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When you decide to start a business, successful or not, it will drastically change the way you live your life forever. It takes a great deal of courage and staying in business to become successful takes even more.
When more than 60% of Australian small businesses close their doors within their first three years, you’ll need a combination of hard work, skill, perseverance, and perhaps even luck to protect yourself from disappointment.
To ensure that you’re making the right decision, here are 10 questions to ask yourself before starting your small business.
It’s a simple enough question.
List down all the reasons why you want to start a business. Is there a hole in the market? Are you providing a service that no one else is? Is your product better than the others available?
Things you should not write down include reasons like ‘everyone is doing it,’ ‘it seems like fun,’ ‘I have nothing to lose,’ ‘I want to say I am an entrepreneur,’ and ‘I have an opportunity to start an interesting company.’
To stand out and be successful, you’ll need to analyse the competition and ensure that your business is the more attractive option.
What is it about your business that means people will come to your business, and not go your competitors? What is the unique selling point of your product or service? What do your competitors do well, and how could they be better?
If you’re planning to devote yourself to starting up a small business, you will want to make sure that you have all the skills like product knowledge, customer service skills, business acumen, supplier knowledge, market understanding, and the time to devote to not only running your business, but to research ways to continually improve your business. And putting this all into practice is going to eat up a large percentage of your day, so be prepared for a lot of long hours.
You’ll need to know who your customers are and understand their buying habits before setting up shop.
Which people are the ones that should be buying your product or service? How will they learn about your company? What will cause them to choose you over your competitors? How will you keep them coming back?
If you can worth with what you have and keep your overhead low, you can start to see profits sooner.
Can you work from your home, or will you need to rent a shopfront or office space? Do I you have plenty of startup capital to buy supplies, pay rent, pay utilities, and pay employees? Can I utilise any skills that friends and family have?
Hopefully, you have larger goals beyond simply setting up a new business. You’ll need them if you want your business to have a direction.
What is your business plan? What do you project your profits will be for the first year? What are your plans for expansion, should everything go well? When will you be able to hire more employees? When will you need to move to a larger premises? Can you expand your product/service range?
Nothing will end your business more quickly than the authorities shutting you down for not adhering to the law.
Have I covered all your bases? Do you need to hire a human resources team? Does your building comply with health and safety regulations? Does your product/service need to comply with any regulatory bodies? What qualifications do you and your employees need to have? What licenses do you need? Are you paying the correct amount of tax? Do you need to hire an accountant? Do you need to hire a lawyer or solicitor?
It takes time to recoup money from initial set up related out lays, and it could be quite some time before your business can actually turn a profit.
Are you prepared to not pay yourself a salary? Will you be able to cover employee salaries without making profit? How long can you go financially, before you have to close the doors?
A problem shared is a problem halved, but it also means that you might have to share any profits that your business makes.
Do you share the same beliefs and values as your partner? Have you agreed on how much each founder will contribute to the company’s startup capital? Have you agreed to an appropriate division of work? Have you discussed the possibility that one will have to buy out the other? Have you had a solicitor draw up a contract or terms of agreement?
To give your new business every chance of success, you will need to devote a lot of yourself to the venture.
Do you have the nerve and firmness to hire and fire employees? Do you have the backbone for tough negotiations? Are you prepared for potential late nights and early starts? Are you prepared for less time with your family and friends?
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