Starting a new business can be an exciting and incredibly fulfilling, if occasionally terrifying experience. While pitfalls aplenty await you, like any journey, pre- planning can help you to skirt looming disaster and place you firmly on the path to future success.
Many of us dream of doing our own thing and being our own boss and many economies rely on a regular stream of new business ventures to revitalize and refresh their business sector. However, there are a lot of moving parts associated with creating a new enterprise from legal and licensing issues through to marketing, finance, and distribution. Here are our ten tips to consider when starting your own business.
1. Seek Inspiration & Ignore Statistics.
Every business grew from an original idea. You have been dreaming of going out on your own for years or perhaps you have come across an idea that is too good to pass up. Flesh out that basic idea and map out its initial requirements and its dependencies together with a quick sketch of the risks.
When you are working through these issues, don’t allow yourself to be distracted by the failure rate of new businesses (it hovers around 80 percent). Many of those businesses flounder due to a lack of planning, lack of research and lack of commitment. Understand what you are seeking to achieve, manage your risks and financial exposure and above all else, be passionate about your project!
2. Get Organised & Do Your Research
You have identified your new idea, now is the time to let a little reality seep in. Get organized and position yourself to follow through on your brilliant idea. Small business owners have to be comfortable wearing many hats. Without a plan and a roadmap, you’ll find yourself being pulled in many directions or worse doing the things you love doing while neglecting those tasks you find more difficult. The best thing you can possibly do at this stage is to prepare yourself rigorously for ownership and responsibility.
Once you have explored the potential demands of ownership, conduct some basic desk research to just how much potential your new business idea has. Does it have the legs to be successful?
For a small business to be successful, it must solve a customer problem, fulfill a need or offer something the market doesn’t yet know it wants. At this point, Google is your friend. Seek out research reports on your target industry, tap into social media to see what consumers are saying about products or services similar to yours, purchase research studies or commission focus groups to explore your idea. Ensure you can confidently answer the following five simple questions:
- Is there a need for your proposed products or services?
- Who needs it and what does your typical customer look like?
- Who are your potential competitors and how are they defining the market?
- How intense is that competition and what is your competitive advantage?
- How will your business differentiate itself in the marketplace?
Support this research by reading a lot about business philosophy, marketing, biographies, motivational books, whatever helps you and provides you with inspiration. The Internet is awash with interesting articles on a wide range of topics, skim through what’s out there and find ideas that resonate. If you struggle to find reading time, look for podcasts and audiobooks.
3. Draft A Business Plan
To turn your brilliant idea into a reality, you need a plan. A simple business plan outlining your key strategies and milestones helps bring clarity about what you expect to achieve and enables you to prioritize how you plan to achieve it.
Your business plan should outline your goals and objects for your business, your target audience, your product or service portfolio, and pricing strategy, a basic financial spreadsheet outlining initial cash flow assumptions, together with an initial take on your marketing plan. Your financial assumptions should also show your new venture’s funding requirements and the rough timing attached to that funding.
If you are planning on seeking financial support from investors or financial institutions, a formal, written business plan with robust assumptions is a must.
4. Get Legal Advice
Many entrepreneurs starting a new business assume legal advice is for when you get yourself into trouble. However, seeking legal advice is one of the smartest steps an entrepreneur can take. Investing in a legal perspective at the start of your business can pay huge dividends later, by avoiding trouble before you get into it.
One key bit of advice is on your company structure. Your new business structure can take the form of: a sole proprietorship, a partnership, a limited liability company (Ltd) or a limited liability partnership (LLP). The structure you select will influence a range of issues from your business name, to your tax filing requirements through to your liability.
There is also a host of licenses and permits that come with a new business, depending on your type of business and your location. Good legal advice can streamline this process and ensure compliance.
Once you have selected your preferred business name you will need to check if it is trademarked or in use. If not you will need to register it. Don’t forget to register your domain name and social media handles as part of your business name selection process.
5. Build A Network & Seek Out A Mentor
When you are considering starting a business it is always helpful to understand the commitment required to make your dream a reality. Build a network of entrepreneurs, who can share their experiences of both success and failure. Their experience will provide you with useful context for your new business. Look at their work habits, strategies, and approach to securing funding.
Similarly, every new business owner should have a coach or mentor. Having someone to talk to about your business and its impact on your personal life can be life changing. Whatever your story, a good coach or mentor can prove invaluable.
A business mentor tends to focus on the growth and success of the business owner as an individual. Their role is to listen to the owner’s goals, dreams, and challenges, and to provide wisdom and advice that helps shape both the individual owner, as well as how he/she runs the business.
