5+ Things to Consider Before Starting a Business in 2024-25

Are you a budding entrepreneur who is planning to start a new business in 2024-25? Read our comprehensive blogpost on "5 things to consider before starting a business".

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    Starting a small business often feels like a risk, even under favorable economic conditions. Presently, many individuals express concern about the state of the economy, with 65% believing it is either not performing well or doing poorly.

    In such uncertain times, one might question whether it is appropriate to start a business. However, the reality is that there is no perfect moment to embark on this journey, and external challenges will always pose a threat to your venture.

    Determining the optimal time to launch a business involves strategic planning, thorough research, and the right mindset. If your financial projections are sound, do not let economic apprehensions deter your plans. Here are five key considerations to keep in mind before embarking on a new business venture.

    5+ Things to Consider Before Starting a Business

    Business Plan

    A business plan is essential in assessing whether starting a business is the right move. It enables you to identify new opportunities, clarify your strategy, and determine the viability of your idea.

    If you have multiple ideas, drafting a business plan will help you evaluate which ones have the highest potential for success. This process also involves researching your target audience and competitors.

    Crucially, a business plan can reveal weaknesses in your business model, helping you identify potential issues and avoid costly errors in the future.

    Most investors require a business plan before providing funding, and it is necessary for qualifying for a loan. Additionally, a well-crafted business plan communicates your vision to prospective employees, aiding in recruitment efforts.

    Your Desired Industry

    When doing a market analysis, you’re examining the customers who will buy your products or services. On the other hand, an industry analysis looks at the various companies within that industry. It’s important to consider the industry’s current state, growth trends, and income projections.

    Think about whether you’re entering an emerging industry or a well-established one. Both have their pros and cons. Emerging industries usually have less competition and high growth potential. But, you’ll need to spend more time educating your customers since they’re not familiar with the product or service. Plus, because the industry is new, you can’t predict what kinds of government regulations might come up in the future.

    Market Demand

    Around 50% of startups fail because the founders create a product that no one wants. This is an avoidable problem, but it’s easy to get carried away with a new business idea and forget to check if there’s a product-market fit.

    Before you dive into a new business, you need to consider the market demand. Market demand is simply how much of a product or service customers are willing to buy at a certain price. It’s influenced by factors like price, economic conditions, and customer preferences.

    Understanding market demand helps you estimate your sales and revenue potential. It also helps you set the right price, choose your target customers, and spot growth opportunities.

    When you analyze the market and see a demand, you should also consider the type of demand. For instance, you might find an irregular demand—something that’s based on seasonality or short-term economic conditions.

    A lot of companies experienced this during Covid. Take Peloton, for example. Their revenue skyrocketed in 2020 and 2021, leading them to invest heavily in inventory. But when the demand dropped, they were left with too much stock. They mistook a temporary surge in sales for a lasting trend, and it ended up costing them.

    Capital Acquisition

    When it comes to getting the money you need to start your business, there are three main options: using your own savings, finding outside investors, or getting a small business loan. Funding the venture yourself means you won’t have to deal with debt or giving up a piece of your business, but it can be tough to get your business off the ground this way. You might have to scrape by for years before you see significant growth.

    Looking for outside investors is another route, but it’s getting tougher for startups. Investment from venture capital funds dropped by 60% from 2022 to 2023, and overall startup funding fell by a third. With interest rates unlikely to drop much in 2024, this trend is probably here to stay.

    Then there’s the option of taking out a small business loan. While banks have strict requirements, non-bank lenders are a great alternative. Online lenders and lending marketplaces offer easier application processes, less stringent criteria, and quicker access to funds.

    Resources

    You can’t start a business without resources, though what you need will depend on the type of business you’re launching. When you’re just getting started, your most crucial resource is funding because every business needs money to run. Sure, there are ways to cut costs, but every startup will have different expenses. We’ll dive into how to get the capital you need in the next section.

    You’ll also need access to the right tech solutions, as technology makes your business more flexible and adaptable. Most startups need a responsive website, cloud storage solutions, cybersecurity tools, and a way to collect and analyze data.

    Lastly, you’ll need to invest in employees at some point. You might be able to get things off the ground by yourself, but to build a scalable business, you’ll need to find and develop the right team.

    Final Thoughts

    Starting a business during uncertain economic times can be intimidating, but with careful planning, strategic thinking, and the right mindset, you can set yourself up for success. There’s never going to be a perfect time to start a business, and economic challenges will always be part of the journey. By creating a solid business plan, understanding market demand, analyzing your industry, securing the resources you need, and exploring various funding options, you can navigate these challenges and bring your entrepreneurial vision to life.

    If you are willing to start your business, you can consult with OnDemand International’s experts who will guide you about the business environment and registration process.