Tips for first-time entrepreneurs before launching?
There’s no ‘one size fits all’ answer to this question. What someone going into an aircraft business needs to know is entirely different from what someone starting a restaurant needs to know. That said, we’re talking about more than industry-specific knowledge. We’re talking about lessons that hundreds of entrepreneurs had to learn before achieving success.
Australian start-ups have been doing very well over the last few years, and in this market, if you have a unique, innovative idea, it is usually worth exploring on some level.
Given the opportunities, Australia is an amazing place to develop new business ideas. Start-up minded small businesses are enjoying rapid growth in the country, with many companies having broken into the global market.
Still, launching a start-up is a lot easier said than done. Before you consider becoming your own boss, you should have a clear idea of how to run a real business. Enthusiasm and innovation can take you a long way, but being truly successful requires effective business skills too.
Tips in launching your small business
With that in mind, here are the tips that you need to consider when thinking about launching a start-up in Australia.
Analyse your business idea before you decide to launch your start-up
Often new business enthusiasts can blur the lines between a business and a hobby, which can be a costly approach.
Doing what you love is a big positive and can help you, but that doesn’t necessarily ensure the viability of your start-up. You need to make sure that your planned products or services have demand in the market rather than following your dreams without giving due consideration to your chance of success.
It’s also very important to ask if your business idea is feasible.
Who are your competitors? Are you up to the challenge of establishing your brand? Do you have the necessary managerial and technical skills to pursue your plan? Financial capability is another big thing to consider here.
Money is important but not enough
A lot of entrepreneurs manage to raise capital early in the game, but money is just not enough. A sound business model that generates consistent cash flows is important. Besides, you need people to implement your systems.
Focus on people and their needs
Business is all about people. You can’t do it all by yourself. Focus on people, understand their needs, compensate them adequately, and invest in their training. They may or may not stay with you, but it’s important to train them continually.
It’s not enough to make sure that your business has a potential market. A successful start-up needs to understand its target market and demographic very well.
The best way to do so is to create a data-driven profile of your prospective customers. Among other things, focus on their spending habits, age, gender, shopping preferences (online vs in-store) and interests in general.
The owner is separate from his business
It’s important to separate yourself from your business and look at yourself as an employee and shareholder in your business. I’ve seen that many people struggle to differentiate their personal finances from that of their business.
Choose the right business for you
Sometimes, the difference between success and failure can be just choosing the right business for you. There are times when no matter how much you try, things just won’t work out because market conditions are not in your favour.
For example, the airline industry in most countries has a profit margin of less than 2% and most airlines, even though competent people run them don’t make money.
Prepare the initial business plan and determine your goals
Before launching a start-up, it’s necessary to have a clear business plan. A business plan will keep you on track and help you achieve your business goals.
It’s impossible to establish a successful start-up without some initial plan when you get started.
Starting a business is difficult and risky; it’s easy to spend all your time and resources on it. Before you start, figure out what type of business you will have. Will it be a sole proprietorship, partnership or corporation? Then put together your plan.
Having a written plan with your projected results and personal goals is the best way to stay on track.
A business plan will put your ideas in concrete terms and help you identify places to change the business model where necessary.
Maintain a strong work-life balance
I see a lot of entrepreneurs spend 12 to 13 hours a day in their business. And they’ve been doing it for over ten years. This eventually causes them to burn out and become unproductive. The moment you start working lesser hours, you find ways to streamline your operations and get things done faster. Nowadays, there are a lot of apps that can help you become more productive.
Start Saving Early
I was never really a big spender. However, I rarely bothered to save money early in my life. If you start saving early, you can use your savings to invest in your business. Savings give you options.
Come up with an effective marketing strategy and price structure
It’s very important to have a marketing and pricing strategy before you go into production.
As a new business, you are likely to face competition from already established companies. You’ll find it hard to acquire customers in the early going, so having some strategy to fall back on is imperative.
This is true even if you are planning to launch an entirely new kind of product or service. Your initial marketing strategy can determine whether you’ll be able to take off.
You need to understand where your product is in the pricing spectrum.
- For budget level products, you should remain competitive by lowering the price.
- For high-end products, it’s better to compete on quality and customer service.
People tend to relate price with quality, so aggressively lowering the price isn’t always a viable strategy.
Many start-ups fail to understand how to market their products effectively; you may have a terrific product that can help a lot of people, but if you aren’t marketing it to the public effectively it’s never going to take off.
To be successful, you need to invest in market research and do your homework.
Learn to manage debt better or stay out of it
Some entrepreneurs use debt to start a business, and this can be very dangerous, especially if you are a first-time entrepreneur. A start-up is inherently very risky, especially if the business model is untested.
If the business fails, the business owner still needs to pay back debt because the business owner personally guarantees most debts.
Some entrepreneurs use home loans, and personal loans to start a business because interest rates on these types of loans are low. However, be very careful, less optimistic, and make sure your debt is within manageable limits.
Make sure you’ll be able to secure the required initial investment. And be prepared for ongoing financial management
Gaining enough initial investment is critical for your start-up. You can consider the following sources to obtain financing for your business:
- Bank loan
- Personal savings
- Government funding
- Venture capital investors
- Borrowing money from other sources
Your business plan is an important part of seeking and managing the initial investment. Later as your business continues to develop, you’ll need a more elaborate strategy (and in some cases, professional help) to manage your finances.
Select a proper business model that fits your start-up’s nature
Every business in Australia belongs to one of the following four business models:
- Sole trader
Depending on the size and type of your start-up, you’ll need to choose the structure that best fits your needs.
Generally speaking, a sole trader model is ideal for small-scale start-ups. In this case, the start-up won’t be registered as a separate entity, and all financial and legal liabilities rest on the owner. Any tax-related to your business goes through your own tax return.
In a partnership model, the start-up will have two or more owners. Profits and losses will be shared according to the partnership terms, and you’ll need a separate tax file for the business.
For start-ups with larger investments, a company model is the most suitable one. If your start-up is structured as a company, then it’s considered to be a separate legal entity from the start-up founders. A company director has additional obligations compared to a sole business owner.
A trust is a business model where a third party manages the business. This is usually not a suitable structure for a start-up.
Apply for tax, registration, and insurance
There are different types of taxes that may apply to your start-up, depending on its business nature and turnover. It’s possibly best to consult with a business advisor or consultant regarding taxation.
While not compulsory in all cases, registering a business number and business name is very important to establish your brand.
If your start-up is a company, then your business name must be registered when you register the company. In other cases, you will have to register your business name with the ASIC, unless your business name is the same as the name of you or your partner.
Even for small start-ups, it’s essential to have insurance to minimise risk and ensure the safety of workers and employees. Some types of insurance are compulsory for just about every Australian business. These are:
- Worker’s compensation insurance (to protect employees from financial hardship should they suffer a work-related injury)
- Third-party personal injury insurance (related to any motor vehicle that your business owns)
- Public liability insurance (may not be applicable for some companies)
Have a strong presence on the web and social media
Most people won’t know a thing about your start-up unless you have a website and active social media accounts. Don’t wait until you have properly launched your business, rather let people know about your future start-up right from the planning stage.
If you’re lucky, doing this might even land you some investor interest.
An early online presence will not only work as a great marketing campaign but also let you get a sense of public opinion to your idea.
You should also think about setting up a website as soon as possible, which can function as an online home for your start-up.
Capital is the amount or value you need to put in the business to get it started and operating. It can be cash or non-cash. To know how much capital you need, list down all the possible spending you need to make to start and operate, such as assets to purchase, renovation, lease payments, operating expenses etc.
When starting a business, plan the assets that you’ll need to operate. This may include the following example: computers, equipment, furniture, vehicle, etc. List down not only the item but also the quantity and price.
Lease, Renovation and Improvements
Next item to consider is if you will rent out space. When renting, normally lessors require advance rent and security deposits which is equal to three (3) to six (months) of the monthly rent. Also, rental space is usually bare and requires renovation and improvements. Consider these costs in your business plan.
Identify and list down all the expenses or spendings you need to operate the business such as salary, rent, office supplies, utilities, etc. Consider the monthly costs in your business plan. This step is also important in your capital requirement because normally you have to keep at least six (6) months to one (1) year of monthly spendings as capital.
Find a good mentor
Having a good mentor is like parental guidance. You want someone to hold you accountable for your actions, and provide guidance through your journey.
But choose your mentor wisely. It should ideally be someone who has a strong track record of business success, believes in your idea, and is willing to give you honest feedback without worrying about protecting your feelings.
Tips for First-Time Entrepreneurs Willing to Be Successful
Here is a list of tips for first-time entrepreneurs willing to be successful and information you need to know before you start your business:
For a first-time business owner, it is important to avoid getting disrupted or side-tracked. New entrepreneurs always feel the urge to jump at every opportunity that may arise.
Well, opportunities always come disguised, they can be beneficial and at the same time traps. Avoid focusing your efforts on a lot of ventures.
Juggling a lot of tasks will exhaust you and limit your effectiveness and productivity to the right business. A simple rule, do one thing perfectly and not 5 or 10 ventures poorly.
It is important to plan things before venturing into business. The same is true that you will never be a true entrepreneur until you put your idea into action and test it.
Don’t take a lot of time planning and forget to test the idea. Draft an action plan and work on it. Test the plan with either your friends, relatives or colleague and get to know their opinion on the business.
Educate yourself every day
Learning is part of becoming an entrepreneur. You may have the idea that you know everything, but you don’t. It is exciting to learn new things about how to run your business.
Look for experts and business people who share a similar idea with you and learn from them. Each one of them has a special skill you can learn and be better.
In addition, learn the art of listening and pay close attention to other successful entrepreneurs. Learn how they run their businesses and build an empire from there.
Network with People
When you start your business, this may be the best time to network with your peers, successful business people and perhaps join your school’s alumni association. You can proceed to find contacts on social media platforms, perhaps Linkedin and connect with other people or staff.
These people may lead you to potential business people that you would not have. Take time to socialise with different people, including professors and staff, you never know, they may be someone who wants something done and there you can land your first business deal.
Have a Great Team Under You
If you want to make a catch, especially in the world business, you need to have a great team that will work together to thrive the business.
Select highly skilled individuals who can work with you, and ensure they have a variety of talents you need to be successful as an entrepreneur. At least have two or three people on your team who have proven experience, and you are one step towards achieving the best in the entrepreneurial world.
Do Your Homework/Research
There is nothing more frustrating than venturing into a field you have no idea of. A lot of start-ups fails because their founders base their action on passion rather than detailed research and data.
Before committing your time, effort and resources in a business, do some research and get to know who your target customers are, what is trending in the market and what the challenges are.
This will keep you updated. You don’t want to start all over again from scratch because you failed to do enough research in the field.
Manage your spending
Since it is a new business, you may be so determined to make it work and end up spending a lot on unnecessary expenses. List the most important things that will help elevate the business and put up some cash to purchase. Have a sensible budget so that you stay lean and focused.
You may have had that entrepreneurship is a lifestyle not a regular 9 to 5 job/profession. Yeah! You got it right; it is indeed a lifestyle. Your health is the most important asset as an entrepreneur.
Of course, when starting up your first business, there is a lot to do that may leave you stressed and exhausted. You need something to relieve the stress and eating right, exercising regularly and having time for you will do magic in your life. Try them out.
Know When To Quit
A wise entrepreneur knows when to venture into business and when to call it to quit. Do not allow your ego to take you down. If your idea does not materialise, focus on what went wrong and learn from the mistakes that were made.
If you continue losing money by the second, and you have exhausted all the survival skills, it’s time to quit. This is important for you since you can learn from the mistake and move on. Quit and venture into something else.
Being an entrepreneur is a dream to which many people aspire, and a worthwhile financial goal. Still, many first-time business owners, and even experienced pros, can sabotage their best efforts through typical mistakes. When you’re ready to roll-up your sleeves and start your own business, keep your eyes open for these tips in launching your start-up business.