Getting started with your own business is an incredible challenge but is also a thrilling experience that could transform your life for the better. It can be especially challenging for new business owners who begin with a loose plan of action or simply on a whim. As all businesses often have to face similar challenges when starting out, it is these business owners who don’t yet have a firm grip on handling them.
Starting your business requires a lot of perseverance and commitment, especially when you face a range of challenges, some making you second guess yourself. To help yourself through this, and ensure that you are prepared, you should ask these 10 questions to yourself.
1. Am I ready to start?
Before you get started with your business you need to make sure you are ready. With many businesses failing in their first year (over 60%) it is important that you are prepared before you begin. The best way to avoid many of the potential failure points for small businesses is to have a robust plan in place. Build a strong business model, complete a comprehensive market analysis, have a clear marketing plan, and enough funding to get your business to a comfortable position.
Doing all of this prep work will help you get your business onto a more stable footing. It is vital that all your research and planning is finalised before hitting launch. Running a business does involve a significant lifestyle change, so being prepared, will make the transition easier.
2. Is my business good enough to make it?
To answer this question you need to dive deep into your research and development. As a part of your market analysis you should be able to answer the following:
- What is the product or service you are offering?
- What is unique or different about your product or service?
- Who is your ideal customer?
- How do your products benefit your customers?
When you can answer these you will be able to identify any issues you may face, opportunities you could take, your marketing strategy, and the identity of your business. Completing this as a part of your market analysis will help provide clarity and direction to your business.
3. What should my structure be, partnership, company or sole trader?
There are many benefits and negatives to being a sole trader, company, or partnership. It is important to weigh up the pros and cons before deciding which structure you would like to follow.
A partnership allows you to enter into a new business with someone who has experience. Having a knowledgeable partner on board is great for comfort. However, you will have to share profit and creative control with them. Trust is a big factor as well. Do you trust them when it comes to creative freedom, control over business decisions, and risk?
It is vital that you research your options when starting your business to determine which structure best suits you. At the same time, if you want to enter into a partnership, do some research on them and look into their work ethic. This is especially important if entering into a business with your friend.
4. Who will be in my team?
When the pace starts to pick up on your business it will become impossible to continue alone. Every successful business has been built by a team who are dedicated to its success. As you begin to grow you need to think about who you want on your team. The first few people you hire will depend entirely on which areas you need support for first.
There are many areas you find you need support in first. Typically these areas include sales, marketing, accounting, bookkeeping, and management. However, it will depend entirely on your skillset and that of those who are also in your business already. It is important that you hire a diverse range of people with different skills, backgrounds, ages, and abilities, to bring a unique perspective to your business.
When beginning to build your team it is important that you are realistic as to what you can afford. You may have to begin by only taking on part time or casual staff until your budget allows it. Taking on staff can increase your productivity, and ultimately your profits, so, think carefully about your business’s needs.
5. Who is my target audience?
You should always know who your target customer is. Initially, this should have been worked out in your market research, however, it is important to keep this information up to date. Listen to and seek feedback from your customers. Interact with them on social media and also read reviews from your customers to gain a good idea as to what they like and dislike about your products and services. Adapting to your customers’ needs is a great way to stay relevant in the minds of your target audience. You can also use this to spot incoming trends early on, in order to adapt your business to meet it.
6. What is my niche?
What do you specialise in that you can offer to your ideal customer? Utilising your niche can help you differentiate yourself in the market. Look at how your business stands out from the rest, this is your niche. This can be used to help convince customers to purchase your products or services through a layer of novelty or interest.
There are many different ways your company can be niche. You could source all materials for your products from ethical sources, be 100% vegan, donate a percentage of all profits to a particular charity or cause. All of these are unique niches. Your niche could be totally different from these as well. Explore what you think your customers may like to find a cool niche that is all yours.
7. Who are the competitors to my business?
A competitor analysis is an important part of your research before starting your business. Not only will it let you know what alternatives there are to your business, it will also allow you to see other niches that exist. This can give you an idea on how to uniquely position your product to capture a different part of the audience. You can see how strong their offerings are and what you will need to do to match.
From a marketing perspective, it also gives you an opportunity to look at what marketing your competitors are using and what is working. This will allow you to both copy what is working, and improve on their marketing strategies, giving your business the edge.
8. How much funding will I need?
Funding is a vital part of any business. In order to make money from your business, you will need to first spend it. To work out how much you will need to spend, look at the immediate costs your business will face, these include registering your business name, finding a space, paying for a website and marketing, registering a trademark, and furniture, stock, and running expenses. Calculate an amount that will cover these costs plus any ongoing expenses you have before making a profit.
9. What is your plan to finance your business?
Once you know the costs of running your business it is time to figure out where that financing will come from. Often financing for businesses will come up with financing through a variety of options including investors, personal finance, or external financing. Each option has its pros and cons.
Funding from investors will require you to forego a percentage of your business, or of your profits, however there are less restrictions and no interest rates. For many, personal finance isn’t an option available. Business loans are one of the most popular methods. Before entering, ensure you can afford the repayments and you are getting the best interest rate.
10. How will success be defined?
Now that you have started your business it is important to decide how you are going to define success after your first year. It is important that each year you set goals which you aim to achieve during the year and beyond. What would you like to achieve with your business? Where do you see your business in a years’ time? Set goals for your business and achieve them.
Congratulations, you are on the road to success with your new business. Having put in all the research and preparation beforehand will allow you to be better prepared for any future challenges you have faced. Now that you are up and running you will want to begin considering working with a bookkeeper or accountant to maximise the money you can make from your business. For your new bookkeeper reach out to us.