What are the tips to start a small business?
Embarking on a new business venture is both exciting and terrifying in equal measure. On the one hand, you’ll finally be the boss; the master of your own destiny who’s pursuing success in something that you’re truly passionate about. On the other hand, you now have a laundry list of things that you need to tick off before you even start to make sure everything kicks off smoothly.
Whereas working for someone else alleviates these responsibilities, the startup owner takes on all these stresses themselves. Not only that, every country has different laws, regulations and requirements to get your business up and running. So, even if you’ve started a business in one country, you’ve still got to do a pile of research to make sure you do it properly in another.
Starting a successful small business in Australia requires strategic planning, hard work, and dedication. If you embody these qualities, your odds of long-term prosperity will rise.
Do Your Research
The path to a prosperous business begins with extensive research. Whilst you are likely eager to open your doors (physically or virtually) as soon as possible, you should never forget to do your homework and carefully research your target industry. Here are some short questions to consider before you begin developing your official business plan:
- Is there a need for the products or services that I will be offering?
- Who will I target with my products or services?
- What location would be best for my offices/store/base?
- How can I gain an edge over my competitors?
Finally, do not forget to consider extenuating circumstances. For instance, it may not be the best time to open a fine dining restaurant amid the coronavirus outbreak. However, you could realise your dreams to open a food-related business by starting with a restaurant that specialises in take-out and delivery. You can then expand your business to include eat-in dining tables.
Countless people dream of becoming entrepreneurs, but they never do. They’re burdened with excuses and fears of failing. From money to time to responsibilities, you can make a million cases for not starting a business.
Let’s face it, being your own boss is scary. In most cases, new business owners have a lot to lose with little insight into their chances of success. Worrying about the risks of business ownership is normal.
But, excuses only slow you down from reaching your goals. If you want to start a business, you need to address the reasons you think you can’t start a business and get rid of them. Find a solution to the issue rather than let it hold you back.
Recognise your strengths and weaknesses
Every small business owner has certain skills, abilities, knowledge and experience that give them an edge when it comes time to build up a business and start operating it. However, no small business owner is so adept that they can be an expert in every single process related to developing a new company.
While you’ll have to wear a lot of different hats, especially during the business’s earliest stages, don’t place too much of a burden on yourself for too long or expect yourself to dive into a highly complicated task with no prior training. Develop a strong understanding of your skills and weaknesses, so you know where to focus your attention best.
Don’t be afraid to learn how to handle new responsibilities and workloads – it’s essentially a requirement for growing small businesses. You also shouldn’t shy away from working with business partners, family members, employees, independent contractors and others to address major needs and make sure important concerns are handled successfully.
Listen to what others have to say—friends, family, experts, even yourself. When it comes to things that have to do with your entrepreneurial goals, be a sponge. As you learn, start to work out the idea in your head. Write things down. Keep notes from all the resources you come across to develop a detailed plan.
When you tell people about your startup, read their body language. Do they like the idea? Or, are they just being nice and think you’re going in the wrong direction? Encourage your listeners to be honest with you. The collective opinion you get from peers could be a reflection of how consumers will react.
Don’t ignore the power of advice from experts and veteran business owners. These folks know first-hand what does and doesn’t work.
Focus on something you have a passion for
Having a passion for something doesn’t necessarily mean it’s your all-time favourite activity or type of business. It does mean that you won’t quickly grow tired of running that type of business, that parts of it appeal to you and, ideally, you can use some combination of existing knowledge or skills related to parts or all of the operations to your advantage.
Finding an existing need and targeting it is a major element of starting a successful small business, whether it’s providing accounting services to other companies or setting up a bakery. Pairing that need with something that excites, interests and motivates you can lead to substantial development and returns.
This piece of advice is relatively basic and most useful when deciding what type of business to start as opposed to getting a specific concept off the ground. Focus on your passion early on and pair it with a strong business plan to give yourself the best chance of crafting an enduring and popular organisation.
Prepare Your Business Plan
A strong business plan will help you in three key ways: First, it will help you identify your needs for funding and staffing. Second, a well-written business plan can help you secure a loan. And third, a business plan will provide an organised framework to help you achieve your first-year goals. Your business plan should be clear and concise, and should include the following points:
- An executive summary, or a short synopsis of your business goals
- A description of your business that outlines the goods or services that your business will deliver
- A market analysis that explores the need for the products that you will offer
- An organisational summary that lists the key players or employees you plan to have within your business
- A marketing strategy that details the advertising initiatives and promotional techniques you plan to employ
Keep it simple
One of the first things you should do as a small business owner is to develop a business plan. You must develop this essential document to steer future work and hold yourself accountable. Still, it’s also important to not go too in-depth during the early stages of developing your concept. A simple business plan is often the best approach when in the beginning stages of developing your organisation.
A shorter plan, about one page or 500-600 words, can give you direction without requiring you to answer questions that won’t have solutions presented until later on in the process. Johnson suggested focusing on your products or services, target market and customers, basic prices and costs and the work needed to turn the concept into a reality.
As work progresses and your idea moves closer to actual operations, you can expand your business plan. Over time, including more accurate estimates, actual costs, longer-reaching projections, mission statement, company summary and other elements commonly seen in fully developed documents.
If you’re like many entrepreneurs, you have a business idea, and you’re ready to run with it. Be careful not to let your concept snowball into something overcomplicated. You could end up with an expensive, elaborate end-product that nobody wants to buy.
As a new business owner, try to start small and narrow your focus. A successful business idea should fulfil promises to customers and exceed expectations.
Cut unnecessary features that water down your offerings and cost you money. As a small business, you don’t need all the bells and whistles of a giant corporation. It will be easier to add to your business as it grows.
Register Your Business
“Registering for an ABN is free, and you can register for a business name and taxes at the same time.” – Australian Government Business Registration Service.
Once you have decided what type of business you would like to open, the next step is to register your business with the Australian government. The Australian government’s business registration service is easy to use, and you can complete the process in a matter of minutes. The site even offers a helpful tool that will help guide you through the business structure and tax registrations that would best suit your new business.
Secure Operating Capital
“When searching for funding, keep in mind that you’ll generally need to meet certain criteria to be eligible and that aside from funding assistance, many programs can help your business by building your skills and knowledge.” – Australian Government Grants and Programs.
Most small business owners need funding to get their businesses off the ground. Depending on the nature of your business, you will need money to pay for your office space, equipment, furnishings, marketing expenses, and daily operating costs. And because most small businesses take at least several months to begin turning a profit, you may need to turn to one of the following sources of funding to help cover costs:
- Grants and funding programs: The Australian government offers a variety of grants and funding programs to qualified business owners.
- Traditional bank loans: Seeking a loan from one of the many banks in Australia is a popular option for many small business owners.
- Private investors: Many angel investors in Australia are interested in lending financial support to new businesses.
- Your personal savings: If you have plenty of money saved, you can dip into your own cash savings to get your business off the ground.
Count the costs
Once you start to develop your business idea, add up how much it will cost. You will need to factor in every business expense necessary to launch and operate. Some costs to keep in mind include your location, rent, supplies, marketing, and more.
Come up with the most educated number you possibly can. Then, take whatever you think that dollar amount is and quadruple it. Seriously, quadruple it. You’ll experience unexpected costs of running a business around every corner. It’s better to be over-prepared than short on funds when bills start to roll in.
When you’re thinking of the cost to start a business, don’t forget about your personal budget. Look at how much money you need to live, including rent, food, gas, healthcare, etc. Lay these expenses out in order of which ones you must pay (e.g., mortgage) to ones that can slide if the money runs out (e.g., entertainment).
Once you have a grasp on all your expenses, start to create a business budget. At first, you might need to get some outside capital to make ends meet, like a small business loan. Go over all of your options before putting your money into the startup.
Imagine yourself with zero money
I mean zero. There is a high probability that this will happen. I’ve had several businesses not make it for the long haul. And I’ve come close to bankruptcy.
Launching an unsuccessful business idea is a reality for many entrepreneurs. Over half of new businesses fail within the first five years of opening. How would you handle having no incoming money?
It’s a good idea to come up with a “just in case the worst outcome happens” plan. You might need to get a job on-the-fly or temporarily live with your parents. You might have to go without comforts that you’re used to. Figure out how you would get by if your business plan went south.
Look at your current sources of income. What do you earn from your current job? How long would your savings last if you quit? What unexpected things could mess up your plan (e.g., you wreck your car or your furnace breaks)? Prepare yourself for all the situations that could happen if the business idea doesn’t work out.
Develop a Marketing Plan
Now that you have secured funding for your business, you will need to determine how you will market your products or services. Unless you have a strong background in marketing, you may wish to hire a marketing specialist to help you develop your marketing plan. Here are a few points that your marketing plan should include:
- Website development and management
- Your social media strategy
- Search Engine Optimisation (SEO) planning (Get your website ranked high on Google)
- Advertising channels
Understand your target customers and existing market
It’s possible to develop an excellent business concept and deploy it in the wrong area. That’s why it’s important to understand the area in which you want to start your small business as well as your target customers. An idea that could work out very well in a large, densely populated area simply may not get the amount of foot traffic or a number of customers it needs in an area with fewer residents.
Assessing the market for your products or services, seeking out the presence of potential competitors and conducting an assessment of how your business will hypothetically perform can all move your idea in the right direction.
You can also look to competitors and similar businesses for ideas and guidance, although indirectly. Visiting their stores, looking at their websites and marketing materials and other intelligence-gathering initiatives can help you fill in pieces of the puzzle.
Earn while you build
If you want to start a small business, don’t quit your day job—yet. Launching a successful startup is a process. Build your business in stages and gradually transition from employee to entrepreneur.
As a new business owner, it will take some time to earn a steady income. Keep your nine-to-five and work on the business during off-hours so you can earn during those tough, first stages. Once you have a healthy inflow of cash from your company, you can tackle business ownership full time.
Consider Having a Soft Opening
The biggest mistake that new entrepreneurs make is they start off with a big grand opening celebration right away. Then they find out that the computer system still has some bugs, they did not hire enough staff and the phone system is not working properly. That is why every business should have a soft opening at least 30 days prior to the grand opening.
In your eagerness to start serving customers, you might be tempted to schedule your official opening before you have worked out some common kinks. You can help avoid some of the typical problems that plague business owners during their first operational week by scheduling a “soft opening” roughly 30 days before you officially open your business to the public.
A soft opening will allow you to assess the effectiveness of your website, phone system, production line, and other key facets of your business. Most importantly, it will help ensure that things flow smoothly during your first official week of operation.
Know the legal requirements for starting a small business
Starting a business is exciting. Laws are not. But, you need to understand the rules that come with opening a business. If you fail to follow government regulations, you could face steep penalties.
From forming a legal structure to set up an accounting system, you must follow laws. You need to register the business with your state. You must also take care of business-specific tax liabilities. And as you hire workers, you need to follow employer laws.
The rules that apply to you depend on your state, business structure, and industry. Consider talking to a small business accountant as you set up your company.
With the above essentials sorted, you’re almost good to go. But, we do have one last tip for you – starting a business is a tough task that’s made a lot easier if you can find ways to save money and build a solid network of peers and partners to work with.