A business coach helps your business tackle specific tasks or objectives (strategy, marketing, technology, growth, acquisitions or on-boarding a business partner). The coach agrees the objectives, sets the number of sessions needed to meet the goal and charges a fee. The business coach relationship is frequently short term, and you could use several coaches over the life of your business.
6. On Board An Accountant
Bringing on an accountant is an important step. Accountants provide an invaluable source of sage commercial and business advice. Fresh eyes can bring independent ideas to the table and help you understand profitability as well as your tax position.
7. Prepare For Turbulence
One of the advantages of devoting time and effort to mapping out a basic business plan is you should understand your new business’s exposure to turbulence. Whether the impact of interest rate changes on consumer sentiment or buying behaviour, an economic downturn in business activity, or revenue erosion from aggressive pricing by a competitor, you need to be prepared for turbulence.
Similarly, a lull in business is an opportunity to catch up and update your business plan. Revisit your marketing plans, follow up with customers, or look for alternate suppliers. Take advantage of slow periods to prepare for the next uptick in activity.
Similarly, revenue is rarely constant but comes in waves. While cash flow can prove fickle, fixed expenses are depressingly constant. Explore options for building up modest cash reserves or look to put in place a line of credit from a local bank.
8. Transform Suppliers Into Partners
Suppliers are pivotal to almost all businesses. Without reliable access to raw materials or manufacturers to supply your products, growth will be a challenge. Suppliers can do more than simply sell you what you need to do business; they can be crucial information and intelligence sources on potential new products, competitor activity, and emerging opportunities. Transforming vendors into partners can help you reduce your cost structure, enhance your product design and occasionally fund marketing initiatives. Don’t regret not selecting good suppliers and vendors as part of your growth plan.
The Internet is great means to identify potential new suppliers, compare your cost base to competitors, find better deals and forge business introductions. For example, you can compare franking machine quotes here.
9. Consider Your Exit Strategy
Always have a Plan B. Aside from faith in your idea, self-belief, and tenacity; a viable exit strategy is crucial. Be it a strategy for selling unused inventory, or for creating secondary revenue while your business ramps up, rather have your entire investment in play.
Understanding you have an exit strategy allows you to subconsciously go full throttle and commit to your new business.
10. Ask Yourself Why?
Every new business owner should be able to answer the question, ‘Why are you doing this?’ It may seem deceptively simple, but there things will go wrong, problems appear insurmountable. Building the business and hunting for growth is a never-ending process. So, you need to remind yourself occasionally why you fell in love with your business. It is also a great discipline to create a personal mission statement to help maintain your focus on the end goal as well as personal ones
Marketing and Customer Acquisition
One of the most difficult challenges in establishing a new business is identifying and acquiring customers. Marketing a new business can be time intensive and expensive. Here are three quick tips to attracting customers:
- Generate Leads & Customer Engagement: Inbound and content marketing offer a cost-effective means to attract visitors to your website and convert them into customers. Start a newsletter that offers useful information about your business, offer special promotions or give visitors a sneak peak into your business. Look to build a community and nurture relationships with customers, it keeps your brand top of mind
- Leverage Social Media: It’s easy, free and provides access to a huge network of potential customers. Identify the channels that reach your audience and focus on two or three from Facebook, Twitter, Pinterest, Instagram, and LinkedIn initially
- Transform Customers Into Advocates: Ask for testimonials from satisfied customers, nurture trust and encourage them to tell their stories, promoting your brand for you
Marketing a new business is crucial in positioning it for growth. Savvy ideas can be both simple and frugal while still attracting website visitors and increasing your visibility, driving customer acquisition.
A Word of Advice
Never partner with someone because it’s convenient. If you decide to go into partnership, choose a partner who will make your business stronger. The wrong partner can derail your business, suck the air oxygen out the room and make your work and private life a living hell! Choosing poorly can cause more problems than it potentially was intended to solve.
Always focus on your higher paying tasks. Sift through your tasks and determine what your high-value tasks are and what your low-value tasks are. Focus on completing the high-value tasks ahead of the low-value tasks, even if the low- value tasks are easier and you feel more comfortable doing them!
When committing to setting up your own business, always remember it is better to do something you like. Don’t start a business you won’t want to do in five years because if you are successful, you’ll still be doing it in five years. Similarly, do your research and ensure you establish a support network and recruit a mentor and business coach. Inevitably, you are not going to know every aspect of running your own business so make time to do research and read as much as you can. you can figure most of it out “on the job” and with the help of a trusted network of advisors. Finally, finish what you start. Entrepreneurs are bursting with ideas but less accomplished at implementing them. Pick an idea, stick with it and you will have all the ingredients for success.