Month: February 2023

Can ChatGPT provide helpful advice in successfully starting a new business?

By now many people know that ChatGPT is an artificial intelligence language model that uses deep learning techniques to generate texts in response to questions. It can answer a wide range of questions, summarize text, and complete sentences and paragraphs. ChatGPT is widely used in applications such as content creation and chatbots to provide human-like text responses in real-time.

Can ChatGPT offer useful advice for starting a successful business?

I asked ChatGPT (by going to
chat.openail.com/chat) the following question: What are the ten key steps in successfully starting a business? Give details on each step.

Here was ChatGPT’s answer:

Here are the 10 key steps in successfully starting a business:

1. Idea Generation: Develop a unique and profitable business idea. Conduct market research to validate the idea and identify potential customers, competitors, and market gaps.
2. Business Plan: Create a comprehensive business plan that outlines your goals, strategies, and resources required for the business.
3. Market Research: Conduct thorough market research to gain insight into the target market, competition, and demand for the product or service.
4. Legal and Regulatory Compliance: Ensure compliance with all relevant legal and regulatory requirements such as registering the business, obtaining necessary licenses and permits.
5. Funding: Secure sufficient funding to start and grow the business, either through personal savings, loans, or investors.
6. Operations and Logistics: Plan and set up the business operations, including supply chain management, manufacturing processes, and distribution.
7. Marketing and Sales: Develop and execute a marketing and sales strategy to reach and acquire customers.
8. Technology: Utilize technology effectively to automate and streamline operations, reduce costs, and improve efficiency.
9. Talent Management: Attract and retain top talent to build and manage the business.
10. Financial Management: Establish and maintain effective financial management practices, including bookkeeping, budgeting, and cash flow management.

These steps should be followed in a systematic and well-planned manner to increase the chances of success in starting a business. Entrepreneurs should also be flexible and adaptable, as circumstances may change and require adjustment of plans along the way.

What grade would I give to this ChatGPT answer? I’m going to give it a C+ for the following reasons:

• The content is very generic and summary.
• There are no links to other sources that may be helpful, unlike many of the quality articles out there on this topic.
• Some of the advice is questionable, such as whether every business needs to prepare a comprehensive business plan.
• Some of the advice does not apply to small or basic businesses (such as the information about supply chain management and manufacturing processes).
• The formatting could be improved for readability.

My version of ChatGPT’s article on starting a business

If I were to edit the ChatGPT answer into an article and keep the basic format, here is how it would look:

The 10 Key Steps to Successfully Starting a Business

Starting a successful business is not easy. There are many steps to consider and potential traps for the unwary. But here are 10 key steps to follow in order to successfully start a business:

1. Business idea

Develop a unique and potentially profitable business idea. Conduct market research to validate the idea and to identify potential customers, competitors, and a sufficiently attractive market opportunity.

2. Business plan

For some businesses, it may be worthwhile to prepare a business plan that sets forth the business idea, sales and marketing strategies, financial projections and other information. For many businesses, a pdf pitch deck outlining the business will be easier and more suitable. See Don’t Waste Time on a Startup Business Plan—Do These 5 Things Instead

3. Market research

Make sure you are thoroughly researching the market opportunity and competitive products or services, and keep on top of new developments and announcements from your competitors. One way to do this is to set up a Google alert to notify you when any new information about those companies appears online. Expect that prospective investors in your company will ask questions about the market opportunity and your competitors. Any entrepreneurs who say that “we don’t have competitors” will have credibility problems.

4. Legal and liability protection

Ensure compliance with all relevant legal and regulatory requirements, such as registering the business and obtaining necessary licenses and permits. You will likely want to start the business as a corporation or an LLC to protect your personal assets from the debts and liabilities of the business. See
How to Form an LLC and How to Incorporate a Startup Business.

5. Funding

Secure adequate funding to start and operate the business, whether from personal capital, loans, government grants or investors. One of the biggest reasons startups fail is because they do not raise sufficient capital for the business. See
5 Startup Funding Options for Your Business

6. Operations

Plan and set up the business operations, including sourcing of products or materials, manufacturing processes if applicable, optimal pricing for customers, and necessary leased space.

7. Sales and marketing

Plan a cost-effective sales and marketing strategy to reach and acquire new customers. Make sure to continually monitor the different channels you use and their cost-efficacy. Consider using social media to boost your presence online.

8. Technology

Use technology effectively and efficiently to operate and market the business.

9. Employees

Attract, motivate, and retain the employees you need to start and grow the business.

10. Financials

It can be important to prepare detailed financial projections for the business, for the following reasons:

• To determine whether the business will ultimately be profitable
• To determine your cash “burn” before you get cash flow profitable, showing how much startup capital you will need
• To lay out your key financial assumptions (price per product, cost of developing the product, marketing expenses, employee expenses, rent and overhead, gross margins, and much more) so that you and others can test the reasonableness of the assumptions
• To have those projections ready and credible when investors inevitably ask for them

Financial projections will typically be for a several-year period and will include:

• Profit and loss statement
• Cash flow statement
• Detailed categories of income and expenses
• Balance sheet
• Underlying assumptions

Of course, your financial projections will not be perfectly matched with your actual results, but your financial projections can be revised as you move through the stages of your business.

You will also want to make sure to establish and maintain effective financial management practices, including accounting, bookkeeping, budgeting, cash flow management and tax compliance.

Most of all, be adaptable in business

Paying attention to these 10 issues will increase the likelihood of success, but you should be flexible and adaptable as you grow the business.

More articles from AllBusiness.com:

• The Complete 35-Step Guide to Starting a Business
• 10 Key Steps to Getting a Small Business Loan
• 15 Major Legal Mistakes Made by Startups
• 25 Frequently Asked Questions on Starting a Business

Copyright © by Richard Harroch. All Rights Reserved.