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    Laying the Foundation: 4 Things You Need to Take Care of Before Launching Your Business

    You can come up with a fantastic startup idea overnight – however – putting that startup idea into practices will take a lot more time and mistakes. There’s nothing wrong with making mistakes – every mistake provides a great learning opportunity that will allow your business skills to evolve.

    Every mistake will cost you time and money – but the problem is – some mistakes are so big that they are downright lethal for a business. Last year, a pair of researchers went through 193 startup post-mortems and discovered that 46% of startups fail because they run out of money.

    In most cases, this happens because the owners fail to do their research – get familiar with all of the costs, inspect the competitive landscape, etc. So naturally, before you start looking for investors or spending money left and right, you need to make sure you’ve covered all your bases.

    So in order to help you ensure your company actually get off the ground and winds up succeeding down the line, here we have a short list of things you should do in the pre-launch phase of your startup.

    1. Find a Mentor

    Why Do You Need It?

    Some people will tell that you should only follow your gut feelings and instincts when you start a new business. However, a mentor can provide you the wisdom, direction and the guidance you need to steer your business in the right way. That’s why so many modern entrepreneurs had mentors.

    Mark Zuckerberg was famously mentored by the late great Steve Jobs, who in turn was mentored by one of the early executives at Apple, Mike Markkula. What’s more, a recent Berkeley study revealed that mentorship can keep young entrepreneurs reassured that they’ll be successful.

    How to Take Care of It?

    It may seem smart to use family members, friends or close colleagues as mentors, however that simply won’t work. That’s because although these people are close to you, they can’t relate to your struggles the way an experienced mentor in your industry can. So you need to look at someone who’s already walked in your shoes.

    If you have no idea where to start – search your social networks and find someone who you respect, that’ll be able to expand your network. Also, you could engage with a “mentor from afar” by consuming free content like online lessons, video trainings and blogs from business leaders you admire – just think TED Talks.

    2. Outsource Some Work Right Away

    Why Do You Need It?

    During the early =stages of your startup, the funding will probably be extremely limited. Therefore, hiring a full staff will be nearly impossible, because it’s difficult to attract first-rate talent without offering a big salary and a number of other costly benefits. So what’s the solution here?

    As Peter Ducker said a couple of decade ago, you should “Do what you do best and outsource the rest.” So you should make an outsourcing budget, and manage it according to what you need most urgently and what you’ll be able to afford in the first few months.

    How to Take Care of It?

    Depending on the nature of your company, there are a couple of services you could potentially outsource during the early stages, and some of them include marketing, sales, getting software customized (visit the site of greenstone for better reference) according to the latest sustainable trends, accounting and human resources, among others. If one of the freelancers proves to be particularly talented, you can easily hire him down the line.

    And thanks to the Internet, you have a huge number of outlets like Upwork, Elance and Toptal that will help you find the right people. Today, there are more than 53 million freelancers in the United States alone, according to a recent survey commissioned by the Freelancers Union.

    3. Prepare an Exit Strategy

    Why Do You Need It?

    The most important thing you can have –besides the faith you have in your startup idea – is an exit strategy. With a developed exit strategy, you’ll be reassured that no matter what happens, you’ll be able the sell all the equipment you invested money into and lose just a small percent of your investment.

    In an ideal case, the exit strategy should be signed off by you and the other founders before the first dollar goes into the startup. A good strategy is also important since early exists provide such attractive options for many startups. For instance, Club Penguin was sold only two years after it was founded and Flickr was just 18 months old when it was sold for $30 million.

    How to Take Care of It?

    While this may sound a complicated endeavor – creating an exit strategy can be fairly simple. You basically just need a target date (for the sale of the company) and a target price of your company). But you have to be aware that a number of factors will affect the marketability and valuation of your startup.

    And for most small organizations, net cash flow is the single most important factor in the valuation. Typically, the real value of your business is a multiple of your NCF. So let’s say your NCF is around $100,000 and your startup has a self-sustainable infrastructure, a consistent revenue and traffic, you may have a multiple as much as five times your cash flow, which amounts to $500,000.

    4. Get Some Legal Advice

    Why Do You Need It?

    One important thing all young entrepreneurs should do before officially opening a company is seek legal counsel. Most people assume that legal counsel is reserved for people/organizations in trouble. However, in some situations, this line of thinking can have a critical impact on their business.

    What most people fail to realize is that preventive legal preparation is one of the best ways to set your company on the path to long-term success. And people who seek legal advice only after they’ve run into a problem often find themselves in a hopeless situation. According to CB Insights, around 10% of startups fail due to legal complications.

    How to Take Care of It?

    Well, a good place for you to start is the official site of the American Bar Association, which is full of useful information for professionals and consumers alike who have legal inquiries. However, there are commercial referral services online that give you instant access to hundreds of lawyers in your area.

    And no matter what your issues is – whether it’s something huge like a possible lawsuit, or something simple as surety bond cost – you should seek some legal guidance nonetheless. Investing some time and money in legal insight at the start will pay a big return later by keeping you and your organization out of trouble

    Final Thoughts

    We should also point out that young entrepreneurs shouldn’t focus on turning a fast profit. This is because chances are they won’t. And this doesn’t mean you shouldn’t focus on improving your product/services and making a profit from the get-go. Far from it actually.

    This just means you should devote more time to developing a bulletproof business model. Remember those researchers who examined all of those startup post mortems we mentioned in the beginning? They also discovered that more than 50% of startups fail because their business models aren’t viable.

    Developing a business model includes a lot of factors; you need consider how it should evolve to reflect the changing economical, technical and competitive environment. Even the largest companies who fail to adept their business model to ever-changing circumstance can have negative results.

    And once you manage to work out a business model and come up with a plan for growth, you’ll be able to devote more time to other aspects of your business. Don’t waste too much time thinking about the small mistakes – they are bound to happen – just make sure to cover all the basics from the start.

    Otherwise, your company may not even have a chance to launch at all.