Are you working for the man and wishing you weren’t? Have you got a great business idea and think you’re ready to start your own business?
Starting a business is not for the faint hearted. 70% of Australian startups wouldn’t fail in their first year of operation if it was a piece of cake. Assess how ready you really are to start a business by asking yourself these 10 important questions.
1. What are you going to sell, i.e. the products or services? Obvious question but you’d be surprised how many startups haven’t fully defined their product or service range before they open their doors.
2. Can you clearly articulate your target market, i.e. who you intend to sell your products or services to? For example, individuals vs businesses, types of businesses, local vs international, physical customers vs online, etc.
3. Can you describe your target customer as a real person, including their behaviours and values and what would drive them to buy your product or service? Understanding the psyche of your target customer will help substantially with your future sales and marketing efforts.
4. If you have a business partner in mind, have you openly discussed the role each of you will play in the business? Being clear from the outset on how you and your partner will work and interact with each other will save a lot of hassles in the future, when pressure is mounting and there is a lot to be done. Putting this on paper in the form of a partnership agreement or job descriptions as early as possible is a good idea too!
5. Have you thought about your business premises? Will you open a physical store or sell your products online? Will you work from home or set up an office/studio space? Your answer to this question will greatly affect the timeframes and financial requirements to get your business up and running.
6. Do you roughly understand the processes required to produce your product or service, and who the players are in those processes? This is an area often forgotten or glossed over, resulting in vague relationships with suppliers, inefficient manufacturing processes or unclear service definitions. Understanding your processes is imperative for costing your product and service, and also helps you to communicate effectively with clients about delivery timeframes.
7. Have you researched your competition? Who are your major competitors? What’s the size of the market? Are you a small fish in a big pond or is the market largely untapped? If you can answer some of these questions, you’re well on the way to do your SWOT (strengths, weaknesses, opportunities and threats) analysis.
8. Have you looked at your earning potential and is it enough? For example, if you are the sole provider of your service, then your maximum earning potential is 100% of your time at your hourly rate. But what’s more realistic is about 80% when you factor in time for managing the business.
9. Do you have access to funding for your startup and for your living expenses during the startup period? It can be very hard to stay in your full time job at the same time as launching your own business, so it’s important to have access to some money (this could be savings, borrowings from a bank or investments from angels) to help bridge the financial gap until your business starts earning.
10. Are you prepared to work harder than you’ve ever worked for before? That’s not meant to scare you, but many successful entrepreneurs say they have never worked as hard in their lives as they have in the years since they became business owners. They also say they wouldn’t change it for the world!
The good news is that if you have relatively concrete answers to these questions, you’re well on your way to a sound business strategy and plan. Of course, this is just the beginning but it’s a great start. If however, you answered “I don’t know” to any of the above, then you might need to do some work before you’re ready to throw open your business doors.
There is plenty of help available for small businesses on what steps to take next. Stay tuned for future blog posts where we will bring you guidance on specific aspects of your business plan and strategy. Tell us what you want to know most about and we’ll be sure to include it in future articles.
* Images sourced from Shutterstock.
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About the Author: Angeline Zaghloul is an expert in business strategy, client management and business processes, and is the Principal of Peer Business Consulting, a Sydney-based consultancy providing strategy and operations support to startups and small businesses.
* Portrait by Markus Jaaskelainen.