Starting a small business is as simple as applying for an ABN.
But to start a successful small business, you should really
consider these 5 things;
Do people want
what I plan to sell?
Whether you are in a service industry or are planning to sell products this is an important question to ask. Are there people who will buy your service or product?
Often when you are thinking about starting your own business you start to talk to your friends and family. These people are your support network and they will generally do their best to encourage you.
But the question is – will they buy what you plan to sell? If you are planning to sell cheap items, I bet they will buy a few to show their support. But are they just supporting you as a person or will they be repeat customers who are the beginning of a loyal client base for your business?
What if you were selling a more expensive product or service? Would they still buy your product or service?
It is important to look at your small business idea and be realistic before you start investing money.
Is there a way that you can find out if people not in your immediate support network are interested in your product or service?
Who are these people that want
what I have to sell?
Once you are confident people will want what you have to sell the next question is who are these people?
This may sound straight forward, but identifying who these people are will form the basis of your marketing plan and it is worth the time for you to spend thinking about this.
A technique we use when thinking about a new business idea is to talk through what this customer looks like.
- How old are they?
- What do they do for a living?
- What kind of things do they do with their free time?
- Are they likely to spend much time on the internet? What would they do on the net?
The description can be as detailed or as general as you like. The further you can drill down on who your target customer is, the more success you are going to have in reaching them with your product or service.
If your customer is a mother aged between 25-32 they are likely to spend a reasonable amount of time on social media. Facebook advertising may be money well spent. If your customer is over 60 and retired – Facebook advertising is probably not your best option.
Understanding who your customer is will help you to make a lot of early decisions about your business and help you spend your money wisely.
Do people know they want
what I have to sell?
This question is the next basic step in forming your marketing plan.
If you are thinking about starting an innovative small business – how you are going to educate people about your product or service?
You may need to build a group of people who will want what you have to sell before your business can start being successful. And this is likely to cost you money.
Even if you are selling a well-established service or product you may still face this challenge.
We have found this to be true in the early days of Sumo Accounting. We are an accounting firm who do things a little bit differently. Explaining that is our challenge.
People don’t Google “Business Growth Accountant”. It’s not a thing yet.
We believe as the accounting industry continues to change that this is the direction the industry will go.
For traditional products and services people may already know they want what you have to sell.
But why will people buy this product or service from you? How many other businesses are there meeting this need? How are you going to be better? Is the difference you? Is the quality of your product or service better? Are you able to offer your product or service at a better pricing point than your competitors?
How much money do I have to invest
into starting a small business?
The reality is that you can’t start a business with nothing.
You may not need a lot of money to get your business going, perhaps only a few thousand. But what is the number?
Make a list of everything you need to get your business going and add it up.
What about your time? Do you need to leave your current job or work less hours?
The income you are giving up is money you are going to invest into your business. How long can you do this for? Add this to your tally.
How are you going to market your business? How much are you willing to spend on this?
Is the total cost an amount you are comfortable with? Be honest!
Is the total of all these amounts an amount you are comfortable to invest into starting your own business?
Can I start this business on my own
or do I need a business partner?
The last critical question to ask yourself when thinking about starting a small business is whether or not you can do it on your own.
Do you have all of the skills that you need to start this business? What about the money?
When you thought about how much money you were willing to invest into this business, did you consider if more starting capital would increase the success of the business?
What would you be willing to give someone for bringing their skills and/or money to the business venture?
You may not be able to do everything yourself and understanding this could be the difference between a business that thrives or a business that fails.
Giving up up a share of the profit in your business may give it the best chance of being successful. 100% of nothing is nothing, but a share in business profit is something!
Whether or not you need a business partner will help determine the best structure for your business.
Make sure you talk to your accountant about this to make sure the structure you choose makes sense for you and your business.