Getting your business started

Coming up with the idea of running a business is easy; maybe choosing your business idea was easy too. But now what? How do you go about making that idea into a real life business?

You don’t have to have a business or economics degree to start a business, nor do you necessarily need a huge capital. As long as you have a belief in yourself and your business, a willingness to work and a desire to make the business last, you can start your own business and potentially do very well.

On the practical level, there are certain steps you should take to maximise your business success. You can move through these steps quickly or slowly, depending on your understanding and time commitment. However, if you move too quickly you may well miss out on crucial information.

Define your idea
Take some time to really think about what business you want to start. It’s not enough to say ‘I want to open a shop’ – what do you want to sell in the shop? Will it be a bricks and mortar shop or an online shop? Will you have a large product range or be very highly specialised?

Unless you have a clear picture, it is worth brainstorming ideas for your business, and if some friends can help, that’s even better. At this stage, don’t reject any idea, just note them down and see what they spark.

From the list of possibilities, cut it back to a description of your business. Be specific about things as this will help you take further steps in starting a business. If you can’t define your business idea, maybe you aren’t ready for a business or are looking at the wrong concept to start with.

Research your idea
Once have defined your business, you’ll need to check it out. It’s all well and good to decide you’ll run a business teaching young Mums to yodel, but what if young Mums don’t live in your area or don’t want to yodel anyway? Likewise, deciding to sell typewriters may not be a valid idea unless you treat it as an antique and novelty item.

Researching a business needs to include things like the desire for your product/service, the price people are willing to pay for it, where these people would buy it and why they would buy it. Research doesn’t have to be expensive or done by professionals, but it is important.

Define your goals and desires
Why are you starting a business? What do you hope to gain from it?

Remember that goals can be changed over time, but you still need an idea of what you want and where you’re going.

Compare your goals with your business idea – do they work together? For instance, if your goal is to make a million dollars in two years then walking dogs in your local area may not be the right business for you; if your goal is to make people happy, then a business of debt collecting isn’t likely to work.

When your business and goals are aligned, you will enjoy the process and your enthusiasm will show through to clients and others.

Identify your skills and weaknesses
As a business owner, you are the best asset of the business. An honest assessment of your skills and weaknesses could save you a lot of money and heart ache in the long term.

Any relevant skills you lack may be learned either through books, attending a course or having an expert coach you. Depending on the skill and time involved, you may want to learn this skill before you actually start the business.

Don’t forget that any business partners and associates, and even close family, can also be included in this analysis of skills. Quite often, your weaknesses will be compensated by another’s strengths. Many creative people find a business partner who is good with numbers and details, whilst other partnerships allow the introvert to work quietly alone as the extrovert promotes the business.

Determine the cost
Before getting too excited about your business, you will need to know how much it will cost to get started. Don’t be put off by this step – it is better to know beforehand, rather than 6 months later.

Again, some brainstorming can help as you list all of the equipment and supplies you need to get started. Include items such as a computer, printer, mobile phone, stock, materials to make stock, packaging, bags/envelopes for purchases, paper, a car/ute/van, business cards, web design, web hosting, specialist equipment, business signs and storage boxes/cupboards. There are also expenses such as phone calls, rent, electricity bills, business name registration, maintenance and industry specific licensing.

Next, add the cost of each item on your list. Some things you may already have so you can list the cost as $0. Total up the list and you will have an estimated cost of start up. Many financial advisors would add another 10% to that total as a safety net.

Separately, determine how much money you have available for your business.

Decide on finance options
Armed with an estimate of your set up costs, you can assess what to do next.

Obviously, if the costs are less than your business budget, you can go ahead.

If the costs are not far above available funds, you could possibly get the extra through family or friends, a partner, waiting and saving for a while, selling an asset or a small bank loan.

A large set up cost, however, brings more decisions with it. Firstly, you need to consider the likely income from the business and decide if the cost is justified by the returns. A million dollar set up for an annual income of $10,000 isn’t worth starting, but a $100,000 cost for a business expected to earn $250,000 a year makes good financial sense.

To finance a large set up, you will need to investigate various options, such as taking on partners, borrowing from a bank or credit union or raising funds through investors. At this stage, a financial advisor could be of great benefit.

Determine the business structure
Knowing your financial situation and business idea, you can make decisions about your business type. The main choices are sole trader, partnership, company or trust. You also need to decide if you need staff straight away and what roles they would undertake.

Your goals for the business can also be influential in these decisions; for instance, if you plan on growing the business and then franchising it, you may make a different choice to someone only wanting a localised business.

Accountants and business lawyers can help make these decisions for your business.

Establish the basics
With much of the groundwork done, some other basic decisions can be made.

Your business will need a name, premises (home office, shopfront, warehouse or whatever), style and contact arrangements. You may also need to set up a website, a business bank account, accounting system, supplier accounts and so on.

Once you know all of the above, you can open for business. Good luck


Getting your business started - To learn more about this author, visit Tash Hughes's Website.

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