Business development takes time. It often takes two or three years to get a business off the ground and up to a decade until your company reaches its full potential. However, 50% of businesses close their doors before five years.
Regardless of your industry or skill level, developing a business is a significant commitment. Every enterprise will bring challenges, but you can make the process slightly easier by creating a company that allows you to utilize your existing traits and skills.
Forming a business that plays to your strengths requires careful planning. For many entrepreneurs, the process starts by defining your skill set, interests, and values. Once these fundamentals are clear, you can move on to selecting an industry, structure, and business model.
Here’s a closer look at the steps necessary to develop a business that plays to your strengths.
Identifying Your Strengths
A list of strengths may be more difficult to compile than you think. A lot of feedback you receive during your academic career and employment is negative. Even constructive criticisms focus on correcting mistakes rather than playing to strengths. Although these insights can help you decide where you’ve improved, they do little to help you define areas in which you have always been strong.
You can break down your abilities into two categories: hard and soft skills.
Hard Skills
Hard skills are technical abilities you typically learn through formal training. Also, these skills may be self-taught and honed by real-world experience.
Here are some examples of hard skills.
- Operating machinery or overseeing manufacturing processes;
- Programming software or websites;
- Repairing electrical systems;
- Creating a Wi-Fi network;
- Treating a medical patient;
- Preparing a legal brief.
In broader terms, you can include any formalized skill in this category. For example, hard skills could include the subject of a degree, professional development, or academic certificate program.
These skills are essential in establishing and perfecting the different processes you will use in your business.
Soft Skills
Soft skills are more informal and subjective. You can’t quantify them as easily as hard skills. However, they are essential for establishing a successful business. Here are common soft-skill examples.
- Communication;
- Problem-solving;
- Interpersonal skills or relationship building;
- Management or leadership;
- Public speaking;
- Ability to work with others.
Some soft skills are personality traits you develop during life, while others could be qualities you work on during school or while working for yourself or others.
Soft skills have a wide range of applications. You use them daily while interacting with employees or clients, addressing issues or challenges, and managing business operations.
Determining Your Core Values
Core values are beliefs, desires, and priorities that drive people or organizations. You might think of them as the motivation behind your business ambitions.
Businesses often define core values and use them to guide strategy planning, long-term goal setting, and hiring. These values can also help craft brand identity, customer service policies, and marketing materials.
A business should not only play to your strengths but also match your personal core values. For example, if you believe in providing opportunities for personal improvement, you might want to consider an academic tutoring business or a center that prepares students for a specific trade.
Values don’t need to be based on current societal movements or established philosophies. They could be as simple as opening a coffee shop because you believe in starting the day with a positive mindset.
Your core values can help you decide how to best apply your hard and soft skills.
Deciding on an Industry
The next step is to define an industry where you can apply your skills and values. This is where you bridge the gap between your goals and attributes and the business world.
The industry you choose should value your skills and allow you to actively use them daily. For example, if you have healthcare training, you might consider starting a business in the medical device industry instead of opening a restaurant.
Most new businesses require entrepreneurs to learn some things they didn’t previously know. However, the correct industry can limit learning-on-the-job challenges and give you a better chance of success.
Creating Your Business Structure
The next step is to start formalizing your new business. For most small companies, this process involves choosing a business structure. Business structures provide a legal framework for establishing a company.
For new businesses, there are five different structures.
Sole Proprietorship
A sole proprietorship is an unincorporated business operated by one person. This option is inexpensive because it does not require any registration. Unless you need a license to provide specific services in your jurisdiction, you can start a business immediately without filing any paperwork.
Sole proprietorships allow you to start a business quickly, and they provide complete control for the owner. If you value autonomy and can work independently, this structure is the best.
Since a sole proprietorship is more informal, you typically have the option of upgrading to a more formal structure in the future without disrupting your operation too much.
Partnership
Partnerships provide a framework for decision-making and operations in companies with two or more owners. Some companies are general partnerships (GPs), with each owner having an equal share of the responsibilities and decision-making powers. Though GPs don’t require filing formal paperwork, you can create a document that outlines procedures for making decisions and distributing profits.
Limited partnerships (LPs) are for companies where one partner handles the primary operations, and others take up specific roles or provide capital for growth. Again, these partnerships do not require anything more than a handshake, but clearly defining roles, liabilities, and profit shares in a written contract is always advisable.
This structure is ideal for people who want to start companies together or combine their different skill sets to increase the scope of the business or give it a better chance of success due to diversity of expertise.
Limited Liability Company (LLC)
LLCs are formal businesses that require obtaining a tax ID number and filing paperwork with your state. The primary reason to use this structure is the legal protections it offers.
Though the profits of an LLC pass through to the owners, this income is differentiated from each owner’s non-business assets. If there is a lawsuit, it can only involve the company’s assets, not the personal wealth of the owners.
This structure is for people who want an extra layer of protection in industries that provide services, products, or advice. In any industry where liability could be an issue, an LLC can provide peace of mind to owners.
Corporation
Corporations are more expensive to form and require more paperwork than other structures. However, they provide the strongest liability protections and allow owners to differentiate between personal and business assets.
Standard corporations, known as C-corps, are taxed as independent entities. Owners receive profits based on shares, which they can sell at any time. Owners can also choose an S-corp, which is a corporation allowing some profits to pass through to the owners directly without corporate taxation, much like a limited liability company.
Corporations are the best option for business owners with ambitious growth plans or those who want early investors to be rewarded when their share value increases as the company grows.
Cooperative
A cooperative (co-op) is a unique business structure owned by its members. These owners can be investors, stakeholders, or patrons. They purchase shares and elect leaders to make decisions and oversee operations.
Co-op members earn profits or receive other benefits based on the number of shares they hold. Technically, they can sell these shares, though there may be rules saying that they can only sell them to other members.
Co-ops are ideal for people who value their community and collaboration and want multiple people to be able to benefit from their business successes.
Finding an Existing Business That Suits Your Skills and Values
One option for starting a business is to open a franchise. A franchise is a business model where the owner licenses their brand, processes, and products to a third party, who operates the business.
There are several advantages to franchise businesses. First, owners do not have to worry about creating brands from scratch and perfecting their products or services. These elements are already established by the company.
Also, franchisees have access to support and professional advice from the company. This can help fill in any skill gaps and reduce the trial-and-error style of learning.
Finding a Franchise That Works for You
Franchises are available in almost every industry, so you can find an ideal franchise that fits your skills, values, and area of interest.
While finding a franchise that fits your skills is essential, you should also look for one that meets other parameters. Franchises have different requirements, some are only available in specific regions, and most have financial conditions.
Also, you should decide whether to opt for a top franchise brand with national recognition or a low-cost option that provides room for growth.