how hard it was to find a taxi. So they launched a company called Uber, which 10 years later had $24 billion in assets.
Probably all entrepreneurs have dreamed of their own rags-to-riches story. Yet 20% of small businesses fail in their first year, according to the Small Business Administration, and 50% fail within five years.
The good news is, to start a successful business you don’t have to be the next Facebook. You don’t need a killer idea that nobody has ever thought of before — you could open a Taco Bell franchisee in the right location and make bank.
What all entrepreneurs need is a sound business idea that meets a previously unmet need. They need market research that identifies a viable customer base. They need to research their competition and identify the gaps in the goods and services currently offered.
In 2007, two guys in San Francisco couldn’t afford to pay their rent, but there was a major design conference coming up and hotels were full.
So they got the idea of renting out air mattresses on the living room floor of their apartment and serving breakfast. From these humble beginning was born AirBnB, which was recently valued at $35 billion.
Entrepreneurs need to figure out how to offer something better. It could be a better price, a better location or a better customer experience, but they have to offer something that’s better.
All of this has to be stated in a sound, written business plan that will interest investors — or even if investors are not needed, one that will provide a roadmap to success for the startup.
One of the biggest mistakes you can make is overestimating your revenue and underestimating your costs. If you’re going to estimate wrong, do it the other way around.
Financing your business may be your biggest challenge, but you don’t necessarily need a lot of cash in a fist to start a successful business. With a good business plan, you can obtain bank loans, small-business grants, financing from friends and family, and support from private investors.
Also, like Steve Jobs and Steve Wozniak built the first Apple computers in a garage, you can start small. Before you commit to a costly, big-picture plan, roll out prototypes of the goods or services you plan to offer, get feedback from people you trust, and improve and innovate.
But remember that “perfect” is sometimes the enemy of “good.” Focus on getting something done and rolling your product out to the market. It doesn’t have to be perfect, but it should be better than what’s already out there.
In 2009, an immigrant from Ukraine who had once lived on food stamps and been turned down for a job at Facebook got an idea for a messaging app that would show the user’s status, where the sign-on would be the user’s cellphone number.
So he launched a company called WhatsApp, which became the world’s most popular messenger app, and which he sold to Facebook in 2014 for $19 billion.
You’ll need a great business name, hopefully, one that is unique. You’ll have to figure whether to structure your company as an LLC, corporation, partnership or something else. Avoid going down the road of the sole proprietorship, which could leave you personally on the hook for the business’s liabilities.
Depending on the type of business, you may need a great location — easy to find, good signage, good foot traffic, and adequate parking.
You’ll need a professional-looking website that reflects the excellence of your business in both visuals and text, and you may need a website set up for e-commerce sales.
You’ll need federal and maybe state tax IDs, company bank accounts, and perhaps permits, licenses, trademarks, and patents.
You’ll need a team, be it employees or freelancers, and you’ll have to figure out how to pay them, deduct applicable taxes and have the funding to back up any benefits you may offer.
You’ll need bookkeepers and accountants to keep track of revenue and expenses, keeping you honest with the taxman without ever overpaying taxes.
And remember one thing: The best time to consult a lawyer is before you desperately need one.
In 1995, a French-Iranian-American computer geek named Pierre Omidyar decided to launch an e-business called Auction Web, where people could bid on used items for sale online.
One of his first sales was a broken laser pointer for $14.83. When Omidyar asked the buyer if he understood the laser pointer was broken, the buyer said he was a collector of broken laser pointers.
Omidyar’s renamed company, eBay, had total assets in 2017 of $26 billion